20-13.pdf - Texas Education Agency

Application Coversheet Early Career Academy Education Strategy Foundation

Proposed Generation Twenty Charter Name Name of Sponsoring Entity

Note: If the sponsoring entity is a 501(c)(3) nonprofit organization, the name must appear exactly as it appears in the Articles of Incorporation or any amendments thereto.

The sponsoring entity is a (Check only one.):

1:8JS01(c)(3) nonprofit organization 0Governmental Entity 0Co!lege or University

Chairperson of Governing Body of Sponsoring Entity: C L l 'FF B LA (. \( f R 6 Y CEO of Sponsoring Entity: NA

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

CEO/Superintendent of Proposed Charter School:

Contact Name: David Catalano

Contact Phone #:317-706-9478

Open Position

Contact E-mail Address: [email protected]

Contact Fax#:

Board Member Who Attended an Applicant Conference: Cliff Blackerby, Christine Gray Date of Conference: 12/4/2014

Applicant Mailing Address (This address will be used for contact regarding this application.): ~~~~~~~~~~~~~

13000 N. Meridian Street, Carmel, IN 46032

Physical Address of Proposed Administrative Offices (if different from above): ~~~~~~~~~~~~~~~~~-

Number of Campuses Being Requested: Three ~~~~~~~~~~~~~~~

Physical Address of Each Proposed Campus (Please include street address, city, state, zip, and county.). If the specific address is unknown at this time, please provide the county and general location of the proposed campus:

29SO South Gessner, Houston, TX 77063, 1S6Sl North Freeway, Houston, TX 77090, 1001 Magnolia Avenue, Webster, TX 77S98

State the estimated enrollment and check all grade levels to be served for each school year. By Year 3, at least one grade in which the state assessments are administered must be offered.

Vear 1: Estima·tei::t Enrollment:

0Pre-K3 D Pre-K4 DK 01 02 03 04 Os 06 07 Da 09 010 l8J 11 012

Vear 2: Estimated Enrollment:

0Pre-K3 D Pre-K4 DK 01 02 03 04 Os 06 07 Os 09 010 l:8J 11 IZl 12


0Pre-K3 D Pre-K4 DK 01 02 03 []4 Os 06 07 Os 09 010 fZI 11 l:8J 12

Year4: Estimated Enrollment:

0Pre-K3 D Pre-K4 01< 01 02 03 04 Os 06 07 Os 09 010 l:8J 11 IZl 12


0Pre-K3 [] Pre-K4 DK 01 02 03 []4 Os []6 07 Os 09 010 IZl 11 lZI 12

At Capacity: Maximum Enrollment:

OPre-1<3 D Pre-K4 01< 01 02 03 04 Os 06 07 Os 09 010 ~11 IZl 12

I certify that I have the authority to submit this application and that all information contained herein is complete and accurate, realizing that any misrepresentation could result in disqualification from the application process or revocation after award. In accordance with TEC §12.120, I further certify that no members of the governing body of the sponsoring entity or of the proposed charter school or any officers or employees of the proposed school have been convicted of a misdemeanor involving moral turpitude or of any felony. I understand that incomplete applications will not be considered. As part of the application submission process, I certify that I have read and reviewed the Generation l wen! y Open~E nrollment Charter Application Instructions and Guidelines document.

( : I- .,, , 1 t . 1 r ,.,._. " ,_ ., ( l/S/2015 Cliff Blackerby (BLUE INK) Sjgr:l'ature-Of Chief Ex~cutive-Gffker of Sponsoring Entity Date -----P-r-in-te_d_N-am_e ___ _

~I '~ I C ~""' / /l /IS- _D_av_i_d_c_at_a_la_n_o _______ _

(BLUE INK) Signature of Application Preparer Date Printed Name

With what company is the application preparer associated? ITT Educational Services, Inc. Was preparer paid? D Yes ~No

Early Career Academy


Application Team Member InformationNames, roles, and current employment of all persons on applicant team:

Full Name Current Job Title and Employer Position with Proposed SchoolDavid Catalano SVP, Business Development, ITT/ESI CMO Management Team Member

Cliff Blackerby Retired Chairman, Board

John Wood President, The Ocean Corporation Treasurer, Board

Christine Gray Retired/Self-employed Secretary, Board

Does this applicant team have charter school applications under consideration by any other authorizer(s)? If yes, complete the table below.

State Authorizer Proposed School NameApplication Due Date

Decision Date

OH Ohio Council of Community Schools Early Career Academy Fall 2014 Jan 2015

CMO only, applicant team not involved

Does this applicant team have new schools or campuses scheduled to open elsewhere in the 2014-15 or 2015-16 school years? Yes No If yes, complete the table below.

Proposed School Name City StateOpening

DateEarly Career Academy (CMO only, applicant team not involved) Indianapolis IN Aug 2015

Early Career Academy (CMO only, applicant team not involved) Tampa FL Aug 2015

Early Career Academy (CMO only, applicant team not involved) Phoenix AZ Aug 2015

Does this applicant team have new schools or campuses approved, but scheduled to open in years beyond 2015-16? If yes, complete the table below.

Authorizer# of

Schools City or Cities State The CMO has the three in the previous Proposed School Name table.

Do any of the following describe your organization or the charter proposed in this application?Seeks approval for multiple campuses under a single charter.

Already operates schools elsewhere in the US.

Will contract or partner with a charter management organization (CMO), management company, or other organization

This provider currently manages schools in Texas or elsewhere in the US.If contracting with a CMO, identify the provider: ESI Service Corp., owned by ITT Educational Services, Inc.

If currently managing, please state where: IN, FL, MI

to provide school management services. If yes, include the provider's portfolio in answering the above questions regarding pending applications and school openings.

Yes No

NoYes


Table of Contents

Application Coversheet . . . . . . . . . . . . . . 1

Table of Contents (this page) . . . . . . . . . . . . . 3Application Team Member Information . . . . . . . . . . 2

Application Page

Educational Plan . . . . . . . . . . . . . . . 4

Application Attachments .................................................................................................... ....

Attachment E1 - Sample Course Scope and Sequence . . . . . . . . 73Attachment E2 - Requirements for Student Promotion/Retention . . . . . . 96Attachment E3 - Admissions and Enrollment Policy . . . . . . . . 103Attachment E4 - Discipline Policy . . . . . . . . . . . . 106

Attachment A2 - Published Notice(s) of Public Meetings . . . . . . . 19Attachment A3 - Certified Mail Receipts or Return Cards . . . . . . . 25

Attachment A1 - Applicant Information Session Documentation . . . . . . 17

Attachment F4 - Audit Report . . . . . . . . . . . . . 251Attachment F5 - Credit Report . . . . . . . . . . . . 256Attachment F6 - (IRS) Form 990, Form 990-N, or Form 990-EZ . . . . . . 258Attachment F7 - Evidence of Support from Intended Community Partners . . . . 260

Attachment F2 - Budget Narrative . . . . . . . . . . . . 223Attachment F3 - Financial Plan Workbook . . . . . . . . . . 228

Attachment F1 - Narrative Start-Up Plan for the School . . . . . . . . 218

Attachment G3 - Bylaws of the Sponsoring Entity . . . . . . . . . 319Attachment G4 - Board Member Biographical Affidavit Form . . . . . . 337Attachment G5 - Governing Board Code of Ethics and Conflict of Interest Policy . . 356Attachment O1 - Organization Chart(s) . . . . . . . . . . . 379

Attachment G1 - 501(c)(3) . . . . . . . . . . . . . 310Attachment G2 - Articles of Incorporation . . . . . . . . . . 313

Attachment F8 - Facility MOU or Other Proof of Intent to Secure a Specific Facility . . 264

Attachment O5 - Principal/Principal Candidate Qualifications . . . . . . 402Attachment O6 - Superintendent/Superintendent Candidate Qualifications . . . 406Charter Management Organization Information (Optional) . . . . . . . 407

Attachment O3 - Supplemental Human Resources Information Form . . . . . 384Attachment O4 - Teacher Evaluation Tool(s) . . . . . . . . . . 397

Attachment O2 - Staffing Chart . . . . . . . . . . . . 381

Facilities . . . . . . . . . . . . . . . . . 10Community . . . . . . . . . . . . . . . . 8Assessment and Evaluation . . . . . . . . . . . . . 6

Financial Information . . . . . . . . . . . . . . 15School/Governing Board . . . . . . . . . . . . . . 14Faculty and Staff . . . . . . . . . . . . . . . 12Students . . . . . . . . . . . . . . . . . 11

Charter Application ............................................................................................................ .... 4

Once the application is complete and the attachment page numbers have been manually entered on all pages, return to this Table of Contents and key in the corresponding page number for the page where each response begins and for each attachment coversheet. This will ensure that the applicant has provided all of the information required by the Request for Application (RFA).


Educational Plan (The response for this section should not exceed six pages in length.) 1. Describe the vision, mission and educational goals of the proposed charter school.

2. Describe the makeup of the anticipated student population. Identify where the students are most likely being educated currently and why they will choose to attend the charter school if awarded.

3. Provide an overview of the instructional design and program to be implemented at the charter school. Include how and why it is believed that this program will be effective in meeting the educational needs of the student population to be served.

4. Provide a general overview of the curricula to be used, to include alignment with the Texas Essential Knowledge and Skills (TEKS).

5. Describe the ways in which the needs of students with special needs will be met.

6. Outline any extra-curricular services/programs to be offered beyond the required curricular offerings, and explain how these activities will improve the quality of the overall educational experience for the students.

TYPE YOUR RESPONSE IN THE NARRATIVE RESPONSE BOX BELOW. IT WILL EXPAND AFTER TABBING OUT OF THE FIELD.Mission: The Early Career Academy is a career-focused charter high school for grades 11 and 12 in which students have the opportunity to earn a high school diploma and a tuition-free associate’s degree at the same time. Vision: We envision the Early Career Academy (ECA) as a place where students enroll in a program of study that leads to a career-oriented associate’s degree in a technical area. ECA students are exposed to specific practical skills that are in use today in a wide variety of employer organizations. Students enjoy and benefit from the substantial facilities and services available to postsecondary students at the campus where the school is located. Students complete programs of study that blend traditional academic content with applied learning concepts. A significant portion of learning is devoted to practical study in a lab environment. Student Professional Experiences and project-based learning prepare students to apply skills in a variety of career-focused positions related to their fields of study. Students graduate with an associate’s degree and this provides them with a significant head start over graduates from other high schools. Students gain employment in their field of study and continue with additional post-secondary study or certifications while working. The start-up plan facilitates the ECA vision. The Early Career Academy: • Students can earn a tuition-free associate’s degree • Is a small, personalized school environment where being smart is cool and learning is fun • Embodies a culture of success to ensure everyone is focused on student achievement • Offers rigorous college coursework in applied fields of study that expose students to real-world problem solving • Boasts technology teachers with industry experience that both instruct and interest students in new fields of study • Implements a daily structured schedule, mastery based learning and differentiated instruction • Students have the opportunity to work on real projects for organizations in the community related to their program of study Goals: 1. High School graduation rate will exceed the School Districts* four-year and five-year graduation rate. 2. The percentage pass rate for state administered exams will exceed that of the School Districts* pass rates. 3. At least 25% of students who enrolled in 11th grade and completed all terms at ECA will complete an associate's degree and 50% will earn at least one year of college credit. 4. All students who enrolled in 11th grade and obtain their associate's degree complete a Student Professional Experience. 5. The Employment to Graduation rate will be at least 70% for students that graduate with an associate's degree. *The "School Districts" is defined as the weighted average of all sending School Districts for the students tested for that goal. The intent is to determine if ECA is performing better than the School Districts where the students reside. Student Population: ECA's model is to lease space inside of an ITT Tech campus and utilize the facilities infrastructure, curriculum and instructional staff. ECA students are simultaneously earning a career ready, technology based, associate's degree from ITT Tech as they complete their high school diploma at ECA. Since ECA utilizes the resources of ITT Tech, ECA anticipates that the student population will mirror that of the ITT Tech campus; ECA students will come from the same neighborhoods served by ITT Tech. These students will likely be the first in their families to pursue and obtain a post-secondary credential. They will choose to attend ECA so they can obtain a tuition free associate's degree in a technology field and pursue employment upon graduation. ITT Tech is well-known in their neighborhoods and well respected in their communities. Based on an extensive review of the data for the existing schools in these neighborhoods, students are less likely to be College Ready Graduates as defined in TAPR. This data, detailed in the Community section, indicates that ECA will likely have students that have an achievement gap in math and reading, that have credit recovery needs and that may not be prepared for the rigors of college coursework. ECA is prepared to handle these students as well


as students fully prepared for the rigors of college coursework. Upon entry, ECA will administer a math and reading diagnostic assessment to each student. The assessment will provide students with an individual learning plan for math and reading subject areas that need improvement. The learning plan is designed to close the students gap in math and reading. Credit recovery coursework will be provided for all subject areas required for the completion of a high school diploma. This will allow 11th grade students to enroll and make up courses normally offered in earlier grades. All courses required for the completion of a high school diploma are offered by the school. This allows students struggling with the technology related courses to fulfill high school course requirements. ECA utilizes a research-based education plan that aligns with the Texas Essential Knowledge and Skills (TEKS). The curriculum results in student mastery of grade level content standards. ECA achieves the result by using an educational plan that meets the needs of each student and differentiates instruction for all students. ECA’s curriculum is built upon a research-based instructional design methodology to provide students with active and hands-on learning experiences in both classrooms and labs. ECA will follow an applied learning model that ensures deep learning of course objectives and includes practical hands-on activities wherever possible. The ECA instructional approach will promote the principles and methods of Applied Learning grounded in the following theoretical constructs: • Merrill’s Principles of Instruction, suggesting that the most effective learning products or environments are those that are problem-centered and involve the student in: a) activation of prior experience, b) demonstration and application of skills, and c) integration of those skills into real-world activities • Gagné’s Taxonomy of Learned Capabilities that represent progression of competency development from lower level operational skills to high-level intellectual capacity for solving unknown, complex, ill-structured problems through application or generation of rules • Bloom/Krathwohl’s Taxonomy of Educational Objectives that determines: a) selection of specific instructional tasks and associated outcomes, and b) assessment of learning outcomes • Keller’s ARCS Model addressing critical factors of learner motivation and engagement This Applied Learning approach emphasizes contextualized learning experience, which empowers and motivates students while assisting them to develop key competencies required for employment, further education and professional development, and active participation in their communities. This instructional design will also utilize an Explore-Practice-Apply model that allows students to gradually build their knowledge and skills while engaging in meaningful and context-relevant interactions with their peers. Students move through learning levels meaningfully and deliberately. • Explore – Facilitates student discovery learning, activation of prior knowledge and building connections between new concepts and existing cognitive frameworks through interactive learning activities. • Practice – Engages students to apply new concepts in the process of developing and testing skills through hands-on exercises, labs, role playing and modeling. • Apply – Engages students in the analysis of complex situations and the development of solutions required by learning tasks grounded in real-life/workplace contexts. ECA’s teachers will be provided with detailed syllabi, instructional guides, and assessments that employ these methodologies – fully aligned to state standards. This entire instructor support material package is approximately 300 pages, depending on the course. Facilitation guidance and teaching tips for faculty will be accompanied by tools and handouts found in the curriculum resource tools. Examples of these include presentation slides, worksheets, illustrations, video files, handouts, checklists and other similar instructional materials. The school improves student achievement by offering challenging coursework combined with student academic support services. Findings from the Jobs for the Future study1 of successful Early College High Schools in North Carolina indicates that students can handle a structured delivery of college level content; the challenged will rise to the occasion. Challenging coursework combined with student academic support services drives student growth . ECA provides student academic support services and strategies to assist students to achieve in college coursework; especially students that have not been well prepared for college. The CMO takes this approach with ITT Tech to assist college students, many unprepared for the rigors of college work, to complete an associate’s degree. Evidence from ITT Tech bears this out as graduation rates, as reported by IPEDs, outpace those of some community colleges serving similar populations. ECA students enroll when starting the 11th grade and complete 11th and 12th grade at ECA. The mission of the ECA is to deliver to students the opportunity to earn both a high school diploma and an associate’s degree concurrently. To facilitate the mission, ECA will adopt a college curriculum and enhance that curriculum to make certain it meets TEKS requirements for the state’s high school


diploma. The associate’s degree's general education coursework serves as the basis for the high school core academic content areas for 11th and 12th grade. Additional courses and course content, sourced from various publishers, are added to complete the requirements for high school. ECA will meet the statutory requirements for awarding a high school diploma and will offer the Business and Industry and Multidisciplinary Endorsements. Serving Students with Special Needs: ECA is an open enrollment, public school and provides a free and appropriate public education (FAPE) for students in accordance with Section 504, the Individuals with Disabilities Education Improvement Act (IDEA) of 2004, Americans with Disabilities Act (ADA), and Texas law. Students will receive individualized, and appropriate accommodations, services and support as determined by their ARD Committee or 504 Team in order to provide FAPE and an equal educational opportunity. With 120 students projected for the first year of enrollment, ECA expects to have between 9 and 14 students with special needs. ECA will have a certified special education teacher in place the first year of operation and additional staffing as necessary. ECA will also seek out other special educational professional service providers by contract or through shared service arrangement/co-operatives and provide training to staff and administrators to meet Child Find obligations and to provide the services and supports needed. The student’s IEP (Individualized Education Program) or 504 Plan will specify all accommodations, services and supports provided to meet the student’s needs. Children who transfer into the school with an IEP will be provided services comparable to those from their previous school until either the ARD Committee adopts the IEP or a new appropriate IEP is developed. ECA will also provide bilingual/ESL services in accordance with Texas law for ELL students. For the first year, this will be contracted out on an as needed basis. Extra-curricular services: Students can join various clubs that are aligned with their program of study which facilitates additional learning and engagement outside of class. Throughout the year ITT Tech hosts various events including job fairs and ECA students are encouraged to attend as a way to discover what employers offer graduates. Regular student activities available to ECA students include: National Technical Honor Society (NTHS), IT Club, IEEE Student Chapter, ETA Student Chapter, Career Fairs, Open Houses, American Design Drafting Association Chapter, College/Career Day, Student Awards Assembly, Student Appreciation Week, Monthly Birthday Celebration, Student Orientation, Campus Newsletter. These activities will improve the quality of the overall educational experience for the students by immersing them in their field of study. 1“Accelerating College Readiness: Lessons from North Carolina's Innovator Early Colleges”, Cecilia Le and Jill Frankfort

Assessment and Evaluation (The response for this section should not exceed two pages in length.) 1. Describe the anticipated standards or measures of student achievement that are expected, to include how the

results will be used to improve teaching and learning.

2. State the anticipated results and expectations of the annual standards or measures of student achievement. Describe how successes will be measured.

3. Outline how the proposed curriculum will be evaluated.

TYPE YOUR RESPONSE IN THE NARRATIVE RESPONSE BOX BELOW. IT WILL EXPAND AFTER TABBING OUT OF THE FIELD.ECA measures student learning using the Texas Essential Knowledge and Skills (TEKS), which are the state standards for what students should know and be able to do. The results are used to improve teaching and learning. ECA will align all core curriculum to TEKS. ECA will use a diagnostic assessment, which uses a 40-item placement exam to assess students in math and reading at the beginning of each year. Data from the assessment recommends appropriate instruction for each student. The diagnostic assessment will allow teachers to understand student weaknesses and will prescribe Individual Learning Paths that include math and reading content from grades 3 to 11. This allows students to build on their weakest areas, which will help close achievement gaps and prepare students for higher-level learning. The objective is to facilitate and optimize learning by meeting each student on their level. ECA’s assessment procedures include both direct and indirect evaluation of student learning. Direct assessment focuses on learning outcomes including TEKS and indirect measures focus on overall program effectiveness and program level learning outcomes. The assessment process is focused on the student learning, professional development and curriculum review required to fulfill the schools mission. Differentiated Instruction; Improve Teaching and Learning All data collected drives differentiated instruction for students. Teachers will use student assessment and performance data to evaluate and inform instruction. Formative classroom assessment techniques are embedded in lesson plans. After covering a concept, teachers will pause and conduct a quick assessment activity to determine if students are tracking with the instruction. If they are, the class can proceed to the next topic. If not, teachers will have another activity related to that key concept available to use in the classroom or with individual students.


The data collected drives student instruction, professional development for faculty and staff and informs the curriculum review process. The Executive Director will review the manner in which teachers deliver instruction to the class, the content and design of the curriculum, the learning outcomes as they align with Texas Essential Knowledge and Skills standards. Findings from the review inform the professional development plan for teachers and coaching opportunities for faculty and staff. Formative Assessments, embedded within a lesson, check understanding of concepts and skills as they are presented. During instruction, teachers pause to engage students in quick-check tasks. Students receive corrective feedback if they answer questions incorrectly, allowing them to refine misconceptions early on in instruction. Core course assessments include a range of system-scoreable task types—including drag-and-drop, multi-select checkbox, fill-in-the-blank, number entry, and multiple choice. Interim Assessments occur at the end of each lesson. These curriculum-based quizzes assess students’ mastery of learning objectives and TEKS standards. Using Webb’s Depth of Knowledge and Bloom’s Taxonomy, items are classified based on their level of difficulty. These assessments include multi-select checkbox, drop-down, number entry, and multiple choice. For core courses each assessment has a threshold score of 70%. Students not achieving 70% are immediately offered coaching and, if necessary, supplemental instruction. Real time data allows teachers, students and administrators to track student progress towards the mastery of content. Summative Assessments are provided at the end of each unit and/or course to evaluate students’ overall performance. The core course cumulative exam consists of multiple-choice questions that build on main ideas and key concepts that are presented throughout every unit. These provide students with an opportunity to exhibit mastery and long-term comprehension of themes presented in a course and are aligned with TEKS standards. Prior to summative exams, students complete a full review of the key concepts contained in the unit and can return to lessons for practice where necessary. The multiple-choice format of the exam allows students to reinforce and relate to foundational concepts and to receive immediate feedback about which lesson content they may need to revisit for greater comprehension. Core course assessment items are designed to align to specific learning objectives in the Texas Essential Knowledge and Skills standards. Items are distributed across all difficulty levels and are categorized using Webb’s Depth of Knowledge and Bloom’s Taxonomy. Students experience all difficulty levels during assessment, from knowledge and understanding to application, evaluation and synthesis. Each core course assessment is designed to measure content-area achievement. Items are aligned to core course content material and represent the breadth of content described in current state standards. The assessments for core courses are content valid and reliable. Non-core, technology courses contains various assessments, which measure learning outcome mastery. These include tests, projects, labs, Student Professional Experience (SPE), e-portfolio work. Each course contains multiple assessment tools that allow teachers to know if students are learning, which students need supplemental instruction and, if applicable, a focus area for teacher professional development. The SPE is a real-world project, completed for a local organization where students in later quarter courses can apply their skills. The SPE is designed to build career ready skills for students. An example of a SPE would be setting up a computer network for a business or department or writing a web based application for a non-profit. These projects provide excellent summative assessment feedback for teachers. The e-portfolio is a web-based application and is used to capture a history of each students work. Students post their work and build a progressive history of documented achievement. The portfolio allows teachers to assess the growth in student learning and allows students to build a resume of work to demonstrate their career readiness. Data Collection and Monitoring Systems Core course reporting through various systems including Edgenuity, PEIMS, S3, Pinnacle and other student reporting systems helps teachers and administrator’s measure and monitor student engagement, progress, and achievement. Teachers and staff use this data to mentor, coach, and differentiate instruction to meet students’ diverse needs one-on-one or in small groups. The Edgenuity system enables families to have core course progress reports automatically e-mailed on a weekly or monthly basis. Information is collected through the student's life cycle of the starting from their initial interest in the school and continuing through their academic life, and ending in an alumni database. School staff adds to student information as they work with the students through each course. Data collected is used for both formative and summative assessments including: 1) All graded exams (unit level, mid-term, final) and graded projects and papers; 2) Capstone rubric data to assess program level learning outcomes; 3) Student Professional Experience outcomes; 4) Student work in a portfolio as evidence of their abilities; 5) Employment – job title, firm, starting salary. The assessments data collected align with ECA’s mission and with all of ECA’s goals. The anticipated results and expectations of the annual standards or measures of student achievement are embodied in ECA's goals. Each goal is specific, measurable, realistic and time-bound and measures student's mastery of TEKS. Each goal is aligned with the needs of the students ECA will serve and ECA’s mission. Each goal is listed below. 1. High School graduation rate will exceed the School Districts* four-year and five-year graduation rate.


2. The percentage pass rate for state administered exams will exceed that of the School Districts* pass rates. 3. At least 25% of students who enrolled in 11th grade and completed all terms at ECA will complete an associate's degree and 50% will earn at least one year of college credit. 4. All students who enrolled in 11th grade and completed their associate's degree with complete a Student Professional Experience. 5. The Employment to Graduation rate will be at least 70% for students that graduate with an associate's degree. *The "School Districts" is defined as the weighted average of the of the sending School District for the student tested for that goal. The intent is to determine if ECA is performing better than the School Districts where the students reside. The curriculum is evaluated on how well it facilitates the achievement of ECA's goals. Data and feedback from various sources inform the evaluation and revision cycle for curriculum. The ECA teachers will review the curriculum once every trimester and provide correction or modifications needed via the CMO's curriculum work order system. The Executive Director will regularly review the student performance statistics and identify any correlation with the curriculum. On a regular basis, the Executive Director and the CMO subject matter experts will review the overall curriculum, recommending updates as well as revisions to the instructional operations team at CMO. The CMO has a centralized curriculum development process. The courses are subjected to an ongoing review using data derived from the delivery of each course throughout the system. The CMO has a system wide curriculum committee, made up of academic staff, that reviews the data and makes recommendations for change. Curriculum revisions are managed by CMO subject matter experts and use existing college faculty to make revisions and write curriculum. Revisions are published system-wide. This centralized curriculum development approach allows the CMO to gather data from the delivery of each course through-out the system. Aggregate data informs curriculum revision and academic operational changes. This process has been in place for over a decade and has proven to be highly effective.

Community (The response for this section should not exceed two pages in length.) 1. Name the traditional ISD in which the proposed school will be located.

2. Describe the characteristics and population of the community to be served.

3. Outline the needs of the community not being met by the local school district or other area charter schools and describe how the proposed charter will close the gap and meet those needs, to include examples of what will set the charter apart and attract students.

TYPE YOUR RESPONSE IN THE NARRATIVE RESPONSE BOX BELOW. IT WILL EXPAND AFTER TABBING OUT OF THE FIELD.There are three proposed schools to be located within existing ITT Technical Institute campuses in the Houston area within the following respective Independent School Districts: ECA Houston North - Spring Independent School District ECA Houston West - Alief Independent School District ECA Houston South - Clear Creek Independent School District. The areas to be served are the respective fifteen-mile radii around each location. The demographics of these areas are generally similar to the Houston area as a whole. Further, it is believed that the student population of the Early Career Academy will come from the same neighborhoods where the current postsecondary student population resides. With that hypothesis, we are able to draw some comparisons between the total population and the more targeted subsets of households. In order to draw these comparisons, an analysis was done to identify and aggregate the census blocks/ neighborhoods (described as North, South, and West Focus Areas) from which current postsecondary students attend the existing campuses. Note, that it is expected that this unique educational offering may also attract students from a wider area. Although the focus area of analysis extends only 15 miles for each location, a broader area of a 50-mile radius was used for the mailing of impact letters. Following are the comparisons for each location. ECA North Focus Area: DATA POINT: North Focus Area / ECA North 15-Mile Radius % POPULATION BLACK OR AFRICAN AMERICAN: 22.3% / 18.7% % POPULATION HISPANIC OR LATINO: 39.9% / 40.9% % POPLUATION 25+ WITH EDUCATIONAL ATTAINMENT OF HIGH SCHOOL DIPLOMA OR LOWER: 69.8% / 68.3% MEDIAN HOUSEHOLD INCOME - WHITE: $63,654 / $63,822 MEDIAN HOUSEHOLD INCOME - BLACK OR AFRICAN AMERICAN: $40,797 / $36,894 MEDIAN HOUSEHOLD INCOME - HISPANIC OR LATINO: $45,084 / $40,962 ECA South Focus Area: DATA POINT: South Focus Area / ECA South 15-Mile Radius % POPULATION BLACK OR AFRICAN AMERICAN: 11.8% / 9.5% % POPULATION HISPANIC OR LATINO: 35.7% / 40.9% % POPLUATION 25+ WITH EDUCATIONAL ATTAINMENT OF HIGH SCHOOL DIPLOMA OR LOWER: 65.0% / 67.7%


MEDIAN HOUSEHOLD INCOME - WHITE: $66,147 / $64,374 MEDIAN HOUSEHOLD INCOME - BLACK OR AFRICAN AMERICAN: $49,879 / $44,704 MEDIAN HOUSEHOLD INCOME - HISPANIC OR LATINO: $47,812 / $44,875 ECA West Focus Area: DATA POINT: West Focus Area / ECA West 15-Mile Radius % POPULATION BLACK OR AFRICAN AMERICAN: 26.4% / 21.1% % POPULATION HISPANIC OR LATINO: 39.0% / 38.9% % POPLUATION 25+ WITH EDUCATIONAL ATTAINMENT OF HIGH SCHOOL DIPLOMA OR LOWER: 64.0% / 61.7% MEDIAN HOUSEHOLD INCOME - WHITE: $61,236 / $63,256 MEDIAN HOUSEHOLD INCOME - BLACK OR AFRICAN AMERICAN: $43,707 / $37,630 MEDIAN HOUSEHOLD INCOME - HISPANIC OR LATINO: $41,188 / $38,595 Similarly to the assessment of the area population demographics, analyses of area school performance was done to identify needs of the area high school student populations that ECA will help to meet. Campus performance data from 2013-14 was aggregated from the Texas Academic Performance Reports system. Some of those key findings follow for each proposed school location. ECA North: The 15-mile radius around ECA North contains approximately 66 schools with grade spans that include 11th and 12th grade students, with a combined student population of nearly 94,000. Of the 66 high schools, 7 of them have a 2014 Accountability Rating of "Improvement Needed." The Class of 2012 5-Year Extended Longitudinal Graduation Rate, combined for all schools with data reported, was 90.9%. Disaggregating the combined rate by ethnicity, the African American rate was 86.7%, Hispanic rate was 88.9%, and the rate for White students was 95.1%. The most relevant measure in the TAPR that the Early Career Academy intends to address is the low proportion of "College Ready Graduates". College Ready Graduates are defined in the TAPR as those who exceed the college-ready criteria on the TAKS exit-level tests, or the SAT or ACT test. In the focus area, only 56% of all graduates met the college-ready criteria, and the numbers were lower for African American and Hispanic students at 36% and 50%, respectively. As an educational option for students in the area, the Early Career Academy provides a career-oriented postsecondary outlet for students who are not necessarily prepared for a traditional four-year college. ECA South: The 15-mile radius around ECA South contains approximately 39 schools with grade spans that include 11th and 12th grade students, with a combined student population of nearly 55,000. Of the 39 high schools, 5 of them have a 2014 Accountability Rating of "Improvement Needed." The Class of 2012 5-Year Extended Longitudinal Graduation Rate, combined for all schools with data reported, was 94.2%. Disaggregating the combined rate by ethnicity, the African American rate was 92.0%, Hispanic rate was 92.8%, and the rate for White students was 95.8%. The most relevant measure in the TAPR that the Early Career Academy intends to address is the low proportion of "College Ready Graduates". College Ready Graduates are defined in the TAPR as those who exceed the college -ready criteria on the TAKS exit-level tests, or the SAT or ACT test. In the focus area, only 60% of all graduates met the college-ready criteria, and the numbers were lower for African American and Hispanic students at 42% and 53%, respectively. As an educational option for students in the area, the Early Career Academy provides a career-oriented postsecondary outlet for students who are not necessarily prepared for a traditional four-year college. ECA West: The 15-mile radius around ECA West contains approximately 116 schools with grade spans that include 11th and 12th grade students, with a combined student population of over 133,000. Of the 116 high schools, 15 of them have a 2014 Accountability Rating of "Improvement Needed." The Class of 2012 5-Year Extended Longitudinal Graduation Rate, combined for all schools with data reported, was 91.9%. Disaggregating the combined rate by ethnicity, the African American rate was 90.2%, Hispanic rate was 90.3%, and the rate for White students was 95.5%. The most relevant measure in the TAPR that the Early Career Academy intends to address is the low proportion of "College Ready Graduates". College Ready Graduates are defined in the TAPR as those who exceed the college-ready criteria on the TAKS exit-level tests, or the SAT or ACT test. In the focus area, only 58% of all graduates met the college-ready criteria, and the numbers were lower for African American and Hispanic students at 44% and 51%, respectively. As an educational option for students in the area, the Early Career Academy provides a career-oriented postsecondary outlet for students who are not necessarily prepared for a traditional four-year college. The Early Career academy offers a unique opportunity by offering a career technical education with the potential of earning a tuition-free Associate's degree simultaneously with completion of high school graduation requirements. The data from area high schools show that a majority of students are not well-prepared to be successful in traditional 4-year college. This opportunity can be especially valuable for motivated, hard-working students, many of whom may be the first in their families to earn a postsecondary credential, to work toward the concrete goal of a technical Associate's degree in a high-quality educational setting following a prescribed curriculum. The opportunity can be a fast-track approach to upward socioeconomic mobility. Recent research from the National Student Clearinghouse (High School Benchmarks Report 2014, National College Progression Rates) revealed that graduates in the class of 2013 coming from high schools with populations that were urban, lower-income, and high-minority enrolled in college at a rate of about 50%. Student from higher-income, lower-minority schools enrolled in college in rates ranging between 61% to 73%. The total high school populations in the respective focus areas have significant non-white populations (between 67%-83%) and substantial economically disadvantage populations (between 47% and 58%). In these same areas, the populations combined from district schools from major urban districts have minority populations between 88% and 96%.


In addition to research of area schools, the applicant team surveyed community members and employers around each of the proposed ECA locations to discern the potential student and employer interest in the school and 223 survey responses were collected. Some or the survey results follow. -82% Agree or Strongly Agree that they support the initiative to create a charter high school, The Early Career Academy, at ITT Technical Institute's campus. -84% Agree or Strongly Agree that a charter high school that allows students to pursue a high school diploma and an associate degree will be beneficial to the employers in the community. -88% Agree or Strongly Agree that with the rising cost of a college education, pursuing an associate degree while in high school at no cost to the student, is a desirable option for high school students in our community. The Early Career Academy will serve the community by offering the opportunity for students to earn a free, career-focused Associate’s Degree. Increasing educational attainment in the community will increase income potential and help to break the cycle of poverty.

Facilities (The response for this section should not exceed two pages in length.) 1. Provide a description of the proposed facility, to include an explanation of why it is suitable to serve the ages/

grades proposed, including any specialized space if any.

2. Describe any purchase or leasing arrangements and/or construction or renovations that must occur to ensure adequate facilities. Include detailed information about anticipated budget costs and financing arrangements.

3. Outline the student transportation plans.

TYPE YOUR RESPONSE IN THE NARRATIVE RESPONSE BOX BELOW. IT WILL EXPAND AFTER TABBING OUT OF THE FIELD.Each of the proposed facilities is a Texas approved and ACICS accredited ITT Technical Institute campus in Houston. Each campus serves an adult student population in the evening and is available for use by ECA during the day. Each facility was designed to deliver both core and technology courses and includes appropriate infrastructure and equipment to facilitate student learning. The campus has an internet café where students can gather at breaks and for lunch and a learning resource center where students can access research and learning materials as well as tutoring services. ECA will have access to the campuses Virtual Library which boasts a significant collection of materials specifically collected for the programs offered at the campus. ECA has access to the facility during daytime hours, in classrooms that will not be in use by postsecondary students. Selected Location Specific Facility Details: ECA North: 30,267 SF, 10 theory classrooms, 3 computer labs, 529 seats ECA South: 30,166 SF, 7 theory classrooms, 2 computer labs, 518 seats ECA West: 30, 842 SF, 12 theory classrooms, 3 computer labs, 551 seats The CMO will conduct an architectural review and ensure occupancy requirements will be met for ECA to conduct classes at the facility. Any modifications that might be required to secure occupancy authorization for the ECA would be provided by CMO prior to students starting classes. Prior to opening and serving students, each facility will have a Certificate of Occupancy with an "E" or Education rating. The facility plan provides high-quality, turnkey educational space to the Early Career Academy at a low, variable cost. Rent charges will be assessed to ECA on a per-pupil basis to provide support for facilities costs as the student population builds up over the 5-year projection period. The rent charge includes instructional equipment, infrastructure, and utilities. The rent charge calculation is simple and applies 50 SF per Pupil to the facility’s actual occupancy cost per square foot. The rental rate is based on the fair market value for that area. Rent for each facility is listed below. ECA North: $23.50 SF, $1,180 per student annually ECA South: $20.98 SF, $1,049 per student annually ECA West: $16.39 SF, $819.50 per student annually Transportation services will be provided to student populations where it is required by law including students with an IEP, disability or who are homeless. ECA will contract with a third-party transportation provider for these services.


Students (The response for this section should not exceed two pages in length.) 1. Outline goals for students and describe methods used to measure success toward each goal.

2. Describe the proposed charter school's admissions and enrollment policies, including advertising and recruitment plans, and how the receipt of applications beyond the maximum enrollment will be addressed.

3. Specify the proposed charter school's anticipated date of opening, and briefly describe the proposed school calendar and school day schedule, including the number of instructional hours provided per day.

TYPE YOUR RESPONSE IN THE NARRATIVE RESPONSE BOX BELOW. IT WILL EXPAND AFTER TABBING OUT OF THE FIELD.Goals and Measures of Success ECA has five distinct goals that are based on the student population that are specific, measurable, achievable, realistic and time-bound. These goals align with the mission of the school and the budget and will improve student learning and close the achievement gap for the neighborhoods they serve. The first goal is for students to graduate with their high school diploma. The percentage of students graduating within a four year and five years will be higher than the local School Districts* starting in year 3 of operation and thereafter. Second goal for students is to pass the State EOC assessment in US History and exceed the local School Districts* and state passing rates. Third, at least 25% of students who enrolled in 11th grade and complete all terms with ECA will complete the associates degree and at least 50% of these students will earn at least one year of college credits. This goal was informed from an Early College High School study which indicated that, nationally, 24% of Early College High School graduates earn an associate's degree and 44% earn one year’s college credit. This measurement will be applicable after operating for 6 terms and thereafter. Fourth, 100% of the students who enrolled in 11th grade and completed their associate’s degree will participate in Student Professional Experience (SPE). This experience will benefit each graduate prior to entering the workforce. Fifth, 70% of associate’s degree graduates will be employed in their field of study or a related field unless enrolling in a bachelor’s degree or military service. This percentage is pegged to the minimum for program review set by the independent institutional accreditor (ACICS) for ITT Technical Institute. This will be measured by November 1st following a June graduation. *The "School Districts" calculation is defined as the weighted average of the pass rates of the sending School Districts for the students testing for that goal. The intent is to determine if ECA is performing better than the School Districts where the students reside. Recruitment Process and Marketing Plan The Executive Director, teachers and staff with the assistance of the CMO will recruit students. The goal for annual recruiting of new students is 120 and the census goal for year two and beyond is 240 students. ECA students will likely come from the same areas of the community that the ITT Tech College students come from as ECA should resonate with the same population and serve that same community. The CMO’s marketing department will execute the communications plan. The school will advertise the open enrollment period using various media channels that may include radio, internet, email, direct mail and through tables at entrances to high volume retail establishments where available. The communication plan will be adjusted based on the recruitment results experienced by the CMO. This optimizes the schools resources by focusing money and time on what works. The Executive Director will also contact local ITT Tech staff, students, and graduates, local community leaders and high school guidance counselors to solicit their assistance in communicating ECA to their constituents. Much like a political campaign, this is a grass-roots effort lead by the Executive Director with the assistance of staff. Communication efforts funnel students and parents to Open Houses at the school. Students and parents will tour the facility, learn about the programs, and gain a better understanding of what ECA has to offer and if ECA is right for them. School’s Admission Policy ECA will ensure that its admissions policy complies with all State and Federal Laws. ECA will initiate a systematic, public, and documented recruitment process to ensure that all 11th grade students have an equal chance for admission. Students not considered 11th grade by their sending district cannot enroll. ECA will admit all students who submit a timely application for enrollment. Enrollment for each grade level is determined by building capacity and individual class sizes and is limited to 120 11th grade students and 120 12th grade students. Total school enrollment at full capacity is 240.


Open enrollment will begin in January and be completed by March 30th. A lottery will be held in April for any grade level(s) in which an excess of completed qualified applications have been received. The lottery will determine which students will be admitted. Notification of admission will be made to parents/guardian and failure to accept within a reasonable amount of time will forfeit admission. The remaining names will be drawn and placed on a waiting list in the order in which they were drawn for only that academic school year. If the number of applications received by the application deadline does not exceed the number of available seats in a grade, all applicants who submitted completed registration forms for that grade during the open enrollment period will be accepted in that grade. Students will be accepted for admission after the open enrollment period provided there is capacity in that grade and a complete application has been submitted. If a student has been accepted to the school but does not confirm enrollment within the appropriate time period, his/her name is automatically withdrawn and the next student on the waiting list may be enrolled. Waiting lists do not carry over into the next school year. Once enrolled, students are not required to reapply in subsequent academic years, but will need to complete information confirming their intent to return. Students who withdraw from ECA during the school year must reapply for admission and follow the procedures outlined above for new students. Calendar and Instructional Format ECA will open on August 15, 2016 for students. Teachers will report for in-service training prior to the start. The school will operate with a trimester configuration. Each trimester is made up of 12 weeks. There will be 180 days of instruction with 6 hours a day scheduled for classes on an A/B block schedule. The school day will begin at approximately 9:00 AM and end at 4:00 PM. Each class is approximately 90 to 120 minutes in length with a 30 minute lunch.

Faculty and Staff (The response for this section should not exceed three pages in length.) 1. Describe the process to be used to identify, recruit, and hire highly qualified and properly certified teachers.

2. Describe the process to be used to identify, recruit, and hire individuals who will lead the school from an administrative level beginning with the superintendent.

3. Describe the process to be used to identify, recruit, and hire individuals with the expertise necessary to serve all other roles to be filled as the proposed charter grows to capacity in year five.

4. Outline the evaluation procedures and criteria to be used when evaluating both educators and administrators.

5. Provide the professional development opportunities that will be offered to faculty, staff, and administrators of the proposed charter.

TYPE YOUR RESPONSE IN THE NARRATIVE RESPONSE BOX BELOW. IT WILL EXPAND AFTER TABBING OUT OF THE FIELD.Staff recruitment, including highly qualified and properly certified teachers will be led by the Executive Director with the assistance of the CMO. The Executive Director will engage the human resource department of the CMO to recruit for all open and budgeted positions. Approved job descriptions will be posted on various recruitment websites on a local, regional and national level, depending on the position. The resume screening is the first step in the new candidate hiring process. The screening process includes a review of the following items: • Educational background • Proper certification/licensure (if appropriate) • Experience in similar positions or for similar organizations • Stable work history • Accurate, neat and organized resume and application materials • Any other qualification items germane to the position The screening process narrows the number of candidates. The narrowed list of candidates is then interviewed in person at the school. Favorable candidates are offered the position and upon the candidate’s acceptance of the conditional offer, the appropriate reference and criminal background checks are executed. Formal employment offers are sent to candidates post-background checks. Selection of the Superintendent and the Executive Director follows the same plan as that of the staff with the exception that the process will be led by the CMO operations executive. The CMO will identify candidates for these two positions and present them to the board for final approval. Upon board approval, the CMO will hire both positions. The Superintendent will be hired by the Sponsoring Entity, here the CMO is simply processing the hire on behalf of the Charter Holder. The Executive Director is a directly


hired by the CMO and is employed by the CMO. Staff hiring over the first five years of operation is conducted by the Executive Director using the same process and consists of hiring additional teachers as needed. ECA is a small school with approximately 240 students at full capacity. Therefore, no additional administrative staff hiring will be needed. Selection of Teachers Initial interview: The initial interview establishes a basis of rapport, verification, and further screening. Questions are asked of the candidate to determine knowledge, attitude, and skills that best match the ECA philosophy. The initial interview can take place on campus or over the phone with the hiring manager. The interview is summarized using an evaluation tool that scores the candidate on a Likert scale to determine a best match. Either of these modes coupled with the resume provides essential information to proceed further with the hiring process. Background check: Candidates whose qualifications best match the requirements are subject to a background check. The background check is completed by a third-party provider and verifies the candidate’s work history accuracy and any defaults on federal student loans. Any criminal background check as may be required based on the position will be performed prior to any hire. Evaluation of teaching effectiveness: If the background check returns as cleared, the prospective faculty member is asked to demonstrate his or her teaching effectiveness before a panel composed of the Executive Director and members of the teaching staff. This evaluation step is referred to as a chalk talk. Candidates must demonstrate quality facilitation skills in a mock classroom, mastery of content area, and effective use of technology. Teaching effectiveness is evaluated by the panel using an evaluation tool on a Likert scale. Based on consensus of the panel, the prospective faculty member is selected for hire with or without reservations, or no hire at all. If a candidate is selected for hire, an offer is extended. The offer is approved with all details clearly defined, and is either extended in person on the phone and in writing. This process for recruiting and selecting teachers is comprehensive and time intensive, but it allows the ECA to achieve the goal of hiring the best teachers for our students. Educator Evaluation: The Executive Director (ED) is the school leader and functions as the Chief Academic Officer and is employed by the CMO. ED will hire and supervise all teachers and will implement the teacher evaluation process. Throughout the academic year teachers are evaluated on various criteria and these measurements are weighted to derive an annual performance rating. The process uses student data from the teacher’s actual students and a qualitative review of the teacher’s performance, conducted by the Executive Director. Additionally, teachers are evaluated on the various professional development activities conducted throughout the year. The process serves to support teachers by providing unambiguous, data-driven feedback combined with mentoring and coaching from the Executive Director. The feedback serves to inform the professional development activities, which the teacher is given credit for performing. The evaluation process is formal and results in prepared and performance driven teachers and a higher level of student learning. A teacher’s overall performance is measured by four performance factors, each with an assigned weight, as follows: 1) Engagement Rate, 2) Student Satisfaction, 3) Professional Growth, 4) Competencies: Integrity, Ethics, Organization, Planning, Persuasion, Influence, Problem Solving and Motivation of Others. Each area is weighted and these weights are used in the calculation of a teacher’s overall performance rating during the year-end in accordance with the CMO’s performance management policy. Executive Director Evaluation: The CMO will evaluate the Executive Director based on the achievement of the schools goals as outlined in the charter application and/or other metrics as deemed necessary by the CMO. Superintendent Evaluation: The Board will evaluate the Superintendent based on the achievement of the goals established at the beginning of the year. Professional Development: The Executive Director will establish and maintain an individual professional development plan for each instructional employee. Professional development is based on analyses of student achievement data and instructional strategies and methods that support the ECA curricula. Professional learning will be connected to the specific performance data for the students to whom the teacher is assigned. It will be aligned with the teacher’s level of development; and will contain clearly defined professional learning goals designed to improve student achievement and changes in the educator’s practices resulting from professional learning. The Executive Director and teachers will consider the academic progress of their students in determining what professional learning is needed that will increase the learning of their students. ECA will provide inservice activities coupled with follow-up support appropriate to accomplish the schools improvement goals and standards. The inservice activities for teachers focus on analysis of student achievement data, ongoing formal and informal assessments of student achievement, identification and use of enhanced and differentiated instructional strategies that emphasize rigor, relevance, and reading in the content areas, enhancement of subject content expertise, integrated use of classroom technology that enhances teaching and learning, classroom management, parent involvement, and school safety.


School /Governing Board (The response for this section should not exceed two pages in length.) 1. List the sponsoring entity board members and their roles on the board. Include any past or current charter school

experience and any strengths or experiences each individual brings to the proposed charter.

2. Describe the staffing and governance structure of the proposed charter school.

TYPE YOUR RESPONSE IN THE NARRATIVE RESPONSE BOX BELOW. IT WILL EXPAND AFTER TABBING OUT OF THE FIELD.The following local community members serve on the Board. All of board members live in the Houston area. Christine Gray, Board Member, serves as Secretary, has experience in non-profit board administration and extensive experience in financial administration. Ms. Gray is a successful fundraiser, grant writer and researcher and has experience in marketing and recruitment, mediation and problem solving. Ms. Gray has over a decade of experience working in a post-secondary institution. All of these skills make for an excellent Board Member. Cliff Blackerby, Board Member, serves as Chairman, spent seven at the Region 4 Education Service Center as Director. Dr. Blackerby has experience on five different boards and has a PhD in Education Human Resource Development and an MBA. Dr. Blackerby's is a retired US Army Reserve Colonel. John S. Wood, Board Member, serves as Treasurer, has extensive board experience and has served on various boards including serving as chair of Career Colleges and Schools of Texas (CCST) and the Texas Guaranteed Student Loan Corporation’s Lender/School Advisory Board (TGSLC). Mr. Wood has also served as the president of the Association of Commercial Diving Educators (ACDE). Mr. Wood is the President of The Ocean Corporation and has operated a post-secondary institution for 26 years. Collectively, the experience and expertise in education, finance, budgeting, operations and governance provides strong evidence that the governing board meets the qualifications to provide effective governance for the proposed school. The Board’s primary purpose is to provide governance and oversight of ECA and consistent with Texas Law. The board applies for and holds the charter granted by the authorizer. In accordance with the organization’s Bylaws, the Board of Directors manages all business of the corporation. Accordingly, the Board's duties include hearing and deciding grievances, adopting and amending the budget, overseeing the disposition or safekeeping of public records, adopting policies governing charter school operations, approving audit reports and selects, employs, directs, evaluates, renews, non-renews, terminates, and sets compensation for the CEO/Superintendent. All other school activities are completed by the charter management organization. The non-profit corporation established to operate the charter school does not have any employees with the exception of the CEO/Superintendent. The Board of Directors governs the school and outsource the daily management of the school to a CMO. The Board holds the CMO accountable for the schools performance. ED hires and manages all direct reporting staff members including the guidance counselor and teachers and is responsible for the prescription and execution of all professional development. The Executive Director (the school leader) executes the mission and vision of the Early Career Academy; leads and ensures excellence in teaching, student learning and student development; promotes community support and maintains efficient and effective operations of ECA. The CMO owns and operates ITT Tech where ECA operates. Select, existing management and staff of the local ITT Tech will assist the ECA Executive Director in the management of the school. A brief description of the College staff that assist ECA are: College Director – provides daily management oversight for the college and can provide necessary resources, as needed, to the Executive Director. Registrar – assists with class scheduling. Dean – assists with college courses and college faculty resources. Director of Career Services – assists with SPE arrangements and graduate employment. Systems Support Technician – maintains computer networks and systems. Community Relations – builds and maintains community relationships. Additional CMO support staff reside in a central facility and assist with various back office functions. These include academic and curriculum support, accounting, regulatory, purchasing, human resources, regulatory and legal support.


Financial Information (The response for this section should not exceed three pages in length.) 1. Describe the anticipated expenses that will be incurred during budget year zero, prior to the first day of serving

students and the source of funding that will be utilized to meet those expenses.

2. Indicate the total amount and source of funds, property, or other resources expected to be available in budget years zero through five, through banks, lending institutions, corporations, foundations, grants, etc. Indicate which are already secured and which are anticipated. (Include evidence of firm commitments if possible). Detail plans for meeting financial needs if the anticipated revenues are not received or are lower than the estimated budget.

3. If applicable, list the services that will be outsourced to a management company or other service provider, such as back office, food services, and transportation as required by statute, gifted and talented, and English language learners, etc. Include information about each provider.

TYPE YOUR RESPONSE IN THE NARRATIVE RESPONSE BOX BELOW. IT WILL EXPAND AFTER TABBING OUT OF THE FIELD.The Early Career Academy plans to open two Houston area locations in year one and a third in year three. Prior to opening to students, the two Early Career Academy campuses are anticipated to spend $277,500. Details of expenses and salary and benefit assumptions are included in the Financial Plan Workbook (Attachment F3). Following is a summary of year zero expenses. Salary/Benefits: $187,500 - Superintendent/CEO and campus Executive Directors will be hired approximately five months prior to opening; Administrative Assistants will be hired two months prior to opening; Teachers will be hired one month prior to opening. Student Recruitment/Marketing: $70,000 - Estimate includes advertising (print collateral, radio advertising, print advertising, and direct mail), community outreach events, and open houses. Legal Fees: $20,000 - Estimate includes board counsel for initial establishment / review of charter school bylaws, policies and vendor contracts. There will be no facility expenses to the campuses prior to opening. Because of the unique arrangement of co-locating ECA with ITT Technical Institute campuses, rent will not need to be paid until classes begin under the proposed leasing agreements. The proposed leases will allow for turnkey educational space and equipment on a per-student basis, thus eliminating facility cost as an obstacle that challenges many start-up charter schools. Access to extensive Charter Management Organization resources (e.g. student scheduling, information systems, purchasing, marketing support, etc.) will also help to keep costs low in year zero and through the bridge period until the schools are up to capacity. In year zero, there will be $150,000 per campus ($300,000 total) available in start-up grant funding from ESI Service Corp. to fund pre-operating expenses (letters of financial commitment are included in Attachment F7). Other grants may be pursued by the board, but will not be relied upon for pre-operating funding and are not included in the projected financial plan. Should pre-operating expenses exceed budgeted amounts; the board may pursue additional financing through community donations. Given the proposed structure of co-locating the facility and in-kind support from the CMO, it is highly unlikely that pre-operating expenses will exceed budgeted amounts. In years one through five, it is projected that revenue will consist of state allotment funding (based on assumptions detailed in Attachment F3) and credits from the CMO for services and fees associated with the proposed contract. In order to be conservative, the only federal funding included in the financial plan is a National School Lunch Program reimbursement. It is assumed that Title I federal funds would be used in a targeted manner, and as such are not assumed to be available as general revenue. State allotment funding is forecast based on 80% average daily attendance (192 students in year one and 384 students in year two, 480 in year three will the addition of a third location, and 576 in years four and five). Of the projected enrollment, 5% of students are assumed to be enrolled in mainstream special education, 50% percent are assumed to qualify for compensatory education funding, and 6% of students are assumed to be enrolled in ELL programs. Special education and compensatory education assumptions are based on weighted average enrollments from the high schools within 15 miles of each proposed locations and ELL assumption is based on the average of Houston ISD (9%) and Alief ISD (3%) ELL enrollment rates for grades 11 and 12. Note that the compensatory education enrollment rate of 50% is conservative, as the economically disadvantaged rates for urban district high schools in the focus areas ranges from 70% to 83%. The conservative financial plan assumes no inflation of the per-pupil state allotment funding over the projection period. Projected revenues from state allotment funding follow ($000’s):


Year one: $2,610 (State allotment = $1,587; NSLP = $54; In-kind grant = $968) Year two: $3,899 (State allotment = $3,174; NSLP = $110; In-kind grant = $615) Year three: $4,968 (State allotment = $3,968; NSLP = $137; In-kind grant = $863) Year four: $5,672 (State allotment = $4,761; NSLP = $165; In-kind grant = $746) Year five: $5,605 (State allotment = $4,761; NSLP = $165; In-kind grant = $679) The source of funding from in-kind grants comes from the Charter Management Organization. The terms and details of the grants will be outlined in the final CMO contract. The CMO provides similar grants for one currently operating charter school in another state. Services planned to be outsourced include school nurse services, specialized special education services (beyond those provided by the dedicated special education teachers), and school lunch services. Reasonable expense assumptions for each of these services are included in the financial plan, with vendors to be selected upon charter approval. The proposed Charter Management Organization is ESI Service Corp., which is based in Indiana and is owned by ITT Educational Services, Inc., a publicly traded education provider that also owns the ITT Technical Institute system. The substantial resources of ITT Educational Services – Shared Services will be available to assist ECA in evaluating the effectiveness and fidelity of the implementation of the school’s education model, together with other school requirements. Services that will be provided by the proposed management company, ESI Service Corp., include Human Resources – Recruitment, Benefits Administration, Payroll Services, Student Information Systems, Management Reporting Services, Class Scheduling, Information Technology, and Curriculum Management. Additionally, all school staff will be employed by the CMO. The management contract would cover ongoing school evaluation using a variety of data that would continually monitor and suggest changes to instruction, curricula, school climate, school operations, and fiscal spending. These processes are utilized to assist over 130 ITT Tech post-secondary colleges and include proven methodologies specifically designed to produce results using an evidenced based data-driven approach.

Attachment A1

Applicant Information Session Documentation

Attachment A2

Published Notice of Public Hearing

07601978

Polygonal Line

1

Dax Meredith at HQ

From: Nicole Elam at HQSent: Tuesday, December 09, 2014 2:46 PMTo: Dax Meredith at HQSubject: Fwd: ITT Educational-Houston Chronicle Classifieds Ad Proof SystemAttachments: image001.jpg; ATT00001.htm; JH26178189K0.pdf; ATT00002.htm

FYI Sent from my iPhone Begin forwarded message:

From: Classified Legals <[email protected]> Date: December 9, 2014 at 2:43:44 PM EST To: "Nicole Elam at HQ ([email protected])" <[email protected]> Cc: Classified Legals <[email protected]> Subject: ITT Educational-Houston Chronicle Classifieds Ad Proof System

Nicole, please see attached proof and quote below for 1 day, ad is on hold pending prepayment and approval, deadline for Wednesday publication is today at 3pm, thanks Carolyn Thank you for choosing the Houston Chronicle. This email serves as your ad proof. Please check that all your information is correct. AD# 26178189 Version: 0 Ad Cost: $ 464.34 First Run: Dec 10 2014 Account# 0 Customer: ITT EDUCATIONAL SERVICES, INC. BBox #: 0 Client: # Tears: 0 Address1: 13000 N. MERIDIAN STREET PO #: City: CARMEL State: IN Zip: 46032 Phone: ( 317 ) 706 - 9409 Contact: ----------------------------------------------------------------------------- Class: Legal Notices Product Zone Days Start Stop Wdth Depth ------- ---- ---- ----------- ----------- ---- ----- Chronicle Classifieds 1 Dec 10 2014 Dec 10 2014 1 34 L Affidavit 1 Dec 10 2014 Dec 10 2014 1 34 L ----------------------------------------------------------------------------- Total Cost = 464.34 Balance Due = 464.34 Thank you, and have a wonderful day

Attachment A3

Certified Mail Receipts

Attachment E1

Course Scope and Sequence

Attachment E1 – Education Plan Page ___

ECA Overview

Texas Essential Knowledge and Skills Alignment with ECA Courses

Weekly Schedule; Daily Schedule for Students; School Calendar

Scope and Sequence (U.S. History) with Lesson Plan

ECA students enroll when starting the 11th grade and complete 11th and 12th grade at ECA. The mission of the ECA is to deliver to students the opportunity to earn both a high school diploma and an associate’s degree concurrently. To facilitate the mission, ECA will adopt the ITT Tech college curriculum and enhance that curriculum to make certain it meets the TEKS requirements for the state’s high school foundation diploma with endorsement options in Business and Industry and/or Multidisciplinary Studies. The associate’s degree general education coursework serves as the basis for the high school core academic content areas for 11th and 12th grade. Additional courses and course content, sourced from state approved publishers, are added to fulfill the requirements for high school. ECA will meet the statutory requirements for awarding a high school diploma with at least one endorsement.


Concentration: Software Development Concentration: Network Systems Administration

Texas Foundation High School Graduation Plan 22 credit hours plus 4 additional credit hours for endorsements

SEC

ON

DA

RY

Gra

de

English Math Science Social Studies

PE Languages

Speech Fine Arts

Career & Technology Education Courses

9 English 9 (1) Algebra I

(1) Biology

(1) World History

(1)

PE (1) Fine Arts (1)

Languages other than English (1)

10 English 10 (1) Geometry

(1) Chemistry

(1) World

Geography (1)

Languages other than English (1)

Speech (.5)‐ Proficiency

11 English III

Composition (1) Algebra II

(1) Physics

(1) U.S. History (1)

See Concentration

Courses (Below)

12

World Literature (.5),

Communications (.5)

English IV (1)

Probability and

Statistics (1)

Elective Science

Adv.

Economics (.5) US Government

(.5) Group Theory

(Topics in Sociology) (.5)

See

Concentration Courses (Below)


Program of Study Courses (required for an Associate’s degree)

Software Development Technology Network Systems Administration

Computer Structure and Logic

Introduction to Programming Introduction to Application Design and Development

Creating Websites Using HTML and CSS Creating Websites Using HTML5, CSS3 and JavaScript

Introduction to Java Programming

Introduction to Mobile Operating Systems

Introduction to Database and XML with jQuery

Application Development Using Java I

Application Development Using Java II

Social Networking Applications and Technology

Software Development Capstone Project

Computer Structure and Logic

Introduction to Networking

Client‐Server Networking I

Physical Networking

Client‐Server Networking II

Linux Networking

Introduction to Information Security

IP Networking

Email and Web Services

Network Systems Administration Capstone Project

Introduction to Programming

Database Concepts

ECA provides all courses required to complete a high school diploma including end of course exams as required in House Bill 5 in US History. ECA will administer the STAAR testing in English III and Algebra II in 2016. Students that need courses normally taught in previous grades or special services will complete all requirements for graduation at ECA. Students that need credit recovery will complete their work at ECA. ECA is prepared to meet student’s needs with courses at any step along the educational path between 9th and 12th grade, as long as the student has met the criteria for being a junior in high school. All students will need to meet one of the following options for either a Business and Industry endorsement or Multidisciplinary endorsement: 1) Follow the coherent sequence of courses required for completion of the associate’s degree program requirements in Network Systems Administration or Software Development. This is the preparation criterion for entering the workforce successfully. 2) Complete four credits in each of the four foundation subject areas to include English IV and chemistry and/or physics. ECA will adjust high school graduation requirements to be compliant with the TEKS standards.

ECA’s curriculum provides simultaneous credit for many of the courses students take to fulfill graduation requirements. To facilitate the completion of courses required to fulfill an associate’s degree, upon enrollment, students select a program of study. Each program of study exposes students to a body of knowledge with courses getting progressively deeper in prerequisite fashion culminating with a capstone course. ECA will offer two programs of study that are in demand by local employers. Initially, ECA will offer Software Development and Network Systems Administration. These program offerings may change in the future based on employer demand and student interest. The ITT Tech associate’s degree programs include both Technical and General Education courses as specified by their national accrediting body, the Accrediting Council for Independent Colleges and Schools (ACICS). The Technical courses are ITT Tech courses currently taught in the Network Systems Administration and Software Development Technology programs.


In prerequisite fashion, courses build on knowledge gained in previous coursework. Many of the courses have a hands‐on lab component allowing students to apply what they have recently learned in the classroom. Additionally, each program contains a Student Professional Experience (SPE). Embedded in later courses, these are projects completed for a local organization and allow students to apply what they have learned to solving a real‐world problem. This applied learning approach helps prepare students for entry‐level jobs in their field of study. SPE’s also serves as a summative assessment tool and informs curriculum and academic delivery reviews. This assessment is critical because ECA holds itself accountable to an employment to graduate metric, which tracks the number of graduates employed in their field of study.

ECA will be successful fulfilling its mission of helping students earn both a high school diploma and a post‐secondary degree, partly through the design of its schedule. Students will be required to attend school longer and to take a rigorous curriculum designed to expose them to the career ready skills necessary to be successful in a technology related position upon graduation. Students will be provided with additional time for support and supplemental instruction to help them succeed. If students do not succeed in passing the college course work on the regular schedule they will be placed in the high school core only to complete their high school diploma. All available sources will be given to students who are struggling with any course material at ECA. ECA Instruction Time ECA will operate a 182‐day calendar with three semesters, thus surpassing the requirements of [TEXAS EDUCATION

CODE ANN. §§ 25.081, 0811] by 2 instructional days. ECA will have 6 hours of daily instruction or 360 minutes. The ECA calendar complies with Texas Education Code for the hours/minutes of instruction for the grades it serves, 11 and 12. Students will follow a weekly schedule where the same classes meet on Monday, Wednesday and Friday and the following week meet on Tuesday and Thursday. Each class session lasts 2 hours and each course has 5 sessions per week over the trimester. The table below depicts the weekly schedule listing daily instructional minutes dedicated to each core content area for each grade level. Instructional minutes for each course: 120 Week Monday Tuesday Wednesday Thursday Friday

One

1. Algebra II 2. Composition

(Eng. III) 3. Economics

US History Intro to Programming Physics

Algebra II Composition (Eng. III) Economics

US History Introduction to Programming Physics


Two 4. US Government 5. Introduction to

Programming


US History Introduction to Programming


US History Introduction to Programming

This schedule allows students to have 62 hours of instructional time for a core course over a trimester. This allows ECA to award the student .5 credit hours for the course. Students have time in this schedule for 6 core or elective courses concurrently. Daily instruction, outlined in the table below, provides for 120 minutes of instruction for each core and elective

course offered that day. Over a two‐week period, a class will have met 5 times for 600 instructional minutes.

Students take 6 core or elective courses concurrently.


Typical 11th Grade Daily Schedule

Hours Blue Minutes White Minutes

8:15‐8:30 Homeroom Homeroom

8:30‐10:30 Class A ‐ Composition 120 Class D – US History 120

10:30‐12:30 Class B ‐ Algebra II 120 Class E – Introduction to Programming 120

12:30‐1:00 Lunch Lunch

1:00‐3:00 Class C ‐ Economics 120 Class F (Course Recovery as Needed for Students – 120 min.)/ Physics

120

3:00‐4:00 After‐school activities After‐school activities

Total Daily 360 360 Typical 12th Grade Daily Schedule

Hours Blue Minutes White Minutes

8:15‐8:30 Homeroom Homeroom

8:30‐10:30 Class A ‐ Literature 120 Class D – Application Development using Java I 120

10:30‐12:30 Class B ‐ Statistics 120 Class E – Introduction to Database and XML with jQuery

120

12:30‐1:00 Lunch Lunch

1:00‐3:00 Class C ‐ Group Theory

120 Class F – Digital Lab 120

3:00‐4:00 After‐school activities

After‐school activities

Total Daily 360 360 Key School Dates for 2016‐2017 DRAFT

Monday, August 15, 2016 First Day of School

Monday, September 5, 2016 Labor day Holiday

Thursday, October 20, 2016 ‐ Fall Break

Friday, October 21, 2016

Thursday, November 10, 2016 End of 1st Trimester

Friday, November 11, 2016 Veterans Day ‐ Holiday

Monday, November 14, 2016 First Day of Second Trimester

Thursday, November 24 ‐ Thanksgiving Break

Friday, November 25, 2016

Monday, December 19 ‐ Winter Break

Monday, January 2, 2017

Tuesday, January 3, 2017 School reopens

Monday, January 16, 2017 Martin Luther King ‐ No School

Monday, February 20, 2017 Presidents Day ‐ No School

Friday, February 24, 2017 Last Day of Second Trimester

Monday, February 27, 2017 First Day of Third Trimester


Monday, April 10 ‐14, 2017 Spring Break

Monday, May 29, 2017 Memorial Day ‐ No School

Wednesday, May 31, 2017 Last Day of School


2016‐2017 SCHOOL YEAR CALENDAR

July 2016 August 2016 September 2016

M Tu W Th F S Su M Tu W Th F S Su M Tu W Th F S Su

01 02 03 01 02 03 04 05 06 07 01 02 03 04

04 05 06 07 08 09 10 08 09 10 11 12 13 14 05 06 07 08 09 10 11

11 12 13 14 15 16 17 15 16 17 18 19 20 21 12 13 14 15 16 17 18

18 19 20 21 22 23 24 22 23 24 25 26 27 28 19 20 21 22 23 24 25

25 26 27 28 29 30 31 29 30 31 26 27 28 29 30

October 2016 November 2016 December 2016


01 02 01 02 03 04 05 06 01 02 03 04

03 04 05 06 07 08 09 07 08 09 10 11 12 13 05 06 07 08 09 10 11

10 11 12 13 14 15 16 14 15 16 17 18 19 20 12 13 14 15 16 17 18

17 18 19 20 21 22 23 21 22 23 24 25 26 27 19 20 21 22 23 24 25

24 25 26 27 28 29 30 28 29 30 26 27 28 29 30 31

31

January 2017 February 2017 March 2017


01 01 02 03 04 05 01 02 03 04 05

02 03 04 05 06 07 08 06 07 08 09 10 11 12 06 07 08 09 10 11 12

09 10 11 12 13 14 15 13 14 15 16 17 18 19 13 14 15 16 17 18 19

16 17 18 19 20 21 22 20 21 22 23 24 25 26 20 21 22 23 24 25 26

23 24 25 26 27 28 29 27 28 27 28 29 30 31

30 31

April 2017 May 2017 June 2017


01 02 01 02 03 04 05 06 07 01 02 03 04

03 04 05 06 07 08 09 08 09 10 11 12 13 14 05 06 07 08 09 10 11

10 11 12 13 14 15 16 15 16 17 18 19 20 21 12 13 14 15 16 17 18

17 18 19 20 21 22 23 22 23 24 25 26 27 28 19 20 21 22 23 24 25

24 25 26 27 28 29 30 29 30 31 26 27 28 29 30

First and Last Day of School Holiday/Break (staff & students) Trimester starts

Teacher training (after school) Teacher Training (no school) Trimester ends


2016‐2017 Early Career Academy Scope and Sequence

US History Since 1877

The recommended number of class periods can be extended if necessary for differentiated instruction.

Standard Vocabulary (Textbook Documentation)

Documentation adapted from HISD, Alief ISD, Aldine ISD, Spring ISD, Humble ISD, and Georgetown ISD

All lessons and units have test, quizzes and summations built into the format. (Type of Standard – State Process Standard (SPS); State Readiness Standard

(SRS); State Supporting Standard (SSS)

Unit # of Classes Beginning 8/15/16 –

9/23/16

Texas Essential Knowledge and Skills Expectations Resources

113.41 United States History

Gilded Age – Three part unit uses Economic, Social and Political concepts to explore the impact of expansion, industrialization, immigration and urbanization. These impacted many groups including Native Americans, workers, and businesses in the late 19

th century.

6 – 90 minute classes Economic –113.41.3B – Analyze economic issues as industrialization, the growth of railroads, labor unions, farming, cattle boom, entrepreneurship, free enterprise, and the pros and cons of big business. (SRS) 113.41.12A – Analyze the impact of physical and human geographic factors on the Klondike Gold R113.41., the Panama Canal, settlement of the Great Plains, and the levee failure in New Orleans after Hurricane Katrina. (SRS) 113.41.13A – Analyze the causes and effects of changing demographic patterns resulting from migration with our country, including the western expansion, rural to urban migration, the Great Migration and Rust Belt to the Sun Belt movement. (SRS) 113.41.15A – Describe the economic impact of the Transcontintental Railroad and the Homestead Act had to the closing of the frontier in the late 19th century. (SSS) 113.41.27A – Explain and describe the effects of scientific discoveries and technology had on the development of the US economy in terms of

E‐BookVideo Reading of Declaration of Independence Debate on pro‐and con of big business; Settlements; Expansion Essay work Maps and discussions with project presentations. Vocabulary reviews daily.


electric power, telephone and satellite communications, petroleum based and steel productions and computers. (SRS) 113.41.29B – Analyze information by sequencing, categorizing, identifying cause and effect relationships, finding the main idea, summarizing, making predictions, drawing inferences, and drawing conclusions. (SPS) 113.41.30A – Create written, oral and visual presentations representing on the topics in this unit. (SPS) 113.41.30B – Use correct social studies terminology to explain historical concepts from this era. (SPS)

Part 2 of the Gilded Age

Social/Cultural Issues 113.41.3C – Analyze social issues that affect women, minorities, children, immigrants, urbanites, socialites, and philanthropy of industrialists.(SRS) 113.41.3D – Describe the optimism of the immigrants who wanted a better life in US. (SSS) 113.41.6A – Analyze causes and effects of immigration, Social Darwinism, race relations, prohibition, women and nativism.(SRS) 113.41.13B – Analyze the causes and effects of changing demographics resulting in legal and illegal immigration throughout the US. (SSS) 113.41.15C – Explain how the US foreign policies affected economic issues such as the Chinese Exclusion Act of 1882, the Open Door Policy, Immigration Quotas and Dollar Diplomacy. (SSS) 113.41.24B – Evaluate the contributions of political and social leaders in the US such as Andrew Carnegie, Billy Graham, Sandra Day O’Connor, Hillary Clinton, Barak Obama, Barry Goldwater and George W. B113.41.. (SSS) 113.41.29A – Use a variety of sources from primary and secondary to acquire information and analyze historical questions that will impact US culture today. (SPS)

E‐bookVideos One on One instruction Articles from different authors giving views on social issues in the late 19

th century. Copies of each Act with documentation from the writers


113.41.30B – Use social studies terminology to explain historical concepts correctly. (SPS)

Part 3 of the Gilded Age

Political Issues 113.41.3A – Analyze political issues such as Indian policies, civil service reform, populism and the growth of political machines. (SRS) 113.41.15B – Describe the changing relationship between private businesses and the federal government, including the costs and benefits of laissez‐faire, anti‐trust acts, the Interstate Commerce Act, and the Food and Drug Act. (SSS) 113.41.29A – Use a variety of sources primary and secondary to find information and to analyze the historical questions and answers from these sources. (SPS) 113.41.29B – Analyze information by sequencing, categorizing, identifying cause and effect relationships, compare and contrast, main idea, summarize, make predictions, draw inferences and conclusions from the information given.(SPS) 113.41.30B – Use correct terminology in social studies to explain historical concepts. (SPS)

MapsE‐Books Video’s Research paper Written Essays Debates News Articles TV coverage of issues Newspapers Magazines

Unit 2 – Age of Imperialism and Reform This is a two part unit. The US reformers made every effort to correct economic and social abuses of the Gilded Age in the early part of the 20

th century. The US entered a new historical era of

6 – 90 minute class periods

Reform: Populism/Progressivism 113.41.5A – Evaluate the impact of Progressive Era reforms, including referendum, recall and the passage of the 16th, 17th, 18th and 19th amendments. (SRS) 113.41.5B – Evaluate the impact of muckrakers and reform leaders such as Ida B. Wells, W.E.B. Dubois, Upton Sinclair and Susan B. Anthony on US society. (SSS) 113.41.5C – Evaluate the impact of third parties such as the Populist and Progressive on US society. (SSS) 113.41.14B – Identify the roles of governmental entities and private citizens in managing the environment as with the establishment of the

E‐bookVideo Instruction Class Discussions Written Projects Copies of amendments Newspaper Articles Copies of all Acts


expansionism beyond the natural borders of the country. The American imperialism lead to involvement in the Spanish‐American war, becoming politically set with policies in Latin America and Asia and finally putting the US into WWI.

National Park System, the EPS (Environmental Protection Agency and the Endangered Species Act. (SSS) 113.41.15B – Describe the changing relationship between the federal government and private businesses, the costs and benefits of laissez‐faire, anti‐trust acts, the Interstate Commerce Act and Food and Drug Act. (SRS) 113.41.15E – Describe the emergence of monetary policy in the US, including the Federal Reserve Act of 1913 and the shifting trend from gold to flat money. (SSS) 113.41.26D –Identify the social, political and economic contributions of women such as Jane Addams, Eleanor Roosevelt, Dolores Huerta, Sonia Sotomayor Frances Willard, Oprah Winfrey and Hillary Clinton. (SSS) 113.41.29A – Use a variety of sources primary and secondary to find information and to analyze the historical questions and answers from these sources. (SSS) 113.41.29B – Analyze information by sequencing, categorizing, identifying cause and effect relationships, compare and contrast, main idea, summarize, make predictions, draw inferences and conclusions from the information given. SPS) 113.41.30B – Use correct terminology in social studies to explain historical concepts (SPS)

Part 2 – Unit 2 Foreign Policy: U.S. Influence Expanded 113.41.4A – Explain why/how significant events, policies and individuals such as U.S. expansionism, Henry Cabot Lodge, Alfred Thayer Mahan, Theodore Roosevelt, Sanford B. Doles, Spanish‐American War and missionaries moved the United States into a world power. (SRS) 113.41.4.B‐ Evaluate American expansionism, include the acquisitions of Hawaii, Guam, the Philippines and Puerto Rico. (SSS) 113.41.12A – Analyze the impact of physical and human geographic factors on the Klondike Gold R113.41., the Panama Canal, settlement of the Great Plains, and the levee failure in New Orleans after Hurricane


Katrina. (SRS) 113.41.12B – Identify and explain reasons for changes in the political boundaries resulting from statehood and international conflicts. (SSS) 113.41.15C – Explain how foreign policies have affected economic issues such as the Open Door Policy, Dollar Diplomacy and the Chinese Exclusion Act of 1882. (SSS) 113.41.15D‐ Describe the economic effects of international military conflicts such as the Spanish‐American War and WWI on the US. (SRS) 113.41.29A – Use a variety of sources primary and secondary to find information and to analyze the historical questions and answers from these sources. (SPS) 113.41.29B – Analyze information by sequencing, categorizing, identifying cause and effect relationships, compare and contrast, main idea, summarize, make predictions, draw inferences and conclusions from the information given. (SPS) 113.41.30B – Use correct terminology in social studies to explain historical concepts. (SPS)

Unit 3 – World War I and Social Change in the 1920’s There units examine the global conflict of WWI and its effects on the social changes of the 1920’s. Americans became more isolationists and responded to changes in social norms, consumerism, technology and artistic


WWI – Causes – Effects – Events of War 113.41.4C – Identify the causes of WWI and why the U.S. entered the war. (SRS) 113.41.4D – Understand the contributions of the American Expeditionary Forces (AEF) led by General John J. Pershing. (SSS) 113.41.4G – Analyze significant events of the war such as the Battle of Argonne Forest. (SSS) 113.41.4E – Analyze the impact of technological innovations in WWI like the machine guns, airplane, tanks, poison gas, and trench warfare that resulted in a stalemate on the Western Front. (SSS) 113.41.4F – Analyze the major issues such as isolationism and neutrality raised by the U.S. involvement in World War I, Woodrow Wilson’s Fourteen Points, and the Treaty of Versailles. (SRS)

E‐Books Videos Direct Instruction Cooperative Groups Articles Art Pictures Music Projects Debates/Discussions


accomplishments.

113.41.15D – Describe and explain the economic effects of international military conflicts like WWI and the Spanish‐American War. (SRS) 113.41.26F – Discuss and explain the importance of Congressional Medal of Honor recipients such as Vernon J. Baker, Alvin, York, and Roy Benavidez. 113.41.29A – Use a variety of sources primary and secondary to find information and to analyze the historical questions and answers from these sources. (SSS) 113.41.29B – Analyze information by sequencing, categorizing, identifying cause and effect relationships, compare and contrast, main idea, summarize, make predictions, draw inferences and conclusions from the information given. (SPS) 113.41.29H – Use appropriate skills to analyze and interpret social studies information like maps, graphs, presentations, speeches, lectures, and political cartoons. (SPS) 113.41.30B – Use correct terminology in social studies to explain historical concepts. (SPS)

Essays Graphics Maps Atlas Dictionaries United Streaming: World War II (54:00) United Streaming: Portrait of America – Japanese Internment (27:09) United Streaming: Archives of War – The Battles (2:02:51) Stalingrad and Allied Dresden Bombing Battle of the Bulge Battle of Midway Manhattan Project D‐Day Hiroshima and Nagasaki Primary Source Lesson – Japanese Internment during World War II

Part 2 of Unit 3 Social/Cultural – Technological Change in the 1920’s 113.41.6A – Analyze causes and effects of events with social issues such as immigration, Social Darwinism, eugenics, race relations, nativism, Red Scare, role of women and prohibition. (SRS) 113.41.6B – Analyze the impact of significant people such as Clarence Darrow, William Jennings Bryan, Henry Ford, Glenn Curtiss, Marcus Garvey, and Charles A. Lindbergh on social and cultural norms. (SSS)

E‐book Videos Cooperative Groups Articles Maps


113.41.13A – Analyze the causes and effects of changing demographic patterns brought on by immigration within the United States, western expansion, rural to urban, the Great Migration and the Rust Bowl to the Sun Belt. (SRS) 113.41.25A – Describe how the characteristics and issues in U.S. History have been reflected in the genres of art, music, film and literature. (SSS) 113.41.25B – Describe both the positive and negative impacts of significant examples of cultural movements in art, music, and country and western style music on American society. (SRS) 113.41.26C – Explain the contributions of people of various racial, ethnic, gender, and religious groups have shaped American culture. (SRS) 113.41.27C – Understand the impact of technological and management innovations and the applications in the workplace resulting in productivity enhancements for business and labor such as assembly line manufacturing, robotics, computer management and time‐study analysis. (SRS) 113.41.29A – Use a variety of sources primary and secondary to find information and to analyze the historical questions and answers from these sources. (SPS) 113.41.29B – Analyze information by sequencing, categorizing, identifying cause and effect relationships, compare and contrast, main idea, summarize, make predictions, draw inferences and conclusions from the information given. (SPS) 113.41.29G – Identify using historical evidence a point of view on a social studies issue or event. (SPS) 113.41.30B – Use correct terminology in social studies to explain historical concepts. (SPS)

Pictures – Different Artist Music Literature Examples

Unit 4 ‐ Economics and Politics of the 1920’s and 1930’s These two parts allow students to go


Prosperity and Politics of the 1920’s (Economics) 113.41.6A – Analyze causes and effects of events and social issues like immigration, Social Darwinism, eugenics, race relations, nativism, Red Scare, role of women and Prohibition. (SRS)

E‐book Videos Hands on Projects


through and study the 1920’s and 1930’s economic and political issues.

113.41.15C – Explain how the US foreign policies affected economic issues such as the Open Door Policy, Dollar Diplomacy and immigration quotas and the Chinese Exclusion Act of 1882. (SSS) 113.41.16A – Analyze causes of growth and prosperity in the 1920’s, including Warren Harding’s, Return to Normalcy, reduction in taxes and increase production. (SSS) 113.41.19C – Describe the effects of political scandals, including the Teapot Dome, Watergate, and Bill Clinton’s impeachment, on the views of American citizens concerning trust in the government and its leaders. (SSS) 113.41.29A – Use a variety of sources primary and secondary to find information and to analyze the historical questions and answers from these sources. (SPS) 113.41.29B – Analyze information by sequencing, categorizing, identifying cause and effect relationships, compare and contrast, main idea, summarize, make predictions, draw inferences and conclusions from the information given. (SPS) 113.41.29G – Identify using historical evidence a point of view on a social studies issue or event. (SPS) 113.41.29H – Use appropriate skills to analyze and interpret social studies information from maps, graphs, presentations, speeches, lectures and political cartoons. (SPS) 113.41.30B – Use correct terminology in social studies to explain historical concepts. (SPS)

Cooperative Group Debates/Discussions Articles Newspaper Art Dance Literature from Era

Part 2 – Unit 4 The Great Depression and the New Deal 113.41.12A – Analyze the impact of physical and human geographic factors in the settlement of the Great Plains, the Klondike Gold R113.41., Panama Canal, The Dust Bowl and the failure of the levees in New Orleans after Hurricane Katrina. (SRS) 113.41.16B – Identify the causes of the Great Depression, include the

E‐Books Videos Direct Instruction Cooperative Groups


impact of tariffs on world trade, stock market speculation, bank failures, and the monetary policy of the Federal Reserve System. (SRS) 113.41.16C – Analyze the effect of the Great Depression on the economy and society such as widespread unemployment and deportation of individuals from Europe and Mexican heritage. (SRS) 113.41.16D – Compare the New Deal policies and its opponents’ approaches to resolve the economic effects of the Great Depression. (SSS) 113.41.16E Describe how various New Deal agencies and programs include the Federal Deposit Insurance Corporation (FDIC), the Securities and Exchange Commission (SEC), and the Social Security Administration impact the lives of Americans. (SSS) 113.41.19A – Evaluate the impact of the New Deal legislation on the roles of state and federal government.(SRS) 113.41.20B – Evaluate the impact of relationships among the legislative, executive, and judicial branches of government, including Franklin D. Roosevelt’s attempt to increase the number of U.S. Supreme Court justices and the presidential election of 2000. (SRS) 113.41.29A – Use a variety of sources primary and secondary to find information and to analyze the historical questions and answers from these sources. (SPS) 113.41.29B – Analyze information by sequencing, categorizing, identifying cause and effect relationships, compare and contrast, main idea, summarize, make predictions, draw inferences and conclusions from the information given. (SPS) 113.41.29G – Identify using historical evidence a point of view on a social studies issue or event. (SPS) 113.41.30B – Use correct terminology in social studies to explain historical concepts. (SPS)

Articles Art Pictures Music Projects Debates/Discussions Essays Graphics Maps Atlas Dictionaries

Unit 5 – Dictators and World War II


WWII Begins

E‐Books


There are three parts in this unit that examine the rise of totalitarian governments in Europe and East Asia. It will explore those government changes and how it led to World War II and the involvement of the United States in the conflict.

113.41.7A – Identify reasons for U.S. involvement in the War, including Italian, German, and Japanese dictatorships and their aggression that led to the attack on Pearl Harbor. (SRS) 113.41.7D – Analyze major issues of WWII, such as the Holocaust, the internment of German, Italian, and Japanese Americans and Executive order 9066, and the development of weapons such as the atomic bomb. (SRS) 113.41.29A – Use a variety of sources primary and secondary to find information and to analyze the historical questions and answers from these sources. (SPS) 113.41.29B – Analyze information by sequencing, categorizing, identifying cause and effect relationships, compare and contrast, main idea, summarize, make predictions, draw inferences and conclusions from the information given. (SPS) 113.41..29G – Identify using historical evidence a point of view on a social studies issue or event. (SPS) 113.41.30B – Use correct terminology in social studies to explain historical concepts. (SPS)

Videos Direct Instruction Cooperative Groups Articles Art Pictures Music Projects Debates/Discussions Essays Graphics Maps Atlas Dictionaries

Part 2 of Unit 5 Fighting on Multiple Fronts 113.41.7D – Analyze major issues of WWII, such as the Holocaust, the internment of German, Italian, and Japanese Americans and Executive order 9066, and the development of weapons such as the atomic bomb. (SRS) 113.41.7E – Analyze and explain major events of WWII, including the Battle of Midway, U.S. military advancement through the Pacific Islands, Bataan Death March, invasion of Normandy and the liberation of concentration camps and fighting the war on a multitude of fronts. (SSS) 113.41.7F – Evaluate and explain the military contributions of leaders during WWII, such as Omar Bradley, Dwight Eisenhower, Douglas MacArthur, Chester A. Nimitz, George Marshall, and George Patton. (SSS)

E‐Books Videos Re‐enactment pictures of the war – Field Trip Projects Debates/Discussions Projects Speeches Music


113.41.29A – Use a variety of sources primary and secondary to find information and to analyze the historical questions and answers from these sources.(SPS) 113.41.29B – Analyze information by sequencing, categorizing, identifying cause and effect relationships, compare and contrast, main idea, summarize, make predictions, draw inferences and conclusions from the information given.(SPS) 113.41.29G – Identify using historical evidence a point of view on a social studies issue or event. (SPS) 113.41.30B – Use correct terminology in social studies to explain historical concepts. (SPS) 113.41.32B – Use a decision‐making process to identify a situation that requires a decision gather information, identify options, predict consequences, and take action to implement a decision. (SPS)

Art Graphs Maps

Part 3 of Unit 5 Home front: WWII 113.41.7B – Evaluate the domestic and international leadership of Franklin D. Roosevelt and Harry Truman during World War II. Include the relationship with U.S. allies and domestic industry’s rapid mobilization for the war effort. (SSS) 113.41.7C – Analyze and explain the function of the U.S. Office of War information. (SSS) 113.41.7D – Analyze the major issues of WWII, such as the Holocaust, the internment of German, Italian, and Japanese Americans and Executive Order 9066, and the development of weapons including the atomic bomb. (SRS) 113.41.7G‐ Explain what was happening at home and how American patriotism inspired exceptional actions by citizens and military personnel, such as military enlistments, volunteerism, the purchase of war bonds, Victory Gardens, the bravery and contributions of the Tuskegee Airmen, the Flying Tigers and the Navajo Code Talkers, and opportunities and obstacles for women and ethnic minorities. (SRS)

E‐Books Videos Direct Instruction Cooperative Groups Articles Art Pictures Music Projects Debates/Discussions Essays Graphics


113.41.17A – Describe the economic effects of WWII on the home front in regard to the end of the Great Depression, rationing, and increased opportunities for women and minority employment. (SRS) 113.41.26F – Discuss and explain the importance of Congressional Medal of Honor recipients, such as Vernon J. Baker, Alvin York, and Roy Benavidez.(SSS) 113.41.29A – Use a variety of sources primary and secondary to find information and to analyze the historical questions and answers from these sources.(SPS) 113.41.29B – Analyze information by sequencing, categorizing, identifying cause and effect relationships, compare and contrast, main idea, summarize, make predictions, draw inferences and conclusions from the information given. (SPS) 113.41.29G – Identify using historical evidence a point of view on a social studies issue or event. (SPS) 113.41.30B – Use correct terminology in social studies to explain historical concepts. (SPS)

Maps Atlas Dictionaries

Sources: Texas Essential Knowledge and Skills; Houston ISD; Alief ISD; Georgetown ISD; Edgenuity; Pearson Education


Vocabulary – 18 weeks – Daily Review

agency alliance amend antitrust boundary candidate characteristic civil commerce commercial industry communism compromise conflict constitution corporation cottage industry democratic process demographic patterns diplomacy distribution doctrine domestic issue economy ‐T

emergeenvironment executive branch expansion federal ‐T free enterprise system ‐T graft grievances immigrant impact imperialism industry initiative innovate international ‐T interstate intrastate isolation issue judicial branch legislation legislature literature

market‐oriented minority migration model nullify participation pattern phenomenon political population private property progressive prosperity recall referendum renaissance republic resolution scientific significant socialism sovereignty stock subsistence agriculture

suffragetechnology thematic map trade treaty union immigration abolitionism ‐T acquisition affiliation appropriate (verb) civil disobedience ‐T common law critical militia monopoly ‐T patent protective tariff ratify unalienable / inalienable urban / urbanization

Source: Georgetown ISD, Houston ISD


United States History Since 1877

LESSON Plan ‐ A New Revolution – Gilded Age

TEKS: Define on the board with EQ

113.41.3; 113.41.15A; 113.41.27A; 113.41.29B; 113.41.30A; 113.41.30B

Essential Question (EQ) Why did the US shift to an industrial economy, and what impact did this change have on society as a whole? Timeframe: 2 days = 4 hours Resources: Ebook; Laptop; Overhead; Maps; Pictures; Bloom’s Taxonomy Knowledge and comprehension (base understanding of events before the civil war and after) Application (Describing, identifying and explaining impact on the US); Analyses (Analyze the events of the period) Synthesis (Using developments in technology now to what can be in the future) Evaluation (Mastery of material in test format and written format for the essay) Lesson Objectives

1. Describe the reasons the US became more industrialized after the Civil War. 2. Identify the effects of the growth of America's railroads on business and settlement. 3. Explain the demographic changes that resulted from industrialization.

Warm Up

Show a picture of a factory floor in the late 1800’s. Discuss the picture in terms of the 2nd industrial revolution. Put vocabulary words into the descriptions as

you open up the class using a boggle or scramble type board on the overhead next to the picture. Mass production and corporations are key terms as you open

up the introduction.

Introduction

Early 1800’s – U.S. – Rural agrarian economy


1st Industrial Revolution (1800‐1860)

2nd Industrial Revolution (1860‐1916) Technology Revolution

- Development of New Technologies (communications, machines) Relate then to now

- Development of new business models (Discuss J.P. Morgan and corporations with stocks)

- Expansion of Railroads and the impact on the western part of the US

- Banking and Finance as it relates to the growth of factories and cities

Effects of Industrialization on the US

- Economic Growth (Rural to urban; Factories; Cities)

- Immigration (25 million immigrates between 1870 and 1916)

- Environmental effects on the Native Americans; buffalo and landscape.

Bessemer process – Method of Steel production; New Machines; Electricity expansion; communication expansion (give an example of the smartphone as

compared to a regular landline)

Lower cost + more production = economic growth

Define corporations: Owners not personally liable if a company went bankrupt if they were a corporation; discuss stocks; discuss various leaders that became

extremely powerful from the growth of corporations.

Banking/Finance – Selling corporation stocks to investors; large companies began to grow in the cities; more managerial positions were developed that built a

strong middle class; J.P. Morgan’s impact on the economy and control

Railroads – Transcontinental finished in 1869; allowed 8 day travel between New York and San Francisco; Raw products to factories to a finished product for

consumers; Markets opened up for companies and prices decreased

Warm Down/Summary:

Rural to Urban during the Gilded Age

Mark Twain coined the phrase Gilded Age

Technology, business, banking and finance along with the railroad expansion in the west caused the US shift and a great impact on US society.

Effects of Industrialization – economic growth (middle class); increased immigration; increased urbanization and changes in the environment.

Assignments:


Write an essay using the appropriate social studies vocabulary to tell what impact the development of new technology has on the Gilded Age in the US. Be

careful to use your graphic organizer to develop your paragraphs. Use examples like the Bessemer process, stocks for investors and others to strengthen your

paper.

Evaluations:

Three quizzes will be given during the lesson to cover new technology, business models and railroad expansion.

At the end of the lesson a 25‐question test will be given to check mastery of standards.

Source: Edgenuity, U.S. History II 2014 ‐ SS3311 IC, Course document (3), Industrialization and the Gilded Age.

Attachment E2

Requirements for Promotion and Graduation

E2 – Graduation Requirements Page __

Early Career Academy serves only 11th and 12th grade students. ECA will adhere to all the state mandated policies involving graduation and promotion. In our grade configuration students must earn credits for each course taken in accordance with standards and goals. All required STAAR end of course exams will be administered as part of the graduation requirement for a Texas High School Diploma. Early Career Academy will also offer two specialized Associates degree programs in conjunction with ITT Technical Institute that will require additional course work. These courses are found at the bottom of this appendix.

Graduation Program Options Discipline Foundation HSP *MHSP *RHSP *DAP English Language Arts

Four credits: • English I • English II • English III • An advanced English course

Four credits: • English I • English II • English III • English IV or approved alternate course

Four credits: • English I • English II • English III • English IV

Four credits: • English I • English II • English III • English IV

Mathematics Three credits: • Algebra I • Geometry • An advanced math course

Three credits: • Algebra I • Geometry • SBOE approved math course

Four credits: • Algebra I • Algebra II • Geometry • An additional math credit

Four credits: • Algebra I • Algebra II • Geometry • An additional math credit

Science Three credits: • Biology • IPC or an advanced science course • An advanced science course

Two credits: • Biology • IPC or Chemistry and Physics (one of the two serves as an academic elective)

Four credits: • Biology • Chemistry • Physics • An additional science credit

Four credits: • Biology • Chemistry • Physics • An additional science credit

Social Studies Three credits • U.S. History • U.S. Government (one‐half credit) • Economics (one‐half credit) • World History or World Geography

Three credits: • U.S. History (one credit) • U.S. Government (one‐half credit) • Economics (one‐half credit) • World History (one credit) or World Geography (one credit)

Four credits: • U.S. History (one credit) • U.S. Government (one‐half credit) • Economics (one‐half credit) • World History (one credit) • World Geography (one credit)

Four credits: • U.S. History (one credit) • U.S. Government (one‐half credit) • Economics (one‐half credit) • World History (one credit) • World Geography (one credit)

Physical Education

One credit One credit One credit One credit

Languages Other Than English

Two credits in the same language Two credits from Computer Science I, II, and III (other substitutions)

None Two credits in the same language

Three credits in the same language

Fine Arts One credit One credit One credit One credit

Speech Demonstrated proficiency in speech skills

One‐half credit from either of the following: • Communication Applications • Professional Communications (CTE)



Electives Five credits Seven and one half credits (one must be an academic elective)

Five and one‐half credits

Four and one‐half credits

Total Credits 22 22 26 26

* Only available for students who entered grade 9 before the 2014‐2015 school year


Endorsements

Business and Industry A coherent sequence or series of courses selected from one of the following:

CTE courses with a final course from the Agriculture, Food, & Natural Resources; Architecture & Construction; Arts, Audio/Video, Technology & Communications; Business Management & Administration; Finance; Hospitality & Tourism; Information Technology; Manufacturing, Marketing; Transportation, or Distribution & Logistics CTE career cluster

The following English electives: public speaking, debate, advanced broadcast journalism including newspaper and yearbook

Technology applications

A combination of credits from the categories listed above

Multidisciplinary Studies

A coherent sequence or series of courses selected from one of the following:

Four advanced courses that prepare a student to enter the workforce successfully or postsecondary education without remediation from within one endorsement area or among endorsement areas that are not in a coherent sequence

Four credits in each of the four foundation subject areas to include English IV and chemistry and/or physics

Four credits in AP, IB, or dual credit selected from English, mathematics, science, social studies, economics, languages other than English, or fine arts

Total Credits w/endorsement ‐ 26 Distinguished Level of Achievement

A total of four credits in math, including credit in Algebra II

A total of four credits in science

Completion of curriculum requirements for at least one endorsement

Performance Acknowledgments

For outstanding performance

in a dual credit course

in bilingualism and biliteracy

on an AP test or IB exam

on the PSAT, the ACT‐Plan, the SAT, or the ACT For earning a nationally or internationally recognized business or industry certification or license

Course Descriptions ECA is an 11th and 12th grade high school. Students that enroll that may need a course normally taught in a previous grade, such has biology or Algebra I, will take that course at ECA. ECA will offer all courses required to fulfill a high school diploma. The Texas Essential Knowledge and Skills standards and the requirements for obtaining an associate’s degree form the basis for ECA courses. Select ECA course descriptions are listed below. English Language Arts courses align to the Texas Essential Knowledge and Skills Standards. Students will be able to receive college credit from ITT Tech for the completion of the majority of courses taken in 11th and 12th grade. A select list of course descriptions follow. English/Language Arts I (9th grade)


This course builds upon students’ prior knowledge of grammar, vocabulary, word usage, and the mechanics of writing and usually include the four aspects of language use: reading, writing, speaking, and listening. English/Language Arts II (10th grade) This course focuses on composition and literature. Students write persuasive, critical, and creative multi‐paragraph essays and compositions. Students explore various genres of literature. Composition This course examines phases of the writing process, with emphasis on the structure of writing and techniques for communicating clearly, precisely and persuasively with emphasis on rhetorical structures, argumentation and research. Communications This course focuses on the history, principles and techniques of interpersonal, organizational and mass communications, and on communicating using written, verbal and visual formats. A.3.2 Course Offerings and Graduation Requirements Early Career Academy Page 4 of 6 World Literature This courses uses literature selections from ancient and/or modern times from countries around the world. Students improve their critical‐thinking skills as they comprehend the diversity of literary traditions and the influences of those traditions. Oral discussion is an integral part of literature courses, and written compositions are often required. Mathematics courses align to the Texas Essential Knowledge and Skills Standards. Students will be able to receive college credit from ITT Tech for the completion of the majority of courses taken in 11th and 12th grade. Algebra I This course includes the study of properties and operations of the real number system; evaluating rational algebraic expressions; solving and graphing first degree equations and inequalities; translating word problems into equations; operations with and factoring of polynomials; and solving simple quadratic equations. Geometry This course covers properties of plane and solid figures; deductive methods of reasoning and use of logic; the study of postulates, theorems, and formal proofs; concepts of congruence, similarity, parallelism, perpendicularity, and proportion; and rules of angle measurement in triangles. Algebra II This course will include, but is not limited to, the following concepts: quadratic, polynomial and radical equations, linear functions and their graphs, systems of linear equations, functions and their properties and triangles and trigonometric functions. Additionally, this course will include the following concepts: exponential and logarithmic equations and functions, graphs of trigonometric functions, trigonometric equations, polar coordinates, oblique triangles, vectors and sequences. Probability and Statistics Course topics include basic probability and statistics: discrete probability theory, odds and probabilities, probability trees, populations and samples, frequency tables, measures of central tendency, and presentation of data (including graphs). Course topics may also include normal distribution and measures of variability. Science courses align to the Texas Essential Knowledge and Skills Standards. Students will be able to receive college credit from ITT Tech for the completion of the majority of courses taken in 11th and 12th grade. A select list of course descriptions follow. Biology The course provides information regarding the fundamental concepts of life and life processes. The course includes cell structure and function, general plant and animal physiology, genetics, and taxonomy. Chemistry The course explores such concepts as the behaviors of solids, liquids, and gases; acid/base and oxidation/reduction reactions; and atomic structure. Chemical formulas and equations and nuclear reactions are also studied. Physics This course introduces students to the principles of general physics. Practical applications demonstrate the theory. This course includes a laboratory component. Social Studies courses align to the Texas Essential Knowledge and Skills Standards. Students will be able to receive college credit from ITT Tech for the completion of the majority of courses taken in 11th and 12th grade. A select list of course descriptions follow.


American History including Texas History This course provides students with an overview of the history of the United States. Course content includes the history of the Texas. American Government This course examines principles and theory related to the United States federal government, including the development and foundations of the U.S. Constitution, the organization and function of the federal government including the legislative, executive and judicial branches, political parties, the electoral process, and the relationship between states with a section on Texas government, and the federal government. World History/Geography This course provides an overview of world history and world geography. Economics This course introduces basic principles of both microeconomics and macroeconomics. Economic principles are presented in formal theoretical contexts and applied contexts. Group Theory – (Topics in Sociology) This course is an overview of the theory related to groups of people bonded by task or culture. Emphasis is on communication, critical thinking and group process theory, including social exchange theory, structuration theory, functional theory, group ethics, diversity and related communication conflicts, group decision‐making, creativity, leadership and gender. Career and Technical Education courses align to the Arizona State Course Catalog with SCED mapping. Students will be able to receive college credit from ITT Tech for the completion of the majority of courses taken in 11th and 12th grade. A select list of course descriptions follow. Computer Structure and Logic Organization of a computer is examined in a given popular operating systems environment. Terminology and underlying principles related to the major computer functions will be discussed in the context of hardware and software environments. Introduction to Programming This course serves as a foundation for understanding the logical function and process of computer programming. Basic computer programming knowledge and skills in logic and generic syntax are studied. Coding convention and procedures are discussed relevant to the given programming language environment. Introduction to Application Design and Development This course serves as a foundation for students pursuing knowledge and skills in computer networking technologies. Major concepts such as OSI and TCP/IP models, LAN/WAN protocols, network devices and their functions, topologies and capabilities will be discussed. Creating Websites Using HTML and CSS This course examines the functions of Websites for mobile and desktop devices and entry‐level skills used to create such sites using HTML and CSS (Cascading Style Sheets) technologies. Creating Websites Using HTML5, CSS3 and JavaScript This course introduces techniques used in building interactive Websites for mobile and desktop devices, using technologies such as HTML5, CSS3 and JavaScript. Introduction to Java Programming This course introduces fundamentals of programming using Java and associated development tools and environments. Introduction to Mobile Operating Systems This course provides an overview of mobile operating systems, such as iOS, Android and Windows Mobile. Topics include architecture, functions and the impact on application development in each operating system. Introduction to Database and XML with jQuery This course introduces fundamental concepts of database technology and applications. Topics include object‐oriented relational databases, database management systems, and using SQL, XML and jQuery to build databases that interact with applications. Application Development Using Java I This course introduces basic techniques used to develop applications using Java. Application Development Using Java II


This course examines intermediate‐level development techniques for applications running in the Android operating system environment. Focus is on applications interacting with Websites for mobile devices. Social Networking Applications and Technology This course examines a variety of social networking platforms, media, methods, tools and applications running on desktop and mobile devices. Topics include analysis of technical features and capabilities of social networking applications and the impact on consumer behavior and the global economy. Software Development Capstone Project A.3.2 Course Offerings and Graduation Requirements Early Career Academy Page 6 of 6 This course provides the opportunity for students to use knowledge and skills acquired in the program of study to research, design, develop and promote a desktop or mobile application. Introduction to Networking This course serves as a foundation for students pursuing knowledge and skills in computer networking technologies. Major concepts such as OSI and TCP/IP models, LAN/WAN protocols, network devices and their functions, topologies and capabilities will be discussed. Industry standards and a brief historical development of major networking technologies will be surveyed in conjunction with basic awareness of software and hardware components used in typical networking and internetworking environments. Client‐Server Networking I This course introduces operating principles for the client‐server based networking systems. Students will examine processes and procedures involving the installation, configuration, maintenance, troubleshooting and routine administrative tasks of popular desktop operating system(s) for standalone and network client computers, and related aspects of typical network server functions. Physical Networking This course examines industry standards and practices involving the physical components of networking technologies (such as wiring standards and practices, various media and interconnection components), networking devices and their specifications and functions. Students will practice designing physical network solutions based on appropriate capacity planning and implementing various installations, testing and troubleshooting techniques for a computer network. NT1330 Client‐Server Networking II The typical network server operating system and its functions are the focus of this course. Areas of study include installation, configuration, maintenance and routine administrative tasks of the network services provided by the server in relation to its clients and other servers. Linux Networking This course covers system and network administrative tasks associated to Linux‐based components on a network. Routine tasks in installation, configuration, maintenance, and troubleshooting of Linux workstations and servers will be discussed with emphasis on the network services provided by open source solutions. Introduction to Information Security This course provides an overview of security challenges and strategies of counter measures in the information systems environment. Topics include definitions of terms, concepts, elements and goals incorporating industry standards and practices with a focus on availability, vulnerability, integrity and confidentiality aspects of information systems. IP Networking This course explores network design and implementation by applying the TCP/IP protocols to provide connectivity and associated services. Planning and deployment of network addressing structures, as well as router and switch configurations, are also examined. Email and Web Services This course explores common network‐based services such as Web services, email and FTP in a given server operating systems environment. Related security issues will also be studied. Network Systems Administration Capstone This course provides an opportunity for students to work on a comprehensive project that includes the design, planning and implementation of a network solution for solving specific business problems. Common project management processes are applied to identify deliverables and outcomes of the project. Database Concepts


This course introduces the basic concepts in databases and their applications. Topics include database history, structure, objects, relational database management systems (RDBMS), and introductory Structured Query Language (SQL). The business plan and budget contain all resources necessary to deliver the program of instruction.

Attachment E3

Admission and Enrollment Policies

E3 ‐ Admissions and Enrollment Policies Page __

Attachment E3

Admissions and Enrollment Policies

The Early Career Academy will initiate a systematic, public, and documented recruitment process to ensure that all 11th and 12th grade students have an equal chance for admission. Students that are not considered 11th or 12th grade will not be considered for admission. The Board of Directors will approve and ensure that the admissions policies and procedures comply with all state and federal laws. The Early Career Academy will admit all students who submit a timely application for enrollment. Enrollment for each grade level is determined by building capacity, individual class sizes, and the ability to accommodate the individual applicant’s scheduling needs. Non‐discriminatory Policy Every applicant will be given equal opportunity for admissions and will not be discriminated against based upon ability, race, ethnicity, sexual orientation, national origin, disability, gender, income level, or proficiency in the English language. Enrollment The open enrollment period will begin January 1 and will continue until the end of March. If the number of completed applications exceeds the openings available, a lottery will be held in April for any grade level(s) in which an excess of completed qualified applications have been received. The lottery will determine which students will be admitted. Notification of Admission and Lottery Admission results will be made clear to parents/guardian and if accepted failure to accept within a reasonable amount of time as set forth by The Early Career Academy Admissions Policy will forfeit admission and subsequently be put back in the lottery. The remaining names will be drawn and placed on a waiting list in the order in which they were drawn for only that academic school year. If a vacancy arises before the commencement of the school year, the individual on the waiting list with the lowest number assignment will be offered admission and then removed from the waiting list. If an application is received after the application period has passed, the applicant’s name will be added to the waiting list behind the names of the applicants who applied within the guidelines. ECA will give enrollment preference to eligible: 1. Students who are siblings of a student enrolled in the charter school. 2. Students who are the children of a member of the governing board of the charter school. 3. Students who are the children of an employee of the charter school. 4. Student who are the children of an active duty member of any branch of the United States. If the number of applications received by the application deadline does not exceed the number of available seats in a grade, all applicants who submitted completed registration forms for that grade during the open enrollment period will be accepted in that grade. Students will be accepted for admission after the open enrollment period provided there is capacity in that grade and a complete application has been submitted. If a student has been accepted to the school but does not confirm enrollment within the appropriate time period established by The Early Career Academy, his/her name is automatically withdrawn and the next student on the waiting list may be enrolled. Waiting lists do not carry over into the next school year. Once enrolled, students will not be required to reapply in subsequent academic years, but will need to complete information confirming their intent to return. Students who withdraw from The Early Career Academy during the school year must reapply for admission and follow the procedures outlined above for new students.

E3 ‐ Admissions and Enrollment Policies Page __

Students may transfer from ECA after each trimester. Students transferring into ECA must go through the enrollment procedures at the beginning of the year. Students will only be enrolled through into the academy up through the first three weeks of classes. No students will be added to ECA after the third week of school. Misconduct History Prior to Enrollment Students with prior history of misconduct will have all records reviewed by the Superintendent and Executive Director before a decision is made for enrollment purposes. Every student will be reviewed in accordance with state and federal guidelines in regard to student conduct. Upon enrollment students and parents will receive a copy of the school’s discipline policy and will be required to sign off that they have received it and will abide by it. Enforcement of the policy will be the responsibility of the Executive Director who will be held accountable for the schools climate. Failure to adhere to the policy will impact climate. Proposed Student Recruitment/Enrollment Timeline for 2016‐2017 School Year Date Activity January 2016 to July 15, 2016 Active engagement of prospective students for registration January 1, 2016 to March 30, 2016 Proposed open enrollment period April 2016 Lottery As needed May 2016 – July 2016 Completion of Enrollments

Attachment E4

Discipline Policy

E4 -‐ School Handbook and Code of Conduct Page _____

There are two documents below. The first is a model handbook previously developed for ECA that will form the basis for the Student Handbook. The second is a Texas specific charter school handbook and code of conduct provided by local legal counsel. Upon award of a charter, a final student handbook and code of conduct would be prepared that is specific to Texas and adopted by the Board of Directors.

The Early

students h

the same

Pa

y Career Aca

have the opp

time.

arent

ademy is a car

portunity to e

/ Stu

2016

reer-focused

earn a high sc

udent H

6 – 20

d charter high

chool diplom

Hand

17

h school for g

ma and a tuiti

dbook

grades 11 an

ion-free asso

k

d 12 in which

ociate’s degre

h

ee at

www.earlycareeracademy.com 2 | P a g e

Table of Contents

School Overview 1

Board of Directors 1

School Leadership 1

School Closing Information 2

Definitions 2

2014-2015 School Calendar 3

Attendance Policy 4

Parent/Teacher Conferences 5

Student Records and Confidentiality 5

FERPA 5

Individualized Education Programs and Section 504 Plans 8

Graduation Requirements 8

Transferability of Credit 9

Academic Honors 9

Safety 9

Student Code of Conduct 10

Disciplinary Procedures 18

ITT Technical Institute Computer and Electronic Information Policy 30

Appendix


School Overview

As a Texas charter school, Early Career Academy (“ECA”) is open to 11th and 12th grade students,

subject to capacity limitations. Through an arrangement with ITT Educational Services, Inc. ECA is

located on ITT Technical Institute's campus. ECA students will have access to many resources

available to the ITT Tech students. ITT Tech’s programs of study are designed to teach students

practical skills used in a wide variety of businesses and organizations. Most programs of study blend

traditional academic content with applied learning concepts, a portion of which is devoted to

practical study in a lab environment.

Board of Directors

The ECA is governed by a Governing Authority, also called a “Board of Directors.” A biography of

each board member at each location can be found on the ECA website:

www.earlycareeracademy.com. The Board of Directors meets regularly, and these meetings are open

to the public. Dates and locations for Board of Directors meetings are posted on the school

website.

School Leadership

The Executive Director is responsible for the day-to-day operations of the school. A biography of

the Executive Director can be found on the school website.


School Closing Information

In the event of severe weather or any other emergency, the school will issue announcements to one

or more media sources when school is canceled or delayed. For specific information, please refer to

the school website.

Definitions

“Parent” - The term “parent” shall mean either the student’s biological or adoptive mother or father

or the student’s legal guardian recognized by law.

“Student”- The term “student” shall mean an individual enrolled for classes in the Early Career

Academy.


2015-2016 School Calendar

2015 - 2016 SCHOOL YEAR CALENDAR

M Tu W Th F S Su M Tu W Th F S Su M Tu W Th F S Su01 02 03 04 05 01 02 01 02 03 04 05 06

06 07 08 09 10 11 12 03 04 05 06 07 08 09 07 08 09 10 11 12 1313 14 15 16 17 18 19 10 11 12 13 14 15 16 14 15 16 17 18 19 2020 21 22 23 24 25 26 17 18 19 20 21 22 23 21 22 23 24 25 26 2727 28 29 30 31 24 25 26 27 28 29 30 28 29 30

31

M Tu W Th F S Su M Tu W Th F S Su M Tu W Th F S Su01 02 03 04 01 01 02 03 04 05 06

05 06 07 08 09 10 11 02 03 04 05 06 07 08 07 08 09 10 11 12 1312 13 14 15 16 17 18 09 10 11 12 13 14 15 14 15 16 17 18 19 2019 20 21 22 23 24 25 16 17 18 19 20 21 22 21 22 23 24 25 26 2726 27 28 29 30 31 23 24 25 26 27 28 29 28 29 30 31

30

M Tu W Th F S Su M Tu W Th F S Su M Tu W Th F S Su01 02 03 01 02 03 04 05 06 07 01 02 03 04 05 06

04 05 06 07 08 09 10 08 09 10 11 12 13 14 07 08 09 10 11 12 1311 12 13 14 15 16 17 15 16 17 18 19 20 21 14 15 16 17 18 19 2018 19 20 21 22 23 24 22 23 24 25 26 27 28 21 22 23 24 25 26 2725 26 27 28 29 30 31 29 28 29 30 31

M Tu W Th F S Su M Tu W Th F S Su M Tu W Th F S Su01 02 03 01 01 02 03 04 05

04 05 06 07 08 09 10 02 03 04 05 06 07 08 06 07 08 09 10 11 1211 12 13 14 15 16 17 09 10 11 12 13 14 15 13 14 15 16 17 18 1918 19 20 21 22 23 24 16 17 18 19 20 21 22 20 21 22 23 24 25 2625 26 27 28 29 30 23 24 25 26 27 28 29 27 28 29 30

30 31 First and Last Day of School Holiday/Break (staff&students) or Professional Development DayEnd of first marking period End of second grading period End of 3rd grading periodTeacher training (after school) Teacher Training (no school)

April 2016 May 2016 June 2016

July 2015 August 2015 September 2015

October 2015 November 2015 December 2015

January 2016 February 2016 March 2016


*If more than three days of school have been cancelled prior to Presidents Day, students will attend school

on Presidents Day. If four or more days have been cancelled prior to spring recess, the make-up days will be

added to the end of the Second Trimester.

School Events

Additional events may be scheduled throughout the school year. These events will be

communicated by the Executive Director.

Attendance Policy

Regular and consistent attendance is a critical component of academic achievement. Each student is

required to be on campus during the entire school day. If a student will be absent, the student’s

parent should call the school by 9:00 a.m. and inform the school administrative assistant.

Tardiness

Classes start promptly at 8:00 a.m. It is essential that all students be in their classroom and prepared

to receive instruction at the scheduled start time. Tardiness may be recorded into the student’s

attendance record as determined by the school.


Parent/Teacher Conferences

Formal parent/teacher conferences will be held each trimester during the school year to facilitate

open communication between parents and teachers. These conferences are intended to keep

parents up to date on student progress; parents are, however, encouraged to monitor performance

and progress on an ongoing basis.

Report Cards and Progress Reports

Parents will receive report cards at the end of each trimester. Mid-trimester progress reports will be

made available during and after parent/teacher conferences.

Student Records and Confidentiality

Student records will consist of the information compiled while a student at the Early Career

Academy.

Family Educational Rights and Privacy Act Annual Notification

The Family Educational Rights and Privacy Act (“FERPA”) affords students certain rights with

respect to their education records. These rights include:

1. The right to inspect and review the student’s education record within 45 days

after the school receives a written request for access.

A student, or the parent of a student under 18, should submit to the Executive Director

a written request that identifies the record(s) desired for inspection. The Executive

Director will make arrangements for access and notify the student of the time and place

where the record(s) may be inspected.


2. The right to request the amendment of the student’s education records that the

student, or parent of students under 18, believes are inaccurate, misleading or

otherwise in violation of the student’s privacy rights under FERPA.

A student, or the parent of a student under 18, may request the school to amend an

education record the student or parent of a student under 18 believes is inaccurate or

misleading. The student or parent must write to the Executive Director, clearly identify

the part of the education record the student or parent wants changed and specify why

the education record is inaccurate, misleading or otherwise in violation of the student’s

privacy rights under FERPA.

If the school decides not to amend the education record as requested by the student or

parent of a student under 18, the school will notify the student and or parent of the

decision and advise the student and parent of his or her right to a hearing regarding the

student’s or parent’s request for amendment. Additional information regarding the

hearing procedures will be provided to the student and or parent when the student is

notified by the school of his or her right to a hearing.

3. The right to consent to disclosures of personally identifiable information

contained in the student’s education records, except to the extent the FERPA

authorizes disclosure without the student’s consent.

One exception permits the school to disclose personally identifiable information

contained in the student’s education records without the student’s consent to school

officials with legitimate educational interests. A School official is: a person employed by

the school in an administrative supervisory, academic or research, or support staff

position; a person or company with whom the school has contracted; a person serving

on an advisory board; or a student assisting a school official in performing his or her


tasks. A school official has a legitimate educational interest if the official needs to review

an education record in order to fulfill his or her responsibility. Upon request, the school

discloses education records without student consent to officials of other schools at

which the student seeks or intends to enroll or where the student is already enrolled, so

long as the disclosure if for purposes related to the student’s enrollment or transfer.

4. The right to file a complaint with the U.S. Department of Education concerning

alleged failures by the school to comply with the requirements of FERPA. The

name and address for the Office that administers FERPA is:

Family Policy Compliance Office, U.S. Department of Education, 400 Maryland Avenue,

S.W., Washington, DC 20202

Parental Notification of FERPA Directory Information Opt-Out Procedure

Directory information (as defined below) in a student’s education records may be unconditionally

released by the school without the student’s consent(or, if the student is under 18, without the

consent of the student’s parent), unless the student or the student’s parent specifically requests in

writing that such information may not be released. The school requires that any such request by or

on behalf of the student must (i) specify what categories of Directory Information are to be withheld

and (ii) be delivered to the Executive Director within 15 days after the student starts class. Any such

request must be renewed annually by the student. Directory Information means information

contained in a student’s education record which would generally not be considered harmful or an

invasion of privacy if disclosed. Directory Information includes, but is not limited to, the student’s:

name; address(es); telephone number(s); electronic mail address(es); photograph; grade level;

enrollment status; date and place of birth; program of study; extracurricular activities; credentials,


awards and recognition received; last school attended; dates of attendance; and student or user ID

number (other than social security number), but only if the identifier cannot be used to gain access

to education records except when used in conjunction with one or more factors that authenticate the

user’s identity which are known or possessed only by the authorized user.

Confidentiality

The ECA is dedicated to complying with all confidentiality laws protecting the privacy of our

students and their families. Information regarding each student’s progress will be shared only with

parents, appropriate members of the school staff, and any third parties retained by the school for the

purpose of measuring and/or improving institutional quality. The school will obtain the written

consent of the student, or parent of a student under the age of 18, prior to releasing the student’s

education records to any other person or organization, except with respect to directory information

or pursuant to the exceptions noted above.

Individualized Education Programs and Section 504 Plans

In order to provide continuity of educational services, students with an Individualized Education

Program or 504 Plan of the Rehabilitation Act of 1973 will be assessed promptly within the

requirements of applicable law. The ECA is dedicated to educating all students and makes every

effort to ensure students’ rights are observed in accordance with applicable laws and regulations.

Graduation Requirements

All state requirements for a high school diploma must be met for high school graduation. Students

must have met the requirements for graduating high school before being eligible for award of the

concurrently earned associate degree. The associate degree is awarded to each student who

satisfactorily completes all required courses in the program plan with at least a 2.0 overall cumulative


grade-point average (OCGPA). Please see the Career and Guidance Counselor for more information

regarding high school graduation and associate degree requirements.

Transferability of Credit

Credits earned are unlikely to transfer.

Academic Honors

The ECA celebrates student achievement. The school will recognize high academic and attendance

performance each trimester and overall academic success at graduation.

Safety

The ECA maintains specific guidelines, policies, and procedures consistent with its Health and

Safety Plan. The Executive Director of the ECA maintains specific, guidelines, policies, and

procedures consistent with its Health and Safety Plan.

Fire and Emergency Drills

Periodically, fire and other emergency drills will be conducted at the school in order to familiarize

students with fire and emergency procedures, as required by law.

Medications

Medications should be given at home when possible. If a student must take medication at school

the following conditions must be met:

1) A parent must complete a Medication Authorization Form authorizing the school to

dispense medication.


2) Prescribed medicine must be in the prescription bottle with the label intact.

3) Over-the-counter medications must be in the original container/package.

Weapons

The possession or use of firearms, knives, other weapons, explosives or fireworks of any kind are

prohibited on school property and during any school activity to the maximum extent that the law

allows, except for law enforcement officers required by local or state law, policy, or procedure to

carry a firearm at all times. Any law enforcement officer who is required to carry a firearm on

school premises or during any school activity must notify the school in writing of that requirement

and provide a copy of the applicable directive that requires the officer to carry a firearm while on

school premises and during school activities.

The school reserves the right to inspect any and all items brought onto the school premises,

including any building or parking lot. Except for law-enforcement officers as specified above,

possession or use of a firearm, knife, other weapon, explosive or firework on school premises or

during any school activity will result in the student’s immediate expulsion from the school, and law

enforcement will be contacted.

Student Code of Conduct

Each student must conduct himself or herself in accordance with the school’s rules, regulations,

policies and procedures as stated in this handbook.

Anti-Harassment

It is the policy of the ECA that sexual harassment of student or applicants to the school in any form

is unacceptable conduct which will not be tolerated. Sexual harassment includes unwelcome sexual


flirtations, advances or propositions, request for sexual favors, verbal abuse of a sexual nature, subtle

pressure or request for sexual activities, unnecessary touching of an individual, graphic verbal

commentaries about an individual’s body, sexually degrading words used to describe an individual, a

display in the school of sexually suggestive objects or pictures, sexually explicit or offensive jokes,

physical assault and other verbal, visual or physical conduct of a sexual nature. No student,

applicant, teacher, or other employee of ECA shall threaten or insinuate, either explicitly or

implicitly, that a student’s or applicant’s refusal to submit to sexual advances will adversely affect

that person’s admission, grades, studies or educational experience at ECA. Similarly, no teacher or

other employee of ECA shall promise, imply or grant any preferential treatment in connection with

any student or applicant with the intent of rewarding for or engaging in sexual conduct.

Other types of harassment that will not be tolerated include any unwanted or unwelcome words,

gestures or actions of a persistent or offensive nature involving any person’s race, religion, color,

age, sex, sexual orientation, national origin, disability, gender or any other protected status.

Harassment of this nature also includes any conduct, whether verbal, visual or physical, relating to or

involving person’s race, religion, color, age, sex, sexual orientation, national origin, disability, gender

or any other protected status that is sufficiently pervasive or severe to: i) unreasonably interfere with

a student’s education at the school or a student’s admission to a program offered by the school; or

(ii) create an intimidation, hostile or offensive learning environment for students.

Bullying/Cyber-bullying

The ECA does not tolerate any form of bullying, including cyber-bullying. Each student must sign

the ECA Anti-Bullying Policy (which requirements are incorporated into this Parent/Student

handbook by reference). The Anti-Bullying Policy is in compliance with Matt’s Safe School Law and

can be found as an appendix to this handbook and on the school website. Bullying is a repeated


behavior that can be face-to-face or through an electronic media. Bullying can be physical (hitting,

kicking); verbal (taunting, teasing, racial slurs, verbal sexual harassment); or nonverbal (threatening

or obscene gestures). Cyber-bullying is the use of technology to bully, threaten, intimidate, harass,

ridicule, or intimidate students or staff.

If the individual committing the bullying behavior and the intended target are both students of the

Early Career Academy, the location of the behavior is irrelevant and the action is covered under

school jurisdiction. It is the responsibility of any individual having knowledge of a bullying incident

to immediately report that incident to the Executive Director.

Personal Property

The school expressly disclaims all liability and responsibility of every kind and nature whatsoever

for any loss, theft, damage, destruction, or other casualty to any personal property of any kind

owned by any student, visitor, or other person. Students must personally take full and complete

responsibility for safekeeping of all their property on school premises and during any school

activities.

Soliciting

No solicitation is permitted on the ECA campus, without the express written consent of the

Executive Director.

Parking

Parking spaces for the disabled are marked, and any vehicles parked in these spaces without the

appropriate disabled designation will be towed at the owner’s expense. Visitor parking is permitted

in the parking spaces designated for visitors. Students must not park in the visitors’ parking area.


Unauthorized parking may result in the vehicle being towed at the owner’s expense and suspension

of the individual’s on-campus driving/parking privileges.

Dress Code

While on school property, students must accept individual responsibility for appropriate dress.

Certain items of dress are not acceptable due to safety reasons, such as shower clogs, flip-flops, etc.

Some programs within the school will require more stringent dress codes for safety and professional

reasons.

Students are expected to wear clothing that adequately covers the person and to wear shoes on the

school premises. Clothing must not contain printed matter that may be considered vulgar or

offensive. More formal attire, as announced, may be required for special events or occasions.

Students will maintain their own personal hygiene so as not to be offensive to fellow students and

staff.

Each teacher may set stricter dress and cleanliness requirements related to specific safety and

hygiene factors for the particular class and laboratory setting. (Such requirements will be either

posted in each classroom and laboratory, or included in the course syllabus given to each student at

the beginning of each course.

Students violating the dress code will be asked to leave school until they are properly dressed and

may be counted absent for the time they are not in class.

Storage Units are School Property

Any storage units assigned to students are the property of the school. At no time does the school

relinquish its exclusive control of its storage units. The Executive Director or his/her designee shall

have custody of all combinations to all storage units or locks. Students are prohibited from placing


locks on any storage unit without the written approval of the Executive Director or his/her

designee.

Legitimate Use of School Storage Units

The school may assign storage units to its students for their convenience and temporary use.

Students are to use storage units exclusively to store school-related materials and authorized

personal items. Students shall not use storage units for any unauthorized purpose, unless specifically

authorized by school board policy, the school Executive Director, or his/her designee prior to

students bringing the items to school. Students solely are responsible for the contents of their

storage units.

Search of Storage Unit Contents

Searches of school storage units and their contents deter violations of school rules and regulations,

ensure proper maintenance of school property, and provide greater safety and security for students

and personnel. Accordingly, the Board of Directors authorizes the Executive Director or his/her

designee, upon reasonable cause under the circumstances, to search storage units and storage unit

contents at any time, without notice, and without parental or student consent.

The Executive Director or his/her designee shall not be obligated, but may request the assistance of

a law enforcement officer in conducting a storage unit search. The Executive Director or his/her

designee shall supervise the search. In the course of a storage unit search, the Executive Director or

his/her designee shall respect the privacy rights of the student regarding any items discovered that

are not illegal or in violation of school policies and rules.

Seizure


When conducting storage unit searches, the Executive Director or his/her designee may seize any

illegal or unauthorized items, items in violation of board policy and/or school policies or rules, or

any other items reasonably determined by the Executive Director or his/her designee to be a

potential threat to the safety or security of others. Such items include but are not limited to the

following: contraband, controlled substance analogues or other intoxicants, dangerous weapons,

explosives, firearms, flammable materials, illegal controlled substances, poisons, and stolen property.

Law enforcement officials shall be notified immediately upon seizure of such dangerous items or

items that schools are required to report to law enforcement agencies. Any items seized by the

Executive Director or his/her designee shall be removed from the storage unit and held by school

officials for evidence in disciplinary proceedings and/or turned over to law enforcement officials.

The parent of a student shall be notified by the Executive Director or his/her designee of items

removed from the storage unit.

Search and Seizure of Electronic Devices

Students are prohibited from using cell phones during the school day, unless specific permission is

granted for an educational purpose by the Executive Director in advance. PDAs, iPods, MP3

players, video equipment, cameras, gaming devices, laser pointers and any other electronic devices

not listed above are not permitted on school grounds or at school-related events, unless approved by

the Executive Director. If approved, an electronic device shall not be used in a manner that disrupts

the educational process or purpose, including but not limited to posing a threat to academic

integrity, violating confidentiality or privacy rights of another individual, or violating the Student

Code of Conduct. If the Executive Director or his/her designee has a reasonable suspicion that a

violation has occurred, he/she shall have the right to confiscate the electronic device.

Search and Seizure of Person and/or Personal Property


The school will conduct a search if the Executive Director or his/her designee has a reasonable

suspicion that a violation of the Student Code of Conduct has occurred. When determining the

nature and scope of the search, the Executive Director or his/her designee will consider the age and

sex of the student as well as the nature of the act of misconduct. The search may include the

student’s person, backpack, purse, pockets, shoes, and/or other personal property.

Acts of Misconduct

The acts of misconduct listed in this Student Code of Conduct are not to be construed as an all-

inclusive list or as a limitation upon the authority of school officials to deal appropriately with other

types of conduct which interfere with the good order of the school, the proper functioning of the

educational process, or the health and safety of students.

A student violating any of the acts of misconduct listed in this Student Code of Conduct may be

deemed to be guilty of a gross misdemeanor and will be disciplined. Additionally, a student who

engages in an act of misconduct that violates the law may be referred to law enforcement.

The acts of misconduct and penalties listed below are applicable when a student:

1. engages in acts of misconduct on school property;

2. engages in an act of misconduct in a motor vehicle being used for a school related purpose;

3. engages in an act of misconduct at a school-related activity, function or event;

4. engages in an act of misconduct en route to or from school;

5. engages in an act of misconduct involving another student who is en route to or from

school;

6. engages in an act of misconduct off school premises, which act, in the judgment of the

administration, is of such seriousness that the student’s continued attendance in school


would present a danger to the health and safety of students or employees or would endanger

the proper functioning of the educational process.

Acts of misconduct include, but are not limited to, the following:

1. Failure to cooperate or comply with directions of school personnel and volunteers

2. False allegations against staff, volunteers, or students

3. Falsification of records or scholastic dishonesty (including cheating and plagiarism)

4. Misuse of copyrighted materials

5. Improper or disrespectful communications to staff, volunteers, or students

6. Use of profanity and/or inappropriate language

7. Disruption of school

8. Sexual harassment

9. Possession of a dangerous weapon, as defined by state law

10. Possessing a an object that resembles a weapon or a weapon not defined as a “dangerous

weapon” by state law

11. Possession of personal protection devices (such as tasers, mace, pepper-spray, etc.)

12. Arson

13. Criminal Sexual Conduct as defined by state law

14. Bullying and hazing. The Early Career has adopted an anti-bullying policy in accordance

with state law.

15. Cyber-bullying as defined by the Early Career’s anti-bullying policy

16. Improper dress in violation of the Dress Code

17. Indecency (either with clothing/exposure, pictures or public display of affection)

18. Any public display of affection having sexual connotations


19. Violations of building rules and regulations

20. Violations of rules or policies as set forth in the Parent and Student Handbook

21. Smoking, tobacco possession or use

22. Trespassing, loitering

23. Suspended or expelled student on school property or attending school activities

24. False alarms

25. Possession of electronic device(s) defined by school policy

26. Defacement/Damage of property or theft/possession of stolen property

27. Coercion, extortion or blackmail

28. Possession of firework(s), explosive(s) and/or chemical substance(s)

29. Possession and/or sale of alcohol and/or illegal or illegally obtained drugs (narcotic drugs,

look-a-like substances and illegal chemical substances)

30. Fighting, physical assault and/or battery on another person

31. Gangs and gang related activity

32. Misconduct prior to enrollment

33. Persistent disobedience. Out of school suspensions show a disregard for the rules and

regulations established by the Board of Directors. Students acquiring 10 or more out of

school suspensions for persistent disobedience may be referred for expulsion proceedings.

34. Verbal assault

35. Malicious or willful types of behavior that endanger the safety of others

36. Extreme acts of defiance and/or threats toward teachers/other adults/fellow students

37. Criminal acts other than as enumerated herein

38. Excessive tardiness or absences as defined in the Attendance Policy


Parents or students who are unsure of what conduct is prohibited by each act should consult

with the Executive Director.

Disciplinary Procedures

A student may be disciplined at any level depending upon the frequency and/or severity of the act

of misconduct. Corporal punishment is prohibited as a means of discipline. The disciplinary

procedures shall work in tandem with the Safe Schools Student Discipline Policy following the

Student Code of Conduct.

Teacher Initiated or “Snap” Suspension

The teacher may initiate a suspension from class under the circumstances and in the manner defined

below.

Parent Notification or Conduct Report The teacher disciplines the student and informs the parents by phone and/or letter. A conduct

report may be completed, and, if so, copies are made for the parent, teacher, and student's file.

Suspension of 10 Days or Less When the act of misconduct is such that it disrupts the school learning environment, the Executive

Director may suspend the student from school for a period, not to exceed ten days. The suspension

shall be recorded in the student’s file.

Long Term Suspension or Expulsion When the act of misconduct is considered a crime under state law, or is so extreme that it threatens

the safety of others or constitutes a gross misdemeanor under the Student Code of Conduct or the

student is persistently disobedient, the Executive Director shall recommend that the student serve a


long term suspension or be expelled from school. Upon recommendation of a long term

suspension or expulsion, the student will be granted a right to a due process hearing. Parents, the

student, and any other person with relevant information may give input during a due process hearing

before a final decision is made. A written record is made of all actions taken and copies are made

for the parent, teacher and student’s file.

Students who are served under an IEP or 504 plan are entitled to certain additional rights in the area

of discipline based upon their qualification for services under these federal laws.

Due Process Procedures

The following due process procedures only govern the suspension or the expulsion of a student

from the school’s regular educational program. If a student charged with violation of this Student

Code of Conduct has been returned to the regular school program pending a decision, then such

action of reinstatement shall not limit or prejudice the school’s right to suspend or expel the student

following that decision. The Executive Director shall approve all discipline referrals for suspension

and/or expulsion.

A. Suspension of Ten School Days or Less

As a general rule, prior to any suspension of the student, the Executive Director shall

provide the student with the following due process:

1. The Executive Director shall inform the student of the charges against

him/her, and, if the student denies the charges, the Executive Director

shall provide the student with an explanation of the evidence the

Executive Director possesses.


2. The student shall be provided an opportunity to explain to the Executive

Director his/her version of the facts.

If a student’s presence in school poses an immediate danger to persons or property

or an ongoing threat of disruption to the educational process, the Executive Director

may immediately suspend the student, and as soon thereafter as reasonable, provide

the student with his/her due process rights as set forth in this section.

If, after providing the student with his/her due process rights, the Executive

Director determines that the student has engaged in a prohibited act under this

Student Code of Conduct, then he/she may impose a disciplinary penalty of a

suspension not to exceed ten (10) school days. The student’s parent shall be

informed (in person or by phone) of the suspension and of the reasons and

conditions of the suspension. A report is to be completed, with copies going to the

parent and the student’s file. A decision to suspend a student for ten (10) or fewer

school days is final and not subject to further review or appeal.

B. Suspension for Eleven (11) or More School Days and Expulsion

The Board of Directors designates the Executive Director the authority to hear long-

term suspensions. The Board of Directors will hear all expulsions based upon the

recommendation by the Executive Director.

Acts of misconduct warranting long-term suspension or expulsion require that the

student be immediately placed on suspension for up to ten (10) days pending the

hearing.


1. Hearing for Long-Term Suspension or Expulsion

If a student is charged with a violation of the Student Code of Conduct

carrying a consequence of long term suspension or expulsion, the student

and his parent shall be notified of such in writing by registered mail, as well

as the student’s rights of due process as set forth herein.

The written notice of violation shall state the nature of the violation, the

proposed consequence, and the student’s and parent’s right to a due process

hearing at a specified time and place to determine (i) whether a violation

occurred and (ii) whether the consequence of such violation merits the

imposition of a long-term suspension or expulsion.

The notice shall also set forth the right of the student and his parent and an

advocate of their choice and at their expense to participate in the hearing, the

right of the student to hear and/or see the evidence offered against him or

her during the hearing, the right of the student to present oral or written

evidence or testimony on the student’s behalf, and the right to a written

record of the result of the hearing.

At the hearing, the student and parent shall be advised of the alleged

violation and the facts leading toward the allegation. Within a reasonable

time following the hearing, the school will provide the parent with a written


record of the decision. This document will inform the parent if there is any

right to an appeal.

The parent shall be responsible for making arrangements for the child’s

educational needs during a long-term suspension and/or expulsion.

2. Appeal of Long-Term Suspension or Expulsion

All discipline decisions made by the Board of Directors are final and not

subject to appeal. If a discipline decision is made by someone other than a

quorum of the Board, the decision may be appealed to the Board of

Directors under the procedure below.

An appeal based upon a potential erroneous application of the provisions of

this handbook must be requested in writing within five days of the receipt of

the written decision. The appeal request must contain the reasons that the

decision should be reviewed or reconsidered, and must be signed by the

parent and delivered to the Board of Directors by way of certified first class

mail. The Board of Directors shall review the written decision based upon

the grounds presented in the appeal request.

The appeal request shall be presented at the next regular meeting of the

Board of Directors following receipt of the notice of appeal. The appeal may

be considered in open or closed session, at the student or parent’s request,


and shall be conducted in accordance with the rights of confidentiality

adhering to Education Records as that term is defined in 20 USC 1232g. In

reviewing the appeal request, the Board of Directors may, during the review,

ask the school administration, student, and/or parent for additional

information. The Board of Directors shall notify the student and his parent

of the result in writing within five business days of the board meeting at

which the appeal was heard.

Miscellaneous Provisions

A. Suspended/Expelled Students on School Property or Attending School Activities

A suspended or expelled student who enters onto school property or appears at a

school activity, event or function without the permission of the Executive Director shall

be deemed to be trespassing.

B. Maintaining Class Progress

When practical in the judgment of the Executive Director, a suspended student may be

permitted to maintain progress during the period of suspension.

Definition of Terms

In-School Suspension refers to the Executive Director’s decision to temporarily remove a student

from the mainstream classroom and to place the student in a segregated environment within the

school building that allows the student to continue to progress in their coursework but denies them

access to regular classroom instruction and social interaction with their peers.

Out-Of-School Suspension refers to the Executive Director's decision to temporarily remove a

student's right to attend school or any school-related activity not to exceed ten (10) school days. A


meeting with the parents will be convened to discuss the incident that led to the suspension and to

develop a plan of action for the future. Additional details related to an out-of-school suspension

are:

Students suspended from school are not allowed to visit the school or attend any school-

related activities during the period of suspension.

At the discretion of the Executive Director, out-of-school suspension reports, conduct

reports, and/or corrective action plans may be removed from a student's permanent school

file at the end of the school year if that student has shown noted improvement in behavior

after the disciplinary action was implemented.

Long Term Suspension is defined as a decision to remove a student from school due to extreme

non-compliance with school rules or state law for up to 180 days.

Expulsion is defined as a decision to remove a student from school due to extreme non-compliance

with school rules/state law.

Permanent Expulsion is defined as a decision to permanently remove the student from school if the

student is found in possession of a dangerous weapon,* commits arson or commits criminal sexual

conduct in a school building or on school grounds.

*The Board of Directors is not required to expel a student for possessing a weapon if student

establishes in a clear and convincing manner at least one (1) of the following:


1. The object or instrument possessed by the student was not possessed by the student

for use as a weapon, or for direct or indirect delivery to another person for use as a

weapon.

2. The weapon was not knowingly possessed by the student.

3. The student did not know or have reason to know that the object or instrument

possessed by the student constituted a dangerous weapon.

4. The weapon was possessed by the student at the suggestion, request or direction of,

or with the express permission of school or police authorities.

Student Responsibility: Safe Schools Student Discipline Policy

The school will take swift and appropriate disciplinary action for the following infractions:

Weapons, Arson, and Criminal Sexual Assault

Any student who possesses a dangerous weapon, commits arson, or commits a criminal

sexual assault against another person while on school property or at a school-sponsored

event shall be permanently expelled from the school subject to reinstatement according to

state law. Furthermore, the school will contact local law enforcement as required by law.

Physical Assaults against School Personnel

Any student who commits a physical assault against a school employee or a person engaged

as a volunteer or contractor for the school while on school property, on a school-related

vehicle, or at a school-sponsored activity or event shall be permanently expelled from the

school subject to reinstatement according to state law. “Physical assault” is defined as


intentionally causing or attempting to cause physical harm to another through force or

violence.

Physical Assaults against Students

Any student who commits a physical assault against another student while on school

property, on a school-related vehicle, or at a school-sponsored activity or event shall be

suspended or expelled, depending on the circumstances, for up to one hundred eighty (180)

school days. “Physical assault” is defined as intentionally causing or attempting to cause

physical harm to another through force or violence.

Verbal Assaults

Any student who commits a verbal assault against a school employee or a person engaged as

a volunteer or contractor for the school while on school property, on a school-related

vehicle, or at a school-sponsored activity or event shall be suspended or expelled, depending

on the circumstances, for up to one hundred eighty (180) school days. “Verbal assault” is

defined as an intentional display of force or communication that gives the victim reason to

fear or expect immediate bodily harm. A bomb threat (or similar threat) directed at a school

building, other school property, or a school-related event is also viewed as verbal assault.

Illegal Drug Possession

Any student who possess illegal drugs while on school property, on a school bus or other

school-related vehicle, or at a school-sponsored activity or event may be suspended or

expelled, depending on the circumstances, for up to one hundred eighty (180) school days.


Gross Misdemeanor and Persistent Disobedience

Students guilty of a gross misdemeanor or persistent disobedience may be suspended or

expelled.

Teacher Empowerment to Suspend

If a student's conduct in a class, subject, or activity significantly or repeatedly interrupts the

educational environment, the teacher may suspend that student from the class, subject, or

activity for up to one full school day. The teacher shall immediately report the suspension to

the Executive Director and send the student to the Executive Director or the Executive

Director's designee for appropriate action. After a suspension, the teacher shall ask the

parent of the student to attend a parent/teacher conference regarding the suspension.

Application of the Disciplinary Policy to Students with Disabilities, Child Find, or

Student Due Process Rights

This policy shall be applied in a manner consistent with the rights secured under federal

(IDEA 2004) and state law to students who are determined to be eligible for special

education programs and services. A copy of the Procedural Safeguards for Special Education

Students can be obtained from the Executive Director.

Student Complaint Procedure

Complaints involving sexual harassment or discrimination should be directed according to the Early

Career Academy’s policies on those topics. All student complaints that do not involve sexual

harassment or discrimination will be handled in the manner outlined below:


Step One –Contact the Teacher

Students are encouraged to communicate their concerns fully and frankly to their teacher.

Step Two – Appeal to the Career and Guidance Counselor

If a complaint is not resolved to the student’s satisfaction, the student will, as soon as

possible after the student’s discussion with the teacher, submit the complaint to the Career

and Guidance Counselor.

Step Three –Contact the Executive Director

If the complaint has not been resolved by the Career and Guidance Counselor, the

complaint should be submitted, in writing, to the Executive Director. The Executive

Director will meet with the student to discuss and respond to the complaint. The Executive

Director’s response may be oral or written and will address the specific complaint and

indicate what, if any, corrective action has been proposed or accomplished. Within three (3)

school days of any such discussion, the Executive Director will prepare a written summary

of the discussion, including any agreed upon or proposed solution to the students’

complaint. The Executive Director will take the necessary steps to ensure than any agreed

upon solution or other appropriate action is taken.

Step Four –Contact the Board of Directors

If the complaint has not been resolved by the Executive Director to the satisfaction of the

student, the complaint may be referred to the Board of Directors.


ITT Technical Institute Computer and Electronic Information Policy

Because the ECA resides on or at the campus of ITT Technical Institute, it is important to adhere to

the policies ITT Tech has set out regarding the use of computers and electronic technology. The

following is an excerpt from the ITT Tech Student Handbook. All references to authorization must

go through the ECA Executive Director or Guidance Counselor.

Authorized Use of ITT Technical Institute Resources

a) Use of ITT Technical Institute’s computing and network systems is limited to authorized

users (i.e., students admitted and attending classes, faculty and staff only).

b) User network IDs, computer sign-ons and passwords are the property of ITT Technical

Institute and should never be shared. A user must use only his or her own network ID,

computer sign-on or password and should never provide his or her network ID, computer

sign-on or password to any other user.

c) ITT Technical Institute’s resources or private computer hardware connected to ITT

Technical Institute’s computer systems must not be used to provide access to any ITT

Technical Institute’s network to anyone who is not an authorized user. No ITT Technical

Institute resources may be used to route non-ITT Technical Institute network traffic

through any ITT Technical Institute computer system without the prior written consent of

ITT Technical Institute.

d) All usage of ITT Technical Institute’s computing resources, networks, and software is to be

made for legitimate educational, research, or employment purposes related to ITT Technical

Institute. Any commercial or other use of ITT Technical Institute’s computing resources,

networks, or software is strictly prohibited.


e) If ITT Technical Institute receives any evidence of any violation of this policy, security

breach or use of ITT/ESI resources for an illegal purpose (including the unauthorized use of

copyrighted materials or licensed software), ITT Technical Institute may terminate the user's

network access without consent or notice and impose other disciplinary action.

Electronic Mail

a) All electronic mail ("e-mail") accounts and the contents thereof are the property of ITT

Technical Institute.

b) ITT Technical Institute uses its e-mail system to communicate important information to

students.

Students should check their e-mail account frequently.

c) E-mail messages should not be regarded as private, and ITT Technical Institute cannot

guarantee the confidentiality of e-mail messages for many reasons, including the following: e-

mail messages may be saved indefinitely on the receiving computer, e-mail messages can be

intentionally or accidentally forwarded to non-intended recipients, and e-mail messages may

be improperly delivered by an e-mail system.

d) ITT Technical Institute, although it does not regularly monitor e-mail communications,

reserves the right to inspect, monitor, disclose or discontinue e-mail communications

without consent or notice when consistent with and/or required by law; when there is

evidence or reason to believe violations of law or ITT Technical Institute policy are taking or

have taken place; or when computer maintenance or operational concerns require such

action.

e) ITT Technical Institute e-mail services may not be used for: unlawful activities; commercial

purposes (whether or not under the auspices of ITT Technical Institute); personal financial

gain; or any other use that violates any other ITT Technical Institute policy or guideline,


including any policy regarding intellectual property or regarding sexual or other forms of

harassment.

f) Each user must properly identify himself or herself as the originator of all e-mail messages

he or she sends and shall not employ any false identity on e-mail messages. Users shall also

not give the impression that they are representing or otherwise making statements on behalf

of ITT Technical Institute unless appropriately authorized to do so.

g) Users shall not be permitted to send unsolicited "junk" e-mail or mass electronic mailings or

chain letters without a legitimate ITT Technical Institute educational purpose.

h) ITT Technical Institute e-mail systems are intended for purposes related to ITT Technical

Institute's educational mission. Incidental personal uses of the e-mail system may be made,

however, provided such use does not: (1) burden ITT Technical Institute with noticeable

incremental cost; (2) violate any provision of this policy; or (3) otherwise interfere with the

operation of ITT Technical Institute's computing and network services. Users should be

aware that such personal communications are not private and are subject to the same

conditions as all other e-mail, as described above.

Software Use

ITT Technical Institute makes a variety of software programs and applications available to the

authorized users of its computing systems. This software is generally licensed to ITT Technical

Institute. Failure to

adhere to the terms of such licenses can subject violators to legal action and can jeopardize ITT

Technical Institute's ability to procure such software for its users. Users of ITT Technical Institute's

computing systems must adhere to the following guidelines:


a) Users should ensure they are covered by the appropriate site-license for each software

program or application they use. To determine whether you are an authorized user, contact

the Executive Director.

b) Unauthorized copying of software is illegal and strictly prohibited, even when such software

is not protected against copying. There is generally a no "fair use" provision for copying

software. ITT Technical Institute’s software licenses do not permit you to obtain a copy of

any of its software programs for your use or installation on any computer.

c) Software must not be removed or copied from any ITT Technical Institute hardware or

system without prior written authorization from the Executive Director.

d) Personal software must not be installed or downloaded from the internet onto any ITT

Technical Institute hardware or system without written authorization from the Executive

Director.

Internet Use and Creation of Web Pages

All use and access of the Internet from ITT Technical Institute's computing systems is subject to the

following guidelines:

a) Access to pornographic, gambling, “hate speech”, or similar web sites is strictly prohibited.

Websites accessed by ITT Technical Institute's computing systems users may be monitored.

b) The Executive Director must authorize any web page created. Each such web page must

include contact information, including an e-mail address, of the writer or publisher on each

page.

c) Creation of any web page must comply with copyright laws for all content, including

photographs, illustrations, and other graphic images that were created by others.

Downloading an image from any web site without permission usually violates copyright law.

See also “Copyright Infringement is Prohibited” contained herein.


d) Any personal, club or organization web page created must be clearly marked with a legend

indicating that such page is personal in nature and does not represent the views or opinions

of ITT Technical Institute.

e) While ITT Technical Institute does not typically provide editorial review of web pages, ITT

Technical Institute reserves the right to edit or terminate such pages at any time to comply

with third party complaints, any applicable law or regulation, or computer and network

management concerns.

Proper and Responsible Use of ITT Technical Institute Computing Systems

a) Users of ITT Technical Institute's computing systems must respect the privacy and rules

governing all information accessible through the systems. For example, users must not

intentionally seek information on, obtain copies of or modify files, tapes or passwords

belonging to other users or ITT Technical Institute available on ITT Technical Institute's

computing systems.

b) Users of ITT Technical Institute's computing systems must respect the finite capacity of the

computing systems. For example, users shall limit usage of the computing systems so as to

not interfere with the usage of others and must not use the computing systems for profit-

making or fundraising activities without specific prior written authorization from the

Executive Director to do so.

c) Users of ITT Technical Institute's computing systems must respect the integrity of the

computing systems. For example, users must not download, transmit, or install any virus,

Trojan horse, worm, or other potentially destructive code on any ITT Technical Institute

computing system.


d) Users of ITT Technical Institute's computing systems must ensure that their usage of such

systems complies with all applicable local, state and federal laws.

1

Student/Parent Handbook 201_–201_

2

[CHARTER SCHOOL]

Student/Parent Handbook

Table of Contents Preface ................................................................................................................................................................................. 7

SECTION I: GENERAL INFORMATION ........................................................................................................................ 8

Mission Statement ............................................................................................................................................................... 8

Statement of Non-Discrimination ....................................................................................................................................... 8

Admissions Policy ............................................................................................................................................................... 8

Student Information ............................................................................................................................................................ 9

Residency Verification ...................................................................................................................................................... 10

School Calendar ................................................................................................................................................................ 10

Attendance ........................................................................................................................................................................ 10

Attendance for Credit or Final Grade ................................................................................................................................ 11

Absence and Tardiness ...................................................................................................................................................... 11

Excused Absences ......................................................................................................................................................... 12

Unexcused Absences ..................................................................................................................................................... 12

Make-Up Work ............................................................................................................................................................. 12

Notification to Parents................................................................................................................................................... 13

Driver’s License Attendance Verification......................................................................................................................... 13

Tardiness ........................................................................................................................................................................... 13

Release of Students from School ...................................................................................................................................... 13

Withdrawal from School ................................................................................................................................................... 14

Dress and Grooming ......................................................................................................................................................... 14

Student Fees ...................................................................................................................................................................... 15

Textbooks and Curriculum Materials ................................................................................................................................ 15

3

Displaying a Student’s Artwork, Projects, Photos, and Other Original Work .................................................................. 16

Lost and Found .................................................................................................................................................................. 16

Cafeteria Services ............................................................................................................................................................. 16

Electronic and Telecommunications Devices ................................................................................................................... 16

Distribution of Published Materials or Documents ........................................................................................................... 17

School-Sponsored Trips .................................................................................................................................................... 18

Transportation ................................................................................................................................................................... 18

Student Parking ................................................................................................................................................................. 19

Pledges of Allegiance and Moment of Silence ................................................................................................................. 19

Recitation of the Declaration of Independence ................................................................................................................. 19

Prayer and Meditation ....................................................................................................................................................... 19

School Property and Facilities .......................................................................................................................................... 20

SECTION II: STUDENT HEALTH AND SAFETY ....................................................................................................... 21

Alcohol-Free School Notice .............................................................................................................................................. 21

Tobacco-Free School Notice ............................................................................................................................................. 21

Drug-Free School Notice .................................................................................................................................................. 21

Accident Insurance ............................................................................................................................................................ 21

Accident Prevention .......................................................................................................................................................... 21

Asbestos Management Plan .............................................................................................................................................. 21

Bacterial Meningitis .......................................................................................................................................................... 22

Communicable Diseases ................................................................................................................................................... 23

Immunizations ................................................................................................................................................................... 23

Emergency Medical Treatment ......................................................................................................................................... 25

Illness During the School Day .......................................................................................................................................... 25

Administration of Medication ........................................................................................................................................... 25

Fitness Testing .................................................................................................................................................................. 26

4

Dyslexia and Related Disorders ........................................................................................................................................ 26

Vision and Hearing Screenings ......................................................................................................................................... 26

Spinal Screening ............................................................................................................................................................... 26

Freedom from Discrimination, Harassment, and Retaliation ............................................................................................ 27

Freedom from Bullying and Cyberbullying ...................................................................................................................... 29

Law Enforcement Agencies .............................................................................................................................................. 30

Child Abuse Reporting and Programs ............................................................................................................................... 31

Plan for Addressing Sexual Abuse of Students and Other Maltreatement of Children .................................................... 31

Interrogations and Searches .............................................................................................................................................. 34

Procedures for Use of Restraint and Time-Outs ............................................................................................................... 35

Visitors to the School ........................................................................................................................................................ 35

Disruptions ........................................................................................................................................................................ 35

Drills: Fire, Tornado, and Other Emergencies ................................................................................................................. 36

Emergency Closings ......................................................................................................................................................... 36

Pest Control Information ................................................................................................................................................... 36

Videotaping of Students .................................................................................................................................................... 36

SECTION III: ACADEMICS AND GRADING ............................................................................................................. 37

Academic Programs .......................................................................................................................................................... 37

Career and Technology Programs ..................................................................................................................................... 37

Class Rank/Top Ten Percent (High School) ..................................................................................................................... 37

College Days (High School) ............................................................................................................................................. 37

Computer Resources ......................................................................................................................................................... 38

Counseling ........................................................................................................................................................................ 38

Credit by Exam ................................................................................................................................................................. 38

Extracurricular Activities, Clubs, and Organizations ........................................................................................................ 39

Grade Classification .......................................................................................................................................................... 39

5

Graduation ......................................................................................................................................................................... 39

Physical Education ............................................................................................................................................................ 41

Homework ......................................................................................................................................................................... 41

Promotion and Retention................................................................................................................................................... 41

Report Cards and Grading Scales ..................................................................................................................................... 42

Special Programs ............................................................................................................................................................... 43

State Assessments ............................................................................................................................................................. 44

Standardized Testing ......................................................................................................................................................... 44

Summer School ................................................................................................................................................................. 46

Tutoring ............................................................................................................................................................................. 46

SECTION IV: STUDENT CODE OF CONDUCT .......................................................................................................... 47

The Purpose of the Student Code of Conduct ................................................................................................................... 47

Jurisdiction ........................................................................................................................................................................ 47

Standards for Student Conduct .......................................................................................................................................... 47

Discipline Management Techniques ................................................................................................................................. 48

Corporal Punishment ......................................................................................................................................................... 48

Offenses and Consequences .............................................................................................................................................. 49

Consequences .................................................................................................................................................................... 52

Removal from School Transportation ............................................................................................................................... 53

Conferences, Hearings and Appeals ................................................................................................................................. 53

Process for Suspensions Lasting Up To Five Days ........................................................................................................... 53

Process for Out-of-School Suspensions Over Five Days and Expulsion .......................................................................... 54

Placement of Students with Disabilities ............................................................................................................................ 55

Gun-Free Schools Act ....................................................................................................................................................... 55

Glossary ............................................................................................................................................................................ 55

6

SECTION V: ESPECIALLY FOR PARENTS ............................................................................................................... 59

Your Involvement as a Parent ........................................................................................................................................... 59

Surveys and Activities ...................................................................................................................................................... 59

Notification of Teacher Qualification ............................................................................................................................... 60

Accommodations for Children of Military Families ......................................................................................................... 60

Student or Parent Complaints and Concerns ..................................................................................................................... 60

SECTION VI: IMPORTANT NOTICES ........................................................................................................................ 61

Annual Notice of Parent and Student Rights (Annual FERPA Confidentiality Notice) ................................................... 61

Use of Student Work in School Publications .................................................................................................................... 66

Student Acceptable Use Policy ......................................................................................................................................... 67

Acceptable Use Agreement Acknowledgement Form ...................................................................................................... 70

Electronic Communication Device Commitment Form (Regulation of Electronic Communication Devices) ................ 71

Food Allergy Notification Form ....................................................................................................................................... 72

Acknowledgment and Approval of Student/Parent Handbook ......................................................................................... 73

7

Preface To Students and Parents: Welcome to [CHARTER SCHOOL]! We wish this year to be an especially productive experience for each student. For this to happen, we must all work together: students, parents, and staff. This Student/Parent Handbook (“the Handbook”) is designed to help us accomplish this goal. The Handbook is an overview of our school’s goals, services, and rules. It is an essential reference book describing what we expect of our students and parents, what they can expect of us, and how we will achieve our educational mission. We have attempted to make the language in this Handbook as straightforward as possible. Please note that the term “parent” is used to refer to the parent, legal guardian, or other person who has agreed to assume school-related responsibility for a student. The Handbook is divided into six sections. The first section includes general information regarding school policy and procedures. The second section provides important health and safety information. The third section provides information about academics and grading. The fourth section is the Student Code of Conduct, which is required by state law and intended to promote school safety and an atmosphere for learning. Both students and parents need to be familiar with the Student Code of Conduct. The Student Code of Conduct is also available in the Secretary’s office at each campus, and is posted on the school’s website. The fifth section is especially for parents, with information regarding parental rights. Finally, the sixth section contains important notices regarding student information, computer resources, and electronic communication devices. This Handbook is designed to be in harmony with Board Policy. Please be aware that the Handbook is updated yearly, while policy adoption and revision may occur throughout the year. Changes in policy and procedure that affect Handbook provisions will be made available to students and parents through newsletters and other communications. In case of conflict between Board Policy and any provision of this Handbook, the provision that was most recently adopted by the Board of Directors will be followed. We ask our parents to review the entire Handbook with their students and to keep it as a reference during this school year. Parents or students with questions about the material in this Handbook should contact their Campus Director. Finally, you must complete and return the last page of the Handbook – “Acknowledgement and Approval of Student/Parent Handbook” – to the school office at your campus. On behalf of the entire [CHARTER SCHOOL] staff and community, best wishes for a great 201_–201_ school year!

8

SECTION I: GENERAL INFORMATION

Mission Statement The mission and vision of [CHARTER HOLDER], the charter-holder of [CHARTER SCHOOL], is to [insert mission statement].

Statement of Non-Discrimination [CHARTER SCHOOL] does not discriminate on the basis of race, religion, color, national origin, sex, disability, or age in providing educational services, activities, and programs, including vocational and career technology programs, in accordance with Title VI of the Civil Rights Act of 1964, as amended; Title IX of the Educational Amendments of 1972; Title II of the Americans with Disabilities Act of 1990 (“ADA”), as amended, which incorporates and expands upon the requirements of Section 504 of the Rehabilitation Act of 1973, as amended; the Age Discrimination Act of 1975, as amended; and any other legally-protected classification or status protected by applicable law. The following staff members have been designated as being responsible for coordinating [CHARTER SCHOOL]’s compliance with these requirements:

The Title IX Coordinator, for concerns regarding discrimination on the basis of sex/gender: [name, title, mailing address, and phone number].

ADA/Section 504 Coordinator, for concerns regarding discrimination on the basis of disability: [name, title, mailing address, and phone number].

Age Discrimination Act Coordinator, for concerns regarding discrimination on the basis of age: [name, title, mailing address, and phone number].

All other concerns regarding discrimination: [name, title, mailing address, and phone number].

Admissions Policy Admission and enrollment of students shall be open to persons who reside within the geographic boundaries stated in the [CHARTER SCHOOL]’s open-enrollment charter, and who are eligible for admission based on lawful criteria identified in the charter and in state law. The total number of students enrolled in the School shall not exceed the number of students approved in the charter or subsequent amendments. Total enrollment may further be limited by [CHARTER SCHOOL] based on occupancy limitations, code compliance, and staffing requirements, as deemed necessary. In accordance with state law, [CHARTER SCHOOL] does not discriminate in its admissions policy on the basis of sex; national origin; ethnicity; religion; disability; academic, artistic, or athletic ability; or the district the child would otherwise attend. Exception to Admission As authorized by the School’s charter and Texas Education Code § 12.111(a)(5)(A), students with a documented history of a criminal offense, a juvenile court adjudication, or discipline problems under Texas Education Code, Subchapter A, Chapter 37 will be excluded from enrollment in [CHARTER SCHOOL]. Submission of Applications and Admissions Lottery The School requires applicants to submit a completed application form in order to be considered for admission. An admissions lottery will be conducted if the total number of applicants exceeds the number of open enrollment spots. Each applicant will be assigned a number, and all numbers will be placed in a container and randomly drawn one

9

number at a time by the Campus Director or designee. Each applicant whose number is drawn will be offered admission. Notification will be made by telephone, e-mail or U.S. Postal Service. Failure of an applicant to respond within 48 hours of the date of the telephone call or e-mail, or within three business days of a post-marked letter, will result in the forfeiture of his or her position in the application process. Parents notified by mail should call the admitting campus immediately upon receipt of the notice in order to preserve their child’s position in the lottery. Once all enrollment spots have been filled by the lottery, the remaining numbers will be drawn and the applicants assigned to these numbers will be placed on a waiting list in the order in which they were drawn. If a vacancy arises before the commencement of the school year, the individual on the waiting list with the lowest number assignment will be offered admission and then removed from the waiting list. If an application is received after the application period has passed, the applicant’s name will be added to the waiting list behind the names of the applicants who timely applied. Exceptions Federal guidelines permit the School to exempt from the lottery students who are already attending the School; siblings of students already admitted to or attending the School; and children of the School’s founders, teachers and staff, so long as the number of these students constitutes only a small percentage of the School’s enrollment.

Student Information Any student admitted to the School must provide records, such as a report card and/or transcript from the previous school attended, to verify his or her academic standing. Verification of residency and current immunization records are also required. Every student enrolling at the School for the first time must present documentation of immunizations as required by the Texas Department of State Health Services. No later than 30 days after enrolling in the School, the parent and school district in which the student was previously enrolled shall furnish records that verify the identity of the student. These records may include the student’s birth certificate or a copy of the student’s school records from the most recently attended school. The School will forward a student’s records on request to a school in which a student seeks or intends to enroll without the necessity of the parent’s consent. Food Allergy Information The parent of each student enrolled at the School must complete a form provided by the School that discloses (1) whether the child has a food allergy or a severe food allergy that should be disclosed to the School to enable the School to take any necessary precautions regarding the child’s safety, and (2) specifies the food(s) to which the child is allergic and the nature of the allergic reaction. For purposes of this requirement, the term “severe food allergy” means a dangerous or life-threatening reaction of the human body to a food-borne allergen introduced by inhalation, ingestion, or skin contact that requires immediate medical attention. The School may also require information from a child’s physician if the child has food allergies. Food allergy information forms will be maintained in the child’s student records, and shall remain confidential. Information provided on food allergy information forms may be disclosed to teachers, school counselors, school nurses, and other appropriate school personnel only to the extent consistent with Board policy and as permissible under the Family Educational Rights and Privacy Act of 1974 (“FERPA”).

10

Residency Verification The Texas Education Code authorizes schools to obtain evidence that a person is eligible to attend public schools. To be eligible for continued enrollment in the School, each student’s parent must show proof of residency at the time of enrollment. Residency may be verified through observation, documentation and other means, to include but not limited to:

A recently paid rent receipt. A current lease agreement. The most recent tax receipt indicating home ownership. A current utility bill indicating the address and name of the residence occupiers. Mailing address of the residence occupiers. Visual inspection of the residence. Interviews with persons with relevant information. Building permits issued to a parent on or before September 1 of the school year in which admission is sought

(permits will serve as evidence of residency only for the school year in which admission is sought). Falsification of residence on an enrollment form is a criminal offense.

School Calendar [CHARTER SCHOOL] operates according to the school calendar adopted annually by the Board of Directors. Holidays may be used as school make-up days for days lost to inclement weather. The latest changes to the calendar will be available on the school website.

Attendance Consistent school attendance is an essential component of each student’s education. Absence from school will affect a student’s ability to succeed in class; therefore, students and parents should make every effort to avoid unnecessary absences. Additionally, state law mandates compulsory school attendance for children of a certain age, and another state law deals with attendance for course credit and a student’s final grade. These laws are discussed below. Compulsory Attendance The state compulsory attendance law requires that a student between the ages of six and 18 must attend school and school-required tutorial sessions, unless the student is otherwise legally exempted or excused. School employees must investigate and report violations of the state compulsory attendance law. A student absent from school without permission – including absence from any class, required special programs, or required tutorials – will be considered truant and subject to disciplinary action. A student who voluntarily attends or enrolls after his or her 18th birthday is also required to attend each school day. The School may revoke a student’s enrollment if the student is 18 years of age or older and has accumulated more than five unexcused absences in a semester. The student’s continued presence on school property would be unauthorized and may, as allowed by applicable law, be considered trespassing. Notice to Parents: Under Texas Education Code § 25.095(a), you are hereby notified that if a student is absent from school on ten or more days or parts of days within a six-month period in any one school year or is absent for three or more days or parts of days within a four-week period, the parent is subject to prosecution under Texas Education Code § 25.093, and a student age 12 through age 17 is subject to prosecution under Texas Education Code § 25.094 or to referral to a juvenile court in a county with a population of less than 100,000 for conduct that violates that section.

11

Attendance for Credit or Final Grade To receive credit or a final grade in a class, a student must attend at least at least [percentage of days; state law mandates that students enrolled in a school district must attend at least 90% of the days a class is offered, but this requirement does not apply to charter schools. However, many charter schools have adopted the “90% Rule.”] of the days the class is offered. These days include both excused and unexcused absences. A student who attends fewer than [percentage] of the days the class is offered may be referred to the Attendance Review Committee to determine whether the absences were due to extenuating circumstances and how the student may regain credit or earn a final grade.

The Attendance Review Committee will consider the following factors when determining whether there are extenuating circumstances for an absence:

All absences will be reviewed, both excused and unexcused, with consideration given to special circumstances discussed in the Texas Education Code.

For a student transferring into the School after school begins, including a migrant student, only those absences after enrollment will be considered.

The committee will attempt to reach a decision that is in the student’s best interest. The committee will consider whether the absences were for reasons over which the student or parent could

exercise control. The committee will consider the acceptability and authenticity of documentation expressing reasons for the

student’s absences. The committee will consider the extent to which the student has completed all assignments, mastered the

essential knowledge and skills, and maintained passing grades in the course or subject. The student, parent, or other representative will be given an opportunity to present any information to the

committee about the absences and to discuss ways to earn or regain credit. If credit is lost or a final grade is not earned due to excessive absences, the Attendance Review Committee will decide how the student may regain credit or earn a final grade. If the committee determines that there are no extenuating circumstances and that credit and/or a final grade may not be earned, the student or parent may appeal the committee’s decision to the Board of Directors by filing a written request with the Superintendent. The appeal notice must be postmarked to the following address within fifteen (15) days following the last day of instruction in the semester for which credit was denied or a final grade was not earned:

[SCHOOL NAME AND ADDRESS] The appeal will then be placed on the agenda of the next regularly scheduled Board meeting. The Campus Director or designee shall inform the student or parent of the date, time, and place of the meeting.

Absence and Tardiness Absence in General When a student must be absent from school, parents are asked to call the School each day the student will be absent. Upon returning to school, the student must bring a note, signed by the parent, that describes the reason for the absence. A note signed by the student, even with the parent’s permission, will not be accepted. Notes must be received within [number] days of the absence, or the absence will be unexcused. Because excessive absences are considered truancy under state law, the School reserves the right to take extreme absence cases to court. Types of Absences [CHARTER SCHOOL] recognizes two kinds of absences: excused and unexcused. Students and parents should read this section carefully to understand the School’s expectations. Students and parents should also be aware of the School’s policy regarding homework, quizzes, and tests following an absence.

12

Excused Absences

State law provides several exemptions to the compulsory attendance law for certain absences, so long as the student makes up all work missed. This includes absence for the following reasons:

Religious holy days; Required court appearances; Activities related to obtaining United States citizenship; Service as an election clerk; Documented health-care appointments for the student or a child of the student, including absences for

recognized services for students diagnosed with autism spectrum disorders. A note from the health-care provider must be submitted upon the student’s arrival or return to campus;

For students in the conservatorship (custody) of the state; Mental health or therapy appointments; or Court-ordered family visitations or any other court-ordered activity, provided it is not practicable to schedule

the student’s participation in the activity outside of school hours. A junior or senior student may also be absent for up to two days per school year for purposes of visiting a college or university, so long as the student obtains permission for the visit from the Campus Director, follows the School’s procedures to verify the visit, and makes up any work missed due to the absence. A student may also be absent for up to two days in a school year for service as an early voting clerk, provided the student receives approval from the Campus Director prior to the absence and informs his or teachers of the absence. Absences of up to five days will be excused for a student to visit with a parent, stepparent, or legal guardian who has been called to duty for, is on leave from, or immediately returned from certain deployments. For religious holy days, required court appearances, activities related to obtaining citizenship, and services an election clerk, one day of travel to the site and one day of travel from the site shall also be excused by the School.

Unexcused Absences

Any absence not listed above will be considered an unexcused absence. Examples of unexcused absences include, but are not limited to:

Car trouble. Failure to bring a written note within two school days following an absence. Leaving school without the permission of the Campus Administrator or other administrator. Oversleeping. Personal business. Vacations.

Make-Up Work

If a student misses class for any reason, a teacher may assign make-up work that incorporates the instructional objectives for the class and that will assist the student to master the essential knowledge and skills necessary to meet subject or course requirements. Students are responsible for obtaining and completing the make-up work in a satisfactory manner and within the time specified by the teacher. Teachers will provide students and parents with additional information regarding penalties for failure to complete make-up work within the time allotted, and the process for making up tests missed due to absence.

13

Notification to Parents

The School will notify the parent by mail when the student is absent from school, without excuse, on three days or parts of days within a four-week period. The notice will inform the parent that it is the parent’s duty to monitor the student’s school attendance and require the student to attend school, the parent is subject to prosecution for contributing to nonattendance under Texas Education Code § 25.093, and that a conference between the parent and School officials is needed to discuss the absences.

Driver’s License Attendance Verification The Texas Department of Public Safety (“DPS”) is required to verify the attendance records of a student between the ages of 16 and 18 that is seeking to obtain or renew a driver’s license. In order for DPS to access this information or, in certain circumstances, for a school administrator to provide the attendance information to DPS, written parental permission must be obtained. Students may obtain the required Verification of Enrollment (“VOE”) form from the School office.

Tardiness Nearly all tardiness is avoidable. If a student arrives late to school, a parent must report to the School office to complete a tardy slip. A student who is late to class by more than [number] minutes will be assigned to detention. Repeated tardiness will result in more severe disciplinary consequences as allowed by the Student Code of Conduct.

Release of Students from School A student will not be released from school at times other than at the end of the school day except with permission from the Campus Director or designee and in accordance with campus sign-out procedures. Additionally, state rules require that parental consent be obtained before a student may leave campus at any point in the school day. The School has established the following guidelines to document parent consent:

A parent or other authorized adult must go to the front office to sign the student out. The School will check the identity of the adult seeking to sign the student out. After the adult’s identity is verified, the School will call for the student. For safety reasons and to preserve the learning environment, the School does not allow parents to go to a classroom to retrieve a child. If the student returns to school later that day, the parent or authorized adult must accompany the student to the front office and sign the student in, and provide documentation concerning the reason for the absence. The School will not release a student to anyone other than a parent or other adult authorized by the parent.

The School may allow high school students to leave campus unaccompanied, provided a parent provides a written note to the front office in advance of the absence. Students over 18 years of age or other emancipated minors may provide a note on their own behalf. In limited circumstances, a phone call from the parent may be accepted, but the School may require a note to be provided for documentation purposes. If the student is allowed to leave campus unaccompanied, he or she must sign out through the front office and sign in if he or she returns to school that same day. Documentation concerning the reason for the absence is required.

A student who becomes ill during the school day should, with the teacher’s permission, report to the Campus Director and/or school nurse. The Campus Director and/or school nurse will decide whether the student should be sent home and will notify the student’s parent of the student’s illness. The sign-out procedures discussed above must be followed.

Because class time is important, doctor’s appointments or meetings with other professionals should be scheduled at times when the student will not miss instructional time, if possible.

14

Withdrawal from School Voluntary Withdrawal A student under 18 may be withdrawn from school only by a parent or legal guardian. The School requests notice from the parent at least three days in advance so that records and documents may be prepared. A withdrawal form may be obtained from the Campus Director’s office. The Campus Director or other administrator will verify the information on the withdrawal form when the parent arrives to sign withdrawal papers to complete the process. The parent shall also provide the name of the new school in which the student will be enrolled, and must sign the formal withdrawal request to document that the student will continue to be enrolled in a school as required by compulsory attendance laws. A student who is 18 years of age or older, who is married, or who has otherwise been declared by a court to be an emancipated minor may withdraw without parental signature. Withdrawing students and parents are expected to:

Return all textbooks and checked-out materials and equipment; Complete any make-up work assigned; Pay any unpaid balance for student fees, if any; and Sign a release of student records.

In all cases, withdrawal forms must be appropriately completed and signed before withdrawal is complete. Involuntary Withdrawal The School may initiate withdrawal of a student under the age of 18 for non-attendance if:

1. The student has been absent ten consecutive school days; and 2. Repeated efforts by the attendance officer and/or Campus Director to locate the student have been

unsuccessful. Additionally, the School may revoke the enrollment of a student 18 years of age or older who has more than five unexcused absences in one semester.

Dress and Grooming As authorized by state law and the School’s charter, students are required to wear uniforms to school. The School’s dress and grooming standards are designed to teach grooming and hygiene, prevent disruption, minimize safety hazards, and provide a dress standard that offers flexibility for the parent and student. Students must come to school cleanly and neatly groomed and wearing clothing that will not be a health or safety hazard to the student or others, and that will not distract from the educational atmosphere of the School. Students are required to arrive in proper attire every day. Parents must provide their student(s) with the required uniform, except in the case of educationally disadvantaged students as provided in the Texas Education Code. The School may provide a uniform for economically disadvantaged students. A request for school assistance for purchasing uniforms must be made in writing to the Campus Director and include evidence of the inability to pay. Further details are available in the Campus Director’s office. A parent may choose for his or her student(s) to be exempted from the requirement of wearing a uniform if the parent provides a written statement that, as determined by the Board of Directors, states a bona fide religious or philosophical objection to the requirement. Students who do not follow the School’s guidelines for personal attire and appearance may be subject to discipline under the Student Code of Conduct. Additionally, a parent may be contacted to bring an acceptable change of clothing

15

to the school, and the student may be assigned to in-school suspension for the remainder of the day until a change of clothes is brought to the school. The following uniform and dress/grooming guidelines shall be followed by all students: [INSERT DRESS AND GROOMING REQUIREMENTS]

All Clothing is Subject to the Approval of the School Administration. The Student Dress Code may be revised at any time.

Student Fees Materials that are part of the basic educational program are provided with state and local funds at no charge to students. Students are expected to provide their own consumable items, such pencils, paper, pens, erasers, and notebooks. Students may be required to pay certain fees or deposits, including:

1. A fee for materials for a class project that the student will keep, if the fee does not exceed the cost of materials. 2. Membership dues in voluntary student clubs or organizations and admission fees for extracurricular activities. 3. A security deposit for the return of materials, supplies, or equipment. 4. A fee for personal physical education and athletic equipment and apparel, although a student may provide his

or her own equipment or apparel if it meets reasonable requirements and standards relating to health and safety. 5. A fee for voluntarily purchased items, such as student publications, class rings, pictures, yearbooks, and

graduation announcement. 6. A fee for voluntary student health and accident benefit plan. 7. A reasonable fee, not to exceed the actual annual maintenance cost, for the use of musical instruments and

uniforms owned or rented by the School. 8. A fee for items of personal apparel used in extracurricular activities that become the property of the student. 9. A parking fee or a fee for an identification card.

10. A fee for a driver-training course, not to exceed the actual cost per student in the program for the current school year.

11. A fee for an optional course offered for credit that requires the use of facilities not available on campus or the employment of an educator who is not part of the School’s regular staff.

12. A fee for summer school courses that are offered tuition-free during the regular school year. 13. A reasonable fee for transportation of a student who lives within two miles of the campus. 14. A reasonable fee, not to exceed $50, for costs associated with an educational program offered outside of regular

school hours through which a student who was absent from class receives instruction voluntarily for the purpose of making up the missed instruction and meeting the level of attendance required for class credit, so long as the fee would not create a financial hardship or discourage the student from attending the program.

15. A fee for lost, damaged, or overdue library books. 16. A fee specifically permitted by any other statute.

[CHARTER SCHOOL] may waive any fee or deposit if the student and parent are unable to pay. A request for such a waiver must be made in writing to the Campus Director, and include evidence of the inability to pay. Details for the fee waiver are available in the Campus Director’s office.

Textbooks and Curriculum Materials State-approved textbooks and additional curriculum materials are provided free of charge for each subject or class, except for dual credit courses. Materials must be treated with care and used as directed by the teacher. A student who is issued a damaged book should report the damage to the teacher. Students must return all textbooks and supplemental materials to the teacher at the end of the school year or when the student withdraws from school. Any student failing to return issued materials in an acceptable condition loses the right

16

to free textbooks and educational materials until the student and/or parent pay for the damages. However, a student will be provided textbooks for use at school during the school day. [CHARTER SCHOOL] may reduce or waive the payment requirement if the student is from a low-income family. The release of student records, including official transcripts, will be delayed pending payment for lost or severely damaged textbooks or supplemental materials.

Displaying a Student’s Artwork, Projects, Photos, and Other Original Work Teachers may display student work in classrooms or elsewhere on campus as recognition of student achievement. However, [CHARTER SCHOOL] will seek parental consent before displaying student artwork, special projects, photographs taken by students, and other original works on the [CHARTER SCHOOL] website, on any campus or classroom website, in printed materials, by video, or by any other method of mass communication. [CHARTER SCHOOL] will also seek consent before displaying or publishing an original video or voice recording in this manner.

Lost and Found Anyone who finds books, clothing or other personal items left unattended should bring these items to the front office. Students who have lost these items should check at the front office. Items will be kept in lost and found for up to seven days. The hallways are inspected each evening and all unsecured items are placed in the front office. Students should label all books, uniforms and other personal belongings with their name to ensure the prompt return of an item that has been misplaced.

Cafeteria Services [CHARTER SCHOOL] participates in the National School Lunch Program and offers nutritionally balanced breakfasts and lunches. Guidelines set by the Texas Department of Agriculture (“TDA”) and United Stated Department of Agriculture (“USDA”) are followed to meet the nutritional needs of all students. Menus may be obtained at the school office. Free and reduced-price breakfasts and lunches are available based on financial need. Information about a student’s participation is confidential. See the Campus Secretary to apply. Students must apply for meal assistance each school year. State-Mandated Nutrition Guidelines The TDA places strict limits on any food or drink provided or sold to students other than through [CHARTER SCHOOL]’s food and nutrition services. More detailed information may be obtained at the school office or online at www.squaremeals.org.

Electronic and Telecommunications Devices Electronic and telecommunication devices are a major source of distraction in the classroom. For this reason, students are not permitted to possess items such as cell phones, pagers, radios, CD players, tape recorders, camcorders, DVD players, cameras, or electronic devices or games at school, unless prior permission has been obtained from the Campus Director. If a student is permitted to possess an electronic or telecommunications device at school, including a cell phone, all such devices must be turned off during school hours. If a school employee observes a student using any electronic or telecommunication device (including a cell phone) during the school day or a school-related activity, the employee will collect the item and turn it in to the Campus Director’s office. If a student and parent have executed a waiver permitting the student to possess an electronic communication device at school, school officials may power on and search the device if there is a reasonable cause to believe that the device has been used in the transmission or reception of communications prohibited by law, policy, or regulation. A parent will be contacted to pick up the item and pay the applicable fine. A $15 fee will be assessed before the parent is able to retrieve the device. An additional $15 fee will be assessed the second time a device is confiscated. The third

17

time a device is confiscated, [CHARTER SCHOOL] will assess a $15 fee and retain the device in the main office until the end of the current semester. Any disciplinary action will be in accordance with the Student Code of Conduct. [CHARTER SCHOOL] will not be responsible for damage to or loss or theft of confiscated items.

Distribution of Published Materials or Documents School Materials Publications prepared by and for [CHARTER SCHOOL] may be posted or distributed with prior approval by the Campus Director, sponsor, or teacher. Such items may include school posters, brochures, murals, etc. Student Non-school Materials Students must obtain express prior approval of the Campus Director before distributing, posting, selling, or circulating written materials, handbills, photographs, pictures, petitions, films, tapes, posters, or other visual or auditory materials on campus. Non-school literature shall not be distributed by students on school property if:

The materials are obscene, vulgar, or otherwise inappropriate for the age and maturity of the audience. The materials endorse actions endangering the health or safety of students. The materials promote illegal use of drugs, alcohol, or other controlled substances. The distribution of such materials would violate the intellectual property rights, privacy rights, or other rights

of another person. The materials contain defamatory statements about public figures or others. The materials advocate imminent lawless or disruptive action and are likely to incite or produce such action. The materials are hate literature or similar publications that scurrilously attack ethnic, religious, or racial

groups or contain content aimed at creating hostility and violence, and the materials would materially and substantially interfere with school activities or the rights of others.

There is reasonable cause to believe that distribution of the non-school literature would result in material and substantial interference with school activities or the rights of others.

Any student who posts material without prior approval will be subject to disciplinary action in accordance with the Student Code of Conduct. Materials displayed without approval will be removed. Nonstudent Non-school Materials Written or printed materials, handbills, photographs, pictures, films, tapes, or other visual or auditory materials over which [CHARTER SCHOOL] does not exercise control shall not be sold, circulated, or distributed by persons or groups not associated with [CHARTER SCHOOL] or a school support group on school premises unless the person or group obtains specific prior approval from the Superintendent or designee. To be considered, any non-school material must include the name of the sponsoring organization or individual. The requestor may appeal the Superintendent or designee’s decision in accordance with school policy. Fundraising Student clubs or classes, outside organizations, and/or parent groups occasionally may be permitted to conduct fundraising drives for approved school purposes. An application for permission must be submitted to the Campus Director at least ten days before the event. Fundraising activities not approved by the Campus Director are not permitted on school property. Sales Advertising may be permitted for approved school-related activities. This may include school newspapers, yearbooks, and other fundraising projects. Advertising material that promotes the use of alcohol and/or tobacco is strictly

18

prohibited. No person may display, solicit, or sell any item or service to students or school personnel while on school property, at school-sponsored events, or on school transportation without the written permission of the Campus Director. Demonstrations or Meetings on School Premises (Non-School Sponsored) Any student who wishes to promote, organize or participate in a non-school sponsored demonstration or meeting on school premises must obtain prior written approval from the Campus Director at least three days prior to the requested activity. This three-day period does not include the day of the request or the day of the activity. [CHARTER SCHOOL] may prohibit demonstrations or meetings that materially and substantially interfere with school activities or the rights of other students or teachers; are vulgar or profane; might reasonably be perceived to advocate drug or alcohol use, irresponsible sex, or conduct otherwise inconsistent with the shared values of a civilized order; inappropriate for the maturity level of the audience; associates [CHARTER SCHOOL] with a non-neutral position on matters of political controversy; and/or [CHARTER SCHOOL] demonstrates reasonable cause to believe that the expression would create material and substantial interference with its educational program.

School-Sponsored Trips Many school-sponsored trips are made each year for the various activities in which students participate. The following regulations govern trips sponsored by [CHARTER SCHOOL]:

1. Students missing school when on a school-sponsored trip are not considered absent, but are required to make up the work missed. Arrangements should be made with each teacher for make-up work before the trip is made.

2. Students are responsible for observing all safety rules during the trip. 3. Students participating in the trip are under the supervision of a sponsor and are expected to follow the Student

Code of Conduct and dress code, as applicable. 4. Students may not miss any class more than 10 times within the school year, unless they are participating in

competition beyond the district level.

Transportation School Sponsored Students who participate in school-sponsored trips are required to use transportation provided by [CHARTER SCHOOL] to and from the event. The Campus Director, however, may make an exception if the parent makes a written request that the student be released to the parent or to another adult designated by the parent, so long as the written request is presented before the scheduled trip. Only designated students are allowed to ride in school vehicles. Students may neither ride the vehicle to a different location nor have friends ride the vehicle to participate in after-school activities. Buses and Other School Vehicles [CHARTER SCHOOL] provides bus transportation at no cost for students living two or more miles from school. Bus routes and any subsequent changes are posted in the front office. Further information may be obtained by calling the front office. Students are expected to assist school staff in ensuring that school vehicles remain in good condition and that transportation is provided safely. When riding school vehicles, students are held to behavioral standards established in this Handbook and the Student Code of Conduct. Students must:

Follow the driver’s instructions at all times. Enter and leave the vehicle in an orderly manner at the designated stop. Keep feet, books, band instrument cases, and other objects out of the aisle. Refrain from defacing the vehicle or its equipment.

19

Refrain from putting his or her head, hands, arms, or legs out of the window, holding any object out of the window, or throwing objects within or out of the vehicle.

Wait for the driver’s signal upon leaving the vehicle and before crossing in front of the vehicle. Not eat and drink on the vehicle.

When students ride in a school van or passenger car, seat belts must be fastened at all times. Student misconduct while riding in a school vehicle will be punished in accordance with the Student Code of Conduct. Additionally, student transportation privileges may be suspended. If a special needs student is receiving bus transportation as a result of an Individual Education plan (“IEP”), the Admissions Review and Dismissal (“ARD”) Committee will have discretion in determining appropriate disciplinary consequences for improper behavior in a school vehicle.

Student Parking Students shall acquire authorization from the school administration before parking a vehicle on school property. Unauthorized vehicles will be towed at the owner’s expense. Students driving on school property must follow all posted speed limits and comply with traffic laws. Unsafe operation of a vehicle on campus (speeding, improper parking, etc.) may result in disciplinary action and/or removal of parking privileges. Students are instructed to leave their vehicles immediately after parking. Under no circumstances will students be allowed to sit in their vehicles.

Pledges of Allegiance and Moment of Silence Each school day, students will recite the Pledge of Allegiance to the United States flag and the Pledge of Allegiance to the Texas flag. Parents may submit a written request to the Campus Director or designee at the [CHARTER SCHOOL] office to excuse their student from reciting a pledge. State law requires that one minute of silence follow recitation of the pledges. Each student may choose to reflect, pray, meditate, or engage in any other silent activity during that minute so long as the silent activity does not interfere with or distract others. In addition, state law requires that [CHARTER SCHOOL] provide for the observance of one minute of silence at the beginning of the first class period when September 11 falls on a regular school day in remembrance of those who lost their lives on September 11, 2001.

Recitation of the Declaration of Independence State law requires students in social studies classes in grades 3–12 to recite a portion of the text of the Declaration of Independence during “Celebrate Freedom Week.” A student will be exempted from this requirement if a parent provides a written statement requesting that the student be excused, [CHARTER SCHOOL] determines that the student has a conscientious objection to the recitation, or the parent is a representative of a foreign government to whom the United States government extends diplomatic immunity.

Prayer and Meditation Students have a right to individually, silently, and voluntarily pray or meditate in school in a manner that does not disrupt instructional or other school activities. [CHARTER SCHOOL] will not require, encourage, or coerce a student to engage in or refrain from such prayer or meditation during any school activity.

20

School Property and Facilities Use by Students Before and After School Students should not arrive at school prior to [time]. However, for the benefit of students and parents, certain areas of the school will be accessible to students before and after school for specific purposes. These areas include the cafeteria and any other area designated by the Campus Director for students who arrive early or stay after school. These areas are open students beginning at [time]. Students must leave campus immediately after school dismisses in the afternoon, unless they are involved in an activity under the supervision of a teacher or sponsor. [CHARTER SCHOOL] [does/does not] not offer after-school care. If a student is involved in an after-school activity, he or she must remain in the area where the activity is scheduled to take place. The student may not go to another area of the school without permission by the teacher or sponsor overseeing the activity. Conduct Before, During, and After School Teachers and administrators have full authority over student conduct during before or after-school activities on school premises and at school-sponsored events off school property, including but not limited to rehearsals, club meetings, athletic practices, and special study groups and tutorials. Students are subject to the same rules of conduct that apply during the instructional day and will be subject to consequences established by the Student Code of Conduct. Students may also be subject to any rules of conduct established by the activity’s sponsor. During the school day, students may not loiter or stand in the halls between classes. Students must have a pass to be outside the learning center during class time. Failure to obtain a pass will result in disciplinary action. Library The library is a learning laboratory with books, computers, magazines, and other materials available for classroom assignments, projects, and reading or listening pleasure. The library is open for student use during the times set by the Campus Director. A student must have a library pass signed by a teacher in order to enter. Meetings of Noncurriculum-Related Groups Students are permitted to meet with noncurriculum-related groups during the hours designated by the Campus Director before and after school. These groups must comply with the requirements found in school policy. A list of these groups is available in the Campus Director’s office. Vandalism The taxpayers of the community have made a substantial financial commitment for the construction and upkeep of school facilities. To ensure that school facilities can serve those for whom they are intended – both this year and in the coming years – littering, defacing, or damaging school property is not tolerated. Students will be required to pay for damages they cause and will be subject to criminal proceedings as well as disciplinary consequences in accordance with the Student Code of Conduct.

21

SECTION II: STUDENT HEALTH AND SAFETY

Alcohol-Free School Notice In order to provide a safe and alcohol-free environment for students and employees, all alcoholic beverages are prohibited on school property at all times, and at all school-sanctioned activities occurring on or off school property. Student violators are subject to the disciplinary terms of the Student Code of Conduct.

Tobacco-Free School Notice Smoking and using smokeless tobacco, including electronic cigarettes, are not permitted in school buildings, vehicles, or on or near school property, or at school-related or school-sanctioned events off school property. Students may not possess tobacco products at any of the locations or activities listed above. All violators are subject to possible prosecution, as allowed by law. Additionally, student violators are subject to the disciplinary terms of the Student Code of Conduct.

Drug-Free School Notice [CHARTER SCHOOL] believes that student use of illicit drugs is both wrong and harmful. Consequently, [CHARTER SCHOOL] prohibits the use, sale, possession, or distribution of illicit drugs by students on school premises or any school activity, regardless of its location. Student violators are subject to possible prosecution, as allowed by law, as well as the disciplinary terms of the Student Code of Conduct.

Accident Insurance Soon after school begins, parents will have the opportunity to purchase low-cost accident insurance that will help in meeting medical expenses in the event of injury to their child. Except for the purchase of insurance against bodily injury sustained by students while training for or engaging in interscholastic athletic competition or while engaging in school-sponsored activities on a school campus, [CHARTER SCHOOL], under state law, pay for medical expenses associated with a student’s injury.

Accident Prevention Student safety on campus and at school-related events is a high priority of [CHARTER SCHOOL]. Although [CHARTER SCHOOL] has implemented safety procedures, the cooperation of students is essential to ensure school safety. Students should:

Avoid conduct that is likely to put the student or other students at risk. Follow the behavioral standards in this Handbook and the Student Code of Conduct, as well as any additional

rules for behavior and safety set by the Campus Director, teachers, or bus drivers. Remain alert to and promptly report to a teacher or the Campus Director safety hazards, such as intruders on

campus and threats made by any person toward a student or staff member. Know emergency evacuation routes and signals. Immediately follow the instructions of teachers, bus drivers, and other school employees.

Asbestos Management Plan All school facilities have been inspected for asbestos by a licensed Asbestos Hazard Emergency Response Act (“AHERA”) inspector. An Asbestos Management Plan has been created for the School in accordance with federal regulations. Parents may view the Asbestos Management Plan by contacting the Campus Director. Copies of the

22

management plan are also available at a reasonable charge. Any questions regarding the management plan for [CHARTER SCHOOL] or an individual campus should be directed to [CONTACT NAME AND ADDRESS].

Bacterial Meningitis State law requires [CHARTER SCHOOL] to provide the following information: What is Meningitis? Meningitis is an inflammation of the covering of the brain and spinal cord. It can be caused by viruses, parasites, fungi, and bacteria. Viral meningitis is common and most people recover fully. Parasitic and fungal meningitis are very rare. Bacterial meningitis is very serious and may involve complicated medical, surgical, pharmaceutical, and life support management. What are the Symptoms? Someone with meningitis will become very ill. The illness may develop over one or two days, but it can also rapidly progress in a matter of hours. Not everyone with meningitis will have the same symptoms. Children (over two years of age) and adults with meningitis commonly have a severe headache, high fever, and neck stiffness or joint pains. Other symptoms might include nausea, vomiting, discomfort looking into bright lights, confusion, and sleepiness. In both students and adults, there may be a rash of tiny, red- purple spots. These can occur anywhere on the body. The diagnosis of bacterial meningitis is based on a combination of symptoms and laboratory results. How Serious Is Bacterial Meningitis? If it is diagnosed early and treated promptly, the majority of people make a complete recovery. In some cases it can be fatal or a person may be left with a permanent disability. How Is Bacterial Meningitis Spread? Fortunately, none of the bacteria that cause meningitis are as contagious as diseases like the common cold or the flu, and they are not spread by casual contact or by simply breathing the air where a person with meningitis has been. The germs live naturally in the back of our noses and throats, but they do not live for long outside the body. They are spread when people exchange saliva (such as by kissing and sharing drinking containers, utensils, or cigarettes, coughing, or sneezing). The germ does not cause meningitis in most people. Instead, most people become carriers of the germ for days, weeks, or even months. The bacteria rarely overcome the body’s immune system and cause meningitis or another serious illness. How Can Bacterial Meningitis Be Prevented? Maintaining healthy habits, including getting plenty of rest, can help prevent infection. Using good health practices such as covering your mouth and nose when coughing and sneezing and washing your hands frequently with soap and water can also help stop the spread of the bacteria. Students should not share food, drinks, utensils, toothbrushes, or cigarettes. Students should limit the number of persons they kiss. There are vaccines available to offer protection from some of the bacteria that can cause bacterial meningitis.* The vaccine is safe and effective (85-90 percent). It can cause mild side effects, such as a redness and pain at the injection site lasting up to two days. Immunity develops within seven to ten days after the vaccine is given and lasts for up to five years. What Should You Do If You Think You Or A Friend Might Have Bacterial Meningitis? Students should seek prompt medical attention.

23

Where Can You Get More Information? Your family doctor and the staff at your local or regional health department office are excellent sources for information on all communicable diseases. You may also call your local health department or Regional Texas Department of Health office to ask about meningococcal vaccine. Additional information may also be found at web sites for the Centers for Disease Control and Prevention, http://www.cdc.gov; and the Texas Department of State Health Services (“TDSHS”), http://www.dshs.state.tx.us.

*Please note that the TDSHS requires at least one meningococcal vaccination between grades 7 and 10, and state guidelines recommend this vaccination be administered between age 11 and 12, with a booster dose at 16 years of age. Also note that entering college students must show, with limited exception, evidence of receiving a bacterial meningitis vaccination within the five-year period prior to enrolling in and taking courses at an institution of higher education. Please see the main office for more information, as this may affect a student who wishes to enroll in a dual credit course taken off campus.

Communicable Diseases To protect other students from contagious illnesses, students infected with certain diseases are not allowed to come to school while contagious. Parents of students with a communicable or contagious disease should notify the Campus Director so that other students who might have been exposed to the disease can be alerted. Among the more common of these diseases are the following:

Amebiasis Influenza Campylobacteriosis Measles (rubeola) Chickenpox Meningitis, bacterial Common cold Meningitis, viral Conjunctivitis, bacterial and/or viral Mumps Fever Pertussis (whooping cough) Fifth disease (erythema infectiosum) Ringworm Gastroenteritis Rubella (German measles) Giardiasis Salmonellosis Head lice (pediculosis) Scabies Hepatitis A Shigellosis Infections (wounds, skin, and soft tissue) Steptococcal sore throat and scarlet fever Infectious mononucleosis Tuberculosis, pulmonary

Any student excluded from school attendance for reason of communicable disease may be readmitted by one or more of the following methods, as determined by the local health authority:

Certificate of the attending physician, advanced practice nurse, or physician assistant attesting that the child does not currently have signs or symptoms of a communicable disease or to the disease’s non-infectiousness in a school setting;

Submitting a permit for readmission issued by a local health authority; or Meeting readmission criteria as established by the commissioner of health.

Immunizations The State of Texas requires that every child in the state be immunized against preventable diseases caused by infectious agents, in accordance with an established immunization schedule. To determine the specific number of doses that are required for your student, please read the “2013–14 Texas Minimum State Vaccine Requirements for Students.” This document and more information about school vaccine requirements are available at the Texas Department of State Health Services (“TDSHS”) Immunization Branch website: www.ImmunizeTexas.com (click on the “School & Childcare” link).

24

Proof of immunization may be shown through personal records from a licensed physician or public health clinic with a signature or rubber-stamp validation. Provisional Enrollment A student may be enrolled provisionally for no more than 30 days if he or she transfers from one Texas school to another, and is awaiting the transfer of immunization records. A student may be enrolled provisionally if the student has an immunization record that indicates the student has received at least one dose of each specified age-appropriate vaccine required by law. To remain enrolled, the student must complete the required subsequent doses in each vaccine series on schedule and as rapidly as is medically feasible and provide acceptable evidence of vaccination to [CHARTER SCHOOL]. [CHARTER SCHOOL] shall review the immunization status of a provisionally enrolled student every 30 days to ensure continued compliance in completing the required doses of vaccination. If, at the end of the 30-day period, a student has not received a subsequent dose of vaccine, the student is not in compliance and [CHARTER SCHOOL] shall exclude him or her from school attendance until the required dose is administered. A student who is homeless, as defined by the McKinney Act (42 U.S.C. § 11302), shall be admitted temporarily for 30 days if acceptable evidence of vaccination is not available. [CHARTER SCHOOL] shall promptly refer the student to appropriate public health programs to obtain the required vaccinations. Exclusions from Immunization Requirements Exclusions from immunization compliance are allowable on an individual basis for medical reasons, reasons of conscience, and active duty with the armed forces of the United States. If a student should not be immunized for medical reasons, the student must present a statement signed by the child’s physician (M.D. or D.O.), duly registered and licensed to practice medicine in the United States who has examined the child, in which it is stated that, in the physician’s opinion, the vaccine required is medically contraindicated or poses a significant risk to the health and well-being of the child or any member of the child’s household. Unless it is written in the statement that a lifelong condition exists, the exemption statement is valid for only one year from the date signed by the physician. To claim an exclusion for reasons of conscience, including a religious belief, a signed TDSHS affidavit must be presented by the student’s parent, stating that the student’s parent declines vaccinations for reasons of conscience, including because of the person’s religious beliefs. The affidavit will be valid for a two-year period. The form affidavit may be obtained by writing the TDSHS Immunization Branch (MC 1946), P.O. Box 149347, Austin, Texas 78714-9347, or online at https://webds.dshs.state.tx.us/immco/default.aspx. The form must be notarized and submitted to the Campus Director within 90 days of notarization. If the parent is seeking an exemption for more than one student in the family, a separate form must be provided for each student. Students, who have not received the required immunizations for reasons of conscience, including religious beliefs, may be excluded from school in times of emergency or epidemic declared by the commissioner of public health. To claim an exclusion for military service, the student must prove that he or she is serving on active duty with the armed forces of the United States. If a parent seeks an exemption for more than one student, a separate form must be provided for each student. Immunization Records Reporting [CHARTER SCHOOL]’s record of your student’s immunization history, while private in most instances, may be inspected by the Texas Education Agency, local health departments and the TDSHS, and transferred to other schools associated with the transfer of your student to those schools.

25

Emergency Medical Treatment If a student has a medical emergency at school or a school-related activity when the parent cannot be reached, school employees will seek emergency medical treatment unless a parent has previously provided a written statement denying this authorization. Therefore, parents are asked each year to complete an emergency care consent form. Parents should keep emergency care information up-to-date (name of doctor, emergency phone numbers, allergies, etc.). Please contact the campus secretary or registrar to update any information.

Illness During the School Day Students becoming ill or injured during the school day are directed to report to the Campus Director. If the Campus Director is not available, the student should report to the main office. Parents or other persons designated on the student’s enrollment application will be contacted as appropriate. Students should stay home from school due to illness if any of the following are present:

1. Fever of 100 degrees Fahrenheit or higher in the past 24 hours; 2. Vomiting and/or diarrhea in the past 24 hours; 3. Itchy, red eyes with discharge; 4. Ringworm (until treatment has been started); 5. Unknown rash; 6. Head lice or eggs (nits or larvae); or 7. Jaundice.

To protect students at school students assessed with any of the signs and symptoms listed above will be sent home.

Administration of Medication Medication should be administered at home whenever possible. If necessary, medication can be administered at school under the following circumstances:

1. Nonprescription medication brought to school must be submitted to [CHARTER SCHOOL] by a parent along with a written request. The medication must also be in the original and properly labeled container.

2. Prescription medications administered during school hours must be prescribed by a physician or advanced nurse practitioner (“ANP”) and filled by a pharmacist licensed in the State of Texas.

3. Prescription medications must be submitted in a labeled container showing the student’s name, name of the medication, reason the medication is being given, proper dosage amounts, the time the medication must be taken, and the method used to administer the medication. Medications sent in plastic baggies or unlabeled containers will NOT be administered.

4. If the substance is herbal or a dietary supplement, it must be provided by the parent and will be administered only if required by the students Individualized Education Program (“IEP”) or Section 504 plan for a student with disabilities.

5. Only the amount of medication needed should be delivered to [CHARTER SCHOOL], i.e., enough medication to last one day, one week, etc. In cases of prolonged need, send in the amount for a clearly specified period. Extra medication will not be sent home with the student.

6. In certain emergency situations, [CHARTER SCHOOL] may administer a nonprescription medication to a student, but only in accordance with the guidelines developed by the school’s medical advisor and when the parent has previously provided written consent for emergency treatment.

Changes to daily medications require written instruction from the physician or ANP and written permission from the parent. Parents are responsible for advising [CHARTER SCHOOL] that a medication has been discontinued.

26

Asthma and Anaphylaxis Medication Asthma and anaphylaxis are life-threatening conditions, and students with those conditions are entitled to possess and self-administer prescription medication while on school property or at school-related events. Student possession and self-administration of asthma or anaphylaxis medication at school requires the student to demonstrate his or her ability to self-administer the medication to the student’s physician or other licensed health care provider and the school nurse, if available. Requirements also include written authorization from the student’s parent and physician or other licensed health care provider on file in the school office indicating the student is capable of independently administering his or her own asthma or emergency anaphylaxis medication. Medication in a student’s possession must be in an original container with a prescription label. Please note that most pharmacies will place a label on the inhaler devise upon request.

Fitness Testing According to requirements under state law, [CHARTER SCHOOL] will annually assess the physical fitness of students. [CHARTER SCHOOL] is not required to assess a student for whom, as a result of disability or other condition identified by rule or law, the assessment exam is inappropriate.

Dyslexia and Related Disorders From time to time, students may be screened and treated for dyslexia and other related disorders in accordance with programs, rules, and standards approved by the State of Texas. Parents will be notified should [CHARTER SCHOOL] determine a need to identify or assist a student diagnosed with dyslexia or related disorder.

Vision and Hearing Screenings All children enrolled in Texas schools must be screened for possible vision and hearing problems in accordance with regulations issued by the Texas Department of State Health Services. Students in certain grade levels identified by state regulations shall be screened for vision and hearing problems annually. Screening records for individual students may be inspected by the Texas Department of State Health Services or a local health department, and may be transferred to another school without parental consent. Exemption A student is exempt from screening requirements if screening conflicts with the tenets and practices of a recognized church or religious denomination of which the individual is an adherent or a member. To qualify for the exemption, the individual or, if the individual is a minor, the minor’s parent, managing conservator, or guardian, must submit to the Campus Director on or before the day of admission an affidavit stating the objections to screening.

Spinal Screening All children in 6th and 9th grade must be screened for abnormal spinal curvature before the end of the school year. The screening requirement for students entering grade six or nine may be met if the child has been screened for spinal deformities during the previous year. A parent, managing conservator, or guardian who declines participation in the spinal screening provided by [CHARTER SCHOOL] must submit to the Campus Director documentation of a professional examination, which includes the results of a forward-bend test. This documentation must be submitted to [CHARTER SCHOOL] during the year the student is scheduled for screening or, if the professional exam is obtained during the following summer, at the beginning of the following school year. Exemption A student is exempt from screening if the screening conflicts with the tenets and practices of a recognized church or religious denomination of which the individual is an adherent or member. To qualify for the exemption, the student’s

27

parent, managing conservator, or guardian must submit to the Campus Director on or before the day of the screening procedure an affidavit stating the objections to screening.

Freedom from Discrimination, Harassment, and Retaliation Statement of Nondiscrimination [CHARTER SCHOOL] prohibits discrimination, including harassment, against any student on the basis of race, color, religions, gender, national origin, disability, or any other basis prohibited by law. [CHARTER SCHOOL] also prohibits dating violence, as defined by this policy. Retaliation against anyone involved in the complaint process is a violation of school policy. Discrimination For purposes of this policy, discrimination against a student is defined as conduct directed at a student on the basis of race, color, religion, gender, national origin, disability, or on any other basis prohibited by law, that adversely affects the student. Prohibited Harassment Prohibited harassment of a student is defined as physical, verbal, or nonverbal conduct based on the student’s race, color, religion, gender, national origin, disability, or any other basis prohibited by law that is so severe, persistent, or pervasive that the conduct:

Affects a student’s ability to participate in or benefit from an educational program or activity, or creates an intimidating, threatening, hostile, or offensive educational environment;

Has the purpose or effect of substantially or unreasonably interfering with the student’s academic performance; or

Otherwise adversely affects the student’s educational opportunities. Examples of prohibited harassment may include offensive or derogatory language directed at another person’s religious beliefs or practices, accent, skin color, or need for accommodation; threatening or intimidating conduct; offensive jokes; name calling, slurs, or rumors; physical aggression or assault; display of graffiti or printed material promoting racial, ethnic, or other negative stereotypes; or other kinds of aggressive conduct such as theft or damage to property. Sexual Harassment and Gender-Based Harassment In compliance with the requirements of Title IX, [CHARTER SCHOOL] does not discriminate on the basis of sex in its educational programs or activities. Sexual harassment of a student, including harassment committed by another student, includes welcome or unwelcome sexual advances; requests for sexual favors; or sexually motivated physical, verbal, or nonverbal conduct when the conduct is so severe, persistent, or pervasive that it:

Affects the student’s ability to participate in or benefit from an educational program or activity, or creates an intimidating, threatening, hostile, or offensive educational environment;


Otherwise adversely affects the student’s educational opportunities. Examples of sexual harassment of a student may include sexual advances; touching intimate body parts or coercing physical contact that is sexual in nature; jokes or conversations of a sexual nature; and other sexually motivated conduct, communications, or contact. [CHARTER SCHOOL] also does not tolerate sexual harassment of a student by school employees. Romantic or inappropriate social relationships between students and school employees are always prohibited, even if consensual. Sexual harassment of a student by a school employee includes both welcome and unwelcome sexual advances; requests

28

for sexual favors; sexually motivated physical, verbal or nonverbal conduct; or other conduct or communication of a sexual nature when:

A school employee causes the student to believe that the student must submit to the conduct in order to participate in a school program or activity, or that the school employee will make an educational decision based on whether or not the student submits to the conduct; or

The conduct us so severe, persistent, or pervasive that it: o Affects the students ability to participate in or benefit from an educational program or activity, or

otherwise adversely affects the student’s educational opportunities; or o Creates an intimidating, threatening, hostile, or abusive educational environment.

Gender-based harassment includes harassment based on a student’s gender, expression by the student of stereotypical characteristics associated with the student’s gender, or the student’s failure to conform to stereotypical behavior related to gender. Examples of gender-based harassment directed against a student, regardless of the student’s or the harasser’s actual or perceived sexual orientation or gender identity, may include, but not be limited to, offensive jokes, name-calling, slurs, or rumors; physical aggression or assault; threatening or intimidating conduct; or other kinds of aggressive conduct such as theft or damage to property. Dating Violence Dating violence occurs when one partner in a current or past dating relationship, either past or current, intentionally uses physical, sexual, verbal, or emotional abuse to harm, threaten, intimidate, or control the other partner. Examples of dating violence against a student may include physical or sexual assaults, name-calling, put-downs, threats to hurt the student or the student’s family members or members of the student’s household, destroying property belonging to the student, threats to commit suicide or homicide if the student ends the relationship, attempts to isolate the student from friends and family, stalking, or encouraging others to engaged in these behaviors. For purposes of this policy, dating violence is considered prohibited harassment if the conduct is so severe, persistent, or pervasive that the conduct:

Affects the student’s ability to participate in or benefit from an educational program or activity, or creates an intimidating, threatening, hostile, or offensive educational environment;


Otherwise adversely affects the student’s educational opportunities. Retaliation [CHARTER SCHOOL] prohibits retaliation against a student alleged to have experienced discrimination or harassment, including dating violence, or another student who, in good faith, makes a report, serves as a witness, or otherwise participates in an investigation. A student who intentionally makes a false claim, offers false statements, or refuses to cooperate with a school investigation regarding discrimination or harassment, including dating violence, is subject to appropriate discipline. Reporting Procedures Any student who believes that he or she has experienced prohibited harassment or believes that another student has experienced prohibited harassment should immediately report the alleged acts to a teacher, counselor, the Campus Director, or other school employee. Alternatively, a student may report prohibited harassment directly to one of the officials below:

Reports of discrimination based on sex, including sexual harassment, may be directed to the Title IX Coordinator.

Reports of discrimination based on disability may be directed to the ADA/Section 504 Coordinator.

29

Reports of discrimination based on age may be directed to the Age Discrimination Act Coordinator. The [INSERT CONTACT, i.e., Campus Director or Superintendent] shall serve as coordinator for purposes of school compliance with all other antidiscrimination laws. A student shall not be required to report prohibited harassment to the person alleged to have committed the conduct. Reports concerning prohibited conduct, including reports against a discrimination coordinator may be directed to the [INSERT CONTACT, i.e., Superintendent]. A report against the [INSERT CONTACT identified in previous item] may be made to the Board of Directors. If a report is made directly to the Board, the Board shall appoint an appropriate person to conduct an investigation. After receiving a complaint of sexual harassment, [CHARTER SCHOOL] may, but need not, require the student to prepare a written report. Oral complaints will be reduced to written form. Upon receipt of a complaint, the appropriate coordinator or other authorized school official shall promptly authorize and undertake an investigation. When appropriate, [CHARTER SCHOOL] may take interim action to avoid additional opportunities for harassment. The investigation may consist of personal interviews with the person making the report, the person against whom the report is filed, and any others with knowledge of the circumstances surrounding the allegations. The investigator will prepare a written report of the investigation. The report shall be filed with the appropriate coordinator or other school official overseeing the investigation. If the results of the investigation establish that prohibited harassment occurred, [CHARTER SCHOOL] shall promptly respond by taking appropriate disciplinary or corrective action reasonably calculated to address the harassment and prevent its recurrence. [CHARTER SCHOOL] may take disciplinary action based on the results of an investigation, even if [CHARTER SCHOOL] concludes that the conduct did not rise to the level of harassment prohibited by law or policy. Confidentiality To the greatest extent possible, [CHARTER SCHOOL] shall respect the privacy of the complainant, persons against whom a report is filed, and witnesses. Limited disclosures may be necessary in order to conduct a thorough investigation and comply with applicable law. Appeal A student or parent who is dissatisfied with the outcome of the investigation may appeal through the [CHARTER SCHOOL] grievance procedure. See “Student or Parent Complaints and Concerns,” page ___. A student shall be informed of his or her right to file a complaint with the United States Department of Education Office for Civil Rights.

Freedom from Bullying and Cyberbullying [CHARTER SCHOOL] prohibits bullying as defined by this section, as well as retaliation against anyone involved in the complaint process. Bullying occurs when a student or group of students engages in written or verbal expression, expression through electronic means, or physical conduct that occurs on school property at a school-sponsored or school-related activity, or in a vehicle operated by [CHARTER SCHOOL] that:

Has the effect or will have the effect of physically harming a student, damaging a student’s property, or placing a student in reasonable fear of harm to the student’s person or of damage to the student’s property; or

Is sufficiently sever, persistent, and pervasive enough the action or threat creates an intimidating, threatening, or abusive educational environment for a student.

Conduct described above is considered bullying if that conduct:

Exploits an imbalance of power between the student perpetrator and the student victim through written or verbal expression or physical conduct; and

Interferes with a student’s education or substantially disrupts the operation of [CHARTER SCHOOL].

30

[CHARTER SCHOOL] also prohibits cyberbullying, which is defined as the use of any electronic communication device to engage in bullying or intimidation. Reporting Procedures Any student who believes that he or she has experienced any form of bullying or believes that another student has experienced bullying should immediately report the alleged acts to the Campus Director, a teacher, counselor, or other school employee. A report may be made orally or in writing. Any school employee who receives notice that a student has or may have experienced bullying shall immediately notify the Campus Director. Investigation of Report The Campus Director shall determine whether the allegations in the report, if proven, would constitute prohibited harassment, and if so proceed under that policy instead. See “Freedom from Discrimination, Harassment, and Retaliation,” page ___. The Campus Director shall conduct an appropriate investigation based on the allegations in the report, and shall take prompt interim action calculated to prevent bullying during the course of an investigation, if appropriate. The Campus Director shall prepare a written report of the investigation, including a determination of whether bullying occurred, and send a copy to the [INSERT CONTACT, i.e., Superintendent]. If the results of an investigation indicated that bullying occurred, [CHARTER SCHOOL] shall promptly respond by taking appropriate disciplinary or corrective action reasonably calculated to address the conduct in accordance with the Student Code of Conduct. [CHARTER SCHOOL] may take action based on the results of an investigation, even if [CHARTER SCHOOL] concludes that the conduct did not rise to the level of bullying under this policy. Confidentiality To the greatest extent possible, [CHARTER SCHOOL] shall respect the privacy of the complainant, persons against whom a report is filed, and witnesses. Limited disclosures may be necessary in order to conduct a thorough investigation. Appeal A student or parent who is dissatisfied with the outcome of the investigation may appeal through the [CHARTER SCHOOL] grievance procedure. See “Student or Parent Complaints and Concerns, page ___.

Law Enforcement Agencies Questioning of Students When law enforcement officers or other lawful authorities wish to question or interview a student at school:

The Campus Director will verify and record the identity of the officer or other authority and ask for an explanation of the need to question or interview the student at school.

The Campus Director ordinarily will make reasonable efforts to notify the parents unless the interviewer raises what the Campus Director considers to be a valid objection.

The Campus Director ordinarily will be present unless the interviewer raises what the Campus Director considers to be a valid objection.

The Campus Director will cooperate fully regarding the conditions of the interview, if the questioning or interview is part of a child abuse investigation.

When the investigation involves allegations of child abuse, special rules apply. See “Child Abuse Reporting and Programs,” page ___. Students Taken Into Custody State law requires [CHARTER SCHOOL] to permit a student to be taken into legal custody:

31

Pursuant to an order of the juvenile court; Pursuant to the laws of arrest; By a law enforcement officer if there is probable cause to believe the student has engaged in delinquent

conduct or conduct in need of supervision; By a probation officer if there is probable cause to believe the student has violated the terms of probation

imposed by a juvenile court; Pursuant to a properly issued directive to apprehend; or By an authorized representative of the Texas Department of Family and Protective Services, a law enforcement

officer, or a juvenile probation officer, without a court order and under the conditions set out in Texas Family Code § 262.104 relating to the student’s physical health or safety.

Before a student is released to a law enforcement officer or other legally authorized person, the Campus Director will verify the officer’s identity and, to the best of his or her ability, verify the official’s authority to take custody of the student. The Campus Director will immediately notify the Superintendent and will ordinarily attempt to notify the parent unless the officer or other authorized person raises what the Campus Director considers to be a valid objection to notifying the parents.

Child Abuse Reporting and Programs [CHARTER SCHOOL] provides child abuse anti-victimization programs and cooperates with official child abuse investigators as required by law. [CHARTER SCHOOL] also provides training to its teachers and students in preventing and addressing incidents of sexual abuse of children, including knowledge of likely warning signs indicating that a child may be a victim of sexual abuse. Assistance, interventions and counseling options are also available. The school’s administration shall cooperate with law enforcement investigations of child abuse, including investigations by the Texas Department of Protective and Family Services. School officials may not refuse to permit an investigator to interview a student who is alleged to be a victim of abuse or neglect at school. School officials may not require the investigator to permit school personnel to be present during an interview conducted at school. Investigations at school may be conducted by authorized law enforcement or state agencies without prior notification or consent of the student’s parent, if necessary.

Plan for Addressing Sexual Abuse of Students and Other Maltreatement of Children What is Sexual Abuse of a Child? The Texas Family Code defines “sexual abuse” as any sexual conduct harmful to a child’s mental, emotional, or physical welfare as well as, in certain circumstances, failure to make a reasonable effort to prevent sexual conduct harmful to a child. What is Other Maltreatment of a Child? Under State law, “other maltreatment” of a child includes “abuse” or “neglect,” as defined by Texas Family Code sections 261.001 and 261.401. Reporting Obligation Anyone who suspects that a child has been or may be abused or neglected has a legal responsibility, under state law, for reporting the suspected abuse or neglect to law enforcement or to the Texas Department of Family and Protective Services (“DFPS”). Reports may be made by contacting one of the following:

Texas Abuse Hotline: 1-800-252-5400 or, in non-emergency situations only, http://www.txabusehotline.org.

32

[Insert Local Police Department and Phone Number]. Call 911 for emergency situations.

[CHARTER SCHOOL] has established a plan for addressing sexual abuse and other maltreatment of children (the “Plan”). The Plan may be accessed at [insert school website], and copies of the plan are also available at the Campus Director’s office and central administrative office. Methods for Increasing Awareness Regarding Sexual Abuse or Other Maltreatment of Children For Teachers: [CHARTER SCHOOL] annually trains teachers in all content areas addressed in the Plan. Training will include contents of the adopted board policy and is provided by campus staff, administrative staff, or outside agencies as determined by the campus administration. For Students: School counseling staff will address issues to increase awareness regarding sexual abuse and other maltreatment of children and anti-victimization programs with age appropriate conversation and materials no less than once per [school year/semester]. Sexual abuse awareness will be discussed in classroom group settings, or as otherwise deemed appropriate by campus administrators. For Parents: Parents must be aware of warning signs indicating that their child may have been or is being sexually abused or otherwise maltreated. A child who has experienced sexual abuse or other maltreatment should be encouraged to seek out a trusted adult. Be aware as a parent or other trusted adult that evidence of sexual abuse or other maltreatment may be more indirect than disclosures or signs of physical abuse. It is important to remain calm and comforting if your child, or another child, confides in you. Reassure the child that he or she did the right thing in coming to you. The fact that the abuser is a parent or other family member does not remove your obligation to protect the child. Parents who permit their child to remain in a situation where he or she may be injured or abused may also be subject to prosecution for child abuse. And, if you are frightened for your own safety or that of your child, you should call 911 or 1-800-252-5400. Also remember that parents are legally responsible for the care of their children and must provide their children with safe and adequate food, clothing, shelter, protection, medical care and supervision, or arrange for someone else to provide these things. Failure to do so may be considered neglect. The Campus Director or campus counselor will provide information regarding counseling options available in your area for you and your child if your child is a victim of sexual abuse or other maltreatment. The Department of Family Protective Services (“DFPS”) also provides early abuse intervention through counseling programs. The ________ County location may be contacted at __________. Services available in your county can be accessed at the following web address: http://www.dfps.state.tx.us/prevention_and_early_intervention/programs_available_in_your_county/default.asp. These websites are also helpful:

Texas Education Agency – Prevention of Child Abuse Overview: http://www.tea.state.tx.us/index2.aspx?id=2820

Sexual Abuse Prevention Programs: http://www.childwelfare.gov/preventing/programs/types/sexualabuse.cfm

Promoting Healthy Families in Your Neighborhood: http://www.childwelfare.gov/pubs/res_packet_2008/

Signs of Child Abuse: http://www.keepkidshealthy.com/welcome/commonproblems/child_abuse.html

DFPS – How to Report Child Abuse or Neglect http://www.dfps.state.tx.us/Contact_us/report_abuse.asp

33

Texas Attorney General – What Can We Do About Child Abuse? https://www.oag.state.tx.us/AG_Publications/txts/child_abuse.shtml

Prevent Child Abuse.org – Texas Chapter: http://www.preventchildabusetexas.org

Texas Council on Family Violence – Abuse Prevention Links: http://www.tcfv.org/

Likely Warning Signs of Sexual Abuse or Other Maltreatment Psychological and behavioral signs of possible sexual abuse or other maltreatment may include:

Nightmares, sleep problems, extreme fears without an obvious explanation. Sudden or unexplained personality changes; becoming withdrawn, angry, moody, clingy, “checking out” or

showing significant changes in eating habits. Depression or irritability. An older child behaving like a young child, for example, bedwetting or thumb-sucking. Developing fear of certain places or resisting being alone with an adult or young person for unknown reasons. Resistance to routine bathing, toileting, or removing clothes, even in appropriate situations. Play, writing, drawings, or dreams of sexual or frightening images. Refusal to talk about a secret he or she has with an adult or older child. Leaving clues that seem likely to provoke a discussion about sexual issues. Using new or adult words for body parts. Engaging in adult-like sexual activities with toys, objects or other children. Developing special relationships with older friends that may include unexplained money, gifts, or privileges. Intentionally harming him or herself, for example, drug/alcohol use, cutting, burring, running away, and sexual

promiscuity. Thinking of self or body as repulsive, dirty, or bad. Becoming increasingly secretive about Internet or telephone use.

Physical symptoms of possible sexual abuse or other maltreatment include:

Stomachaches or illness, often with no identifiable reason. Difficulty in walking or sitting. Stained or bloody underwear. Genital or rectal pain, itching, swelling, redness, or discharge. Bruises or other injuries in the genital or rectal area. Unexplained soreness, pain or bruises around mouth, sexually transmitted disease, or pregnancy.

Any one sign does not necessarily mean that a child has been sexually abused or maltreated, but the presence of several signs is the time you should begin asking questions and seeking help. Signs often first emerge at other times of stress, such as during a divorce, death of a family member or pet, problems at school or with friends, or other traumatic or anxiety-inducing events. Actions That A Child Who Is A Victim of Sexual Abuse or Other Maltreatment Should Take During student awareness sessions concerning sexual abuse and maltreatment issues, students will be encouraged to tell a trusted adult in a private and confidential conversation if they have been a victim of sexual abuse or maltreated, or have been in situations that make them feel uncomfortable in any way. School employees are trained to take appropriate actions to help the child obtain assistance and to follow proper reporting procedures. Older students will also be provided with local crisis hotline numbers to obtain assistance.

34

Available Counseling Options [Insert list of counseling providers in the area and a brief description of the services offered. DFPS maintains a database of providers at http://www.dfps.state.tx.us/prevention_and_early_intervention/programs_available_in_your_county/default.asp]

Interrogations and Searches In the interest of promoting student safety and attempting to ensure that [CHARTER SCHOOL] is safe and drug free, school officials may from time to time conduct searches. Such searches are conducted without a warrant and as permitted by law. Administrators, teachers and other professional personnel may question a student regarding the student’s own conduct or the conduct of other students. In the context of school discipline, students have no claim to the right not to incriminate themselves. Students shall be free from unreasonable searches and seizures by school officials. School officials may search a student’s outer clothing, pockets, or property by establishing reasonable cause or securing the student’s voluntary consent. Express or implied coercion – such as threatening to contact parents or police – invalidates apparent consent. A search is reasonable if (1) the school official has reasonable grounds for suspecting that the search will uncover evidence of a rule violation or a criminal violation and (2) the scope of the search is reasonable related to the circumstances justifying the search; i.e., the measures adopted are reasonably related to the objectives of the search and are not excessively intrusive in light of the age and sex of the student and the nature of the infraction. Desk and Locker Searches Students should have no expectation of privacy in the contents of their lockers, desks or other school property. Lockers and desks assigned to students remain at all times under the control and jurisdiction of [CHARTER SCHOOL]. [CHARTER SCHOOL] will make periodic inspections of lockers and desks at any time, with or without notice or student consent. School officials will remove any item that violates school policy or that may potentially be dangerous. Students have full responsibility for the security of their lockers and desks, and shall be held responsible for any prohibited items found during a search. The student’s parent shall be notified if any prohibited articles or materials are found in a student’s locker or desk, or on the student’s person, as a result of a search conducted in accordance with this policy. Vehicles on Campus Vehicles parked on school property and property under school control are under the jurisdiction of [CHARTER SCHOOL] and may be searched at any time if reasonable suspicion exists to believe that the search will result in evidence that school rules or other laws have been violated. If a vehicle subject to search is locked, the student shall be asked to unlock the vehicle and consent to a search of the vehicle. If the student refuses to permit the vehicle to be searched, [CHARTER SCHOOL] may contact the student’s parents and/or law enforcement officials. A student may be held responsible for and in possession of prohibited items found in his or her vehicle parked on school property or at a school-related event. Random Drug Searches In order to ensure a drug-free learning environment, [CHARTER SCHOOL] conducts random drug searches of all school facilities. [CHARTER SCHOOL] may use or contract for specially trained nonaggressive dogs to sniff out and alert school officials to the current presence of concealed prohibited or illegal items, including drugs and alcohol. Canine visits may be unannounced. The dogs shall be used to search vacant classrooms, vacant common areas, the areas around student lockers, and the areas where vehicles are parked on [CHARTER SCHOOL] property or at school-related events. The dogs shall not be asked to alert on students. A dog alert to a locker, vehicle, or item in a classroom, constitutes reasonable grounds for a search by school officials.

35

Procedures for Use of Restraint and Time-Outs School employees, volunteers or independent contractors are authorized to use restraint in the event of an emergency and subject to the following limitations:

Only reasonable force, necessary to address the emergency, may be used. The restraint must be discontinued at the point at which the emergency no longer exists. The restraint must be implemented in such a way as to protect the health and safety of the student and others. The student may not be deprived of basic human necessities.

At no time, however, may a student be placed in seclusion. A student with a disability may not be confined in a locked box, locked closet or other specially designated locked space as either a discipline management practice or a behavior management technique.

Visitors to the School General Visitors [CHARTER SCHOOL] welcomes visitors for educational purposes. For the safety of those within the school and to avoid disruption of instructional time, all visitors – including parents – must first report to the front office, present a valid photo ID, sign-in, and obtain a visitor’s badge. The Campus Director or designee may take the following actions whenever there is a school visitor:

Require the visitor to display his or her driver’s license or another form of identification issued by a governmental entity containing the person’s photograph.

Establish an electronic database for the purpose of storing information concerning visitors. Information stored in the electronic database may be used only for the purpose of school security, and may not be sold or otherwise disseminated to a third party for any purpose.

Verify whether the visitor is a sex offender registered with the computerized central database maintained by the Department of Public Safety or any other database accessible by [CHARTER SCHOOL].

Any visitor identified as a sex offender shall be escorted by school personnel at all times during a school visit and shall have access only to common areas of the campus. Visits to individual classrooms during instructional time are permitted only with approval of the Campus Director and teacher and so long as the duration or frequency of the visits do not interfere with the delivery of instruction or disrupt the normal school environment. All visitors are expected to demonstrate the highest standards of courtesy and conduct; disruptive behavior will not be permitted. Visitors Participating in Special Programs for Students On certain days, [CHARTER SCHOOL] invites representatives from colleges, universities, and other higher education institutions, as well as prospective employers and military recruiters to present information to interested students. These individuals must comply with [CHARTER SCHOOL]’s rules and policies regarding school visitors.

Disruptions In order to protect student safety and sustain an educational program free from disruption, state law permits [CHARTER SCHOOL] to take action against any person – student or nonstudent – who:

36

Disrupts classes while on school property or on public property that is within 500 feet of school property. Class disruption includes making loud noises; trying to entice a student away from, or to prevent a student from attending, a required class or activity; entering a classroom without authorization; and disrupting the activity with profane language or any misconduct.

Interferes with an authorized activity by seizing control of all or part of a building. Interferes with the movement of people at an exit or an entrance to school property. Interferes with the movement of people in an exit, an entrance, or a hallway of a school building without

authorization from an administrator. Interferes with the transportation of students in school vehicles. Uses force, violence, or threats in an attempt to prevent participation in an authorized assembly. Uses force, violence, or threats in an attempt to prevent people from entering or leaving school property

without authorization from an administrator. Uses force, violence, or threats to cause disruption during an assembly.

Drills: Fire, Tornado, and Other Emergencies From time to time, all members of the school community will participate in drills of emergency procedures. When the alarm is sounded, students should follow the instructions from their teachers or other individuals in charge quickly, quietly, and in an orderly manner. Students should also learn and follow the following procedures: Fire Drill Bells

3 bells: leave the building. 1 bell: halt; stand at attention. 2 bells: return to the room.

Tornado Drill Bells

1 continuous bell: move quietly but quickly to the designated locations. 2 bells: return to the classroom.

Emergency Closings Generally, [CHARTER SCHOOL] dismisses classes for weather-related events on the same days as surrounding local independent school districts. Any closures for weather will be broadcast on local television stations. [CHARTER SCHOOL] may also need to close during certain emergency situations beyond the control of school officials. The announcement of non-weather related school closings will be broadcast on local television stations as early as possible. Any emergency closures will also be posted on the [CHARTER SCHOOL] website (insert website).

Pest Control Information [CHARTER SCHOOL] periodically applies pesticides inside school buildings and on school grounds. Except in an emergency, signs will be posted 48 hours before application. Students may not reenter a treated area inside a building or use an area on school grounds for at least 12 hours following application. Parents who want to be notified prior to pesticide application may contact the Campus Director.

Videotaping of Students For safety purposes, including the maintenance of order and discipline, surveillance cameras may be used to monitor student behavior in classrooms, on school vehicles, and in school common areas. Video recordings may be reviewed routinely to document student misconduct and used by [CHARTER SCHOOL] staff when investigating an incident. Tapes and other video recordings will be available for viewing pursuant to the Family Educational Rights and Privacy Act (“FERPA”).

37

SECTION III: ACADEMICS AND GRADING

Academic Programs The Campus Director will provide students and parents with information regarding academic programs to prepare for higher education and career choices. A student removed from the regular classroom to in-school suspension or another setting will have an opportunity to complete his or her daily work just as if they were in the regular learning center. Students and parents are encouraged to discuss options for ensuring that students complete all work required with a teacher or the Campus Director.

Career and Technology Programs [CHARTER SCHOOL] offers career and technical education programs in [INSERT CTE COURSES OFFERED]. Admission to these programs is based on [LIST ELIGIBILITY REQUIREMENTS]. [CHARTER SCHOOL] will take steps to ensure that lack of English language skills will not preclude a student from participating in all educational and career and technology programs.

Class Rank/Top Ten Percent (High School) [CHARTER SCHOOL] ranks high school students by grade point averages and recognizes the top graduates as honor graduates. Class rankings are provided to graduates, parents, and colleges upon request. Graduates from all school campuses in each school year are combined to produce one “district-wide” ranking. For two school years following their graduation, high school graduates who ranked in the top ten percent and, in some cases, the top 25 percent, of their graduating class are eligible for automatic admission into four-year public universities and colleges in Texas if the student:

1. Completes the Recommended or Advanced/Distinguished Achievement Program; or 2. Satisfies the ACT College Readiness Benchmarks or earns at least a 1500 out of 2400 on the ACT.

The student must also satisfy any other admissions and enrollment criteria of the college or university. Students and parents should contact the Campus Director or designee for further information on the application process.

College Days (High School) High school students who meet the following criteria will be allowed to have two excused days of absence for a college visit during their junior year and two excused days of absence for a college visit during their senior year:

The student must have passed the required parts of the TAKS/STAAR test for the previous year. The student must be on track to graduate on time. The student must be classified as a junior or senior based upon credits earned. The student must be passing all course work. The student must have no truancy or other attendance problems.

Students must submit a written request to the school office at least two days prior to the day requested for a college visit so that eligibility criteria for an excused day of absence can be verified and approval granted prior to the student participating in a college visit. Approval will not be granted for a college visit on a day when major exams are scheduled, and no partial days will be approved.

38

Computer Resources To prepare students for an increasingly computerized society, [CHARTER SCHOOL] has made a substantial investment in computer technology for instructional purposes. Use of these resources is restricted to students working under a teacher’s supervision and for approved purposes only. Students and parents must read and agree to abide by the Student Acceptable Use Policy, found on page ___ of this Handbook.

Counseling Academic Counseling Students and parents are encouraged to talk with the Campus Director to learn about course offerings, graduation requirements, and early graduation procedures. Each spring, students in 8th–12th grade will be provided with information on anticipated course offerings for the next year and other information that will help to make the most of academic and vocational opportunities. To plan for the future, including attendance at a college, university, or training school or pursuing some other type of advanced education, students should work closely with the Campus Director to take the courses that best prepare them for the future. The Campus Director can also provide information about entrance exams and application deadlines, as well as information about automatic admission to state colleges and universities, financial aid, housing, and scholarships. Personal Counseling The Campus Director is available to assist students with a wide range of personal concerns, including social, family, or emotional issues, and substance abuse. The Campus Director may also provide information about community resources to address these concerns. A student who wishes to meet with the Campus Director should set an appointment through the school secretary. Please note: [CHARTER SCHOOL] will not conduct a psychological examination, test, or treatment without first obtaining the parent’s written consent, unless required by state or federal law for special education purposes or by the Texas Education Agency for child abuse investigations and reports.

Credit by Exam [CHARTER SCHOOL] uses examinations and guidelines established by the State Board of Education to offer credit and acceleration by exam. If a Student has Prior Instruction A student in grades 6–12 who has previously taken a course or subject (but did not receive credit for it) may, in circumstances determined by the Campus Director or designee, be permitted to earn credit by passing an exam on the essential knowledge and skills defined for the course or subject. To receive credit, a student must score at least 70% on the exam. The Attendance Review Committee may also offer a student with excessive absences an opportunity to receive credit for a course by passing an exam. If a Student has Not Taken the Course A student will be permitted to take an exam to earn credit for an academic course or subject area for which the student has had no prior instruction or to accelerate to the next grade level. The exams offered by [CHARTER SCHOOL] are approved by the Board of Directors. The dates on which exams are scheduled during the 20__–20__ school year will be published in an appropriate school publication and on the [CHARTER SCHOOL] website. A student in grade 6 or above will earn course credit with a passing score of at least 80 on the exam, or a score designated by the state for an exam that has alternate scoring standards. A student may take an exam to earn course

39

credit no more than twice. If a student fails to achieve the designated score on the approved exam before the beginning of the school year in which the student would need to enroll in the course according to the school’s course sequence, the student must complete the course. If a student plans to take an exam, the student (or parent) must register with the Campus Director no later than 30 days prior to the scheduled testing date. [CHARTER SCHOOL] [will or will not] honor a request by a parent to administer a test on a date other than the published dates. If [CHARTER SCHOOL] agrees to administer a test other than the one chosen by the school, the student’s parent will be responsible for the cost of the exam.

Extracurricular Activities, Clubs, and Organizations Participation in school-related activities is an excellent way for a student to develop talents, receive individual recognition, and build strong friendships with other students. Participation, however, is a privilege and not a right. Eligibility for participation in many school-related activities is governed by state law and rules of the University Interscholastic League (“UIL”), a statewide association overseeing interscholastic competition between public schools. Additional information regarding extracurricular activities, clubs, and organizations may be obtained from the Campus Director. Please note: Sponsors of student clubs and performing groups such as the band, choir, and drill and athletic teams may establish standards of behavior – including consequences for misbehavior – that are stricter than those for students in general. If a violation of organization rules is also a violation of school rules, the consequences specified by the Student Code of Conduct or by local policy will apply in addition to any consequences specified by the organization.

Grade Classification After the 9th grade, students are classified according to the number of credits earned toward graduation. Certain grade level courses are required for the individual classifications. Classification Grade 10 (Sophomore): ___ completed credits Grade 11 (Junior): ___ completed credits Grade 12 (Senior): ___ completed credits

Graduation To receive a high school diploma from [CHARTER SCHOOL] students must successfully complete the required number of credits, pass a statewide exit-level exam (depending on the year in which the student is scheduled to graduate), and meet all attendance requirements.

Requirements for a Diploma for Students Enrolled in High School Prior to the 2014–2015 School Year [H] To receive a high school diploma, a student who was enrolled in high school prior to the 2014–2015 school year must successfully:

1. Complete the required number of credits established by the State and any additional credits required by the School;

2. Complete any locally required courses in addition to the courses mandated by the State; and 3. Achieve passing scores on certain end-of-course (“EOC”) assessments or approved substitute assessments,

unless specifically waived as permitted by State law.

Requirements for a Diploma Beginning with the 2014–2015 School Year [H] Beginning with students who enter grade 9 in the 2014–2015 school year, as well as any currently-enrolled high school student who decides to graduate under the new foundation graduation program, a student must meet the following requirements to receive a high school diploma:

40

1. Complete the required number of credits established by the State and any additional credits required by the

School; 2. Complete any locally required courses in addition to the courses mandated by the State; 3. Achieve passing scores on certain EOC assessments or approved substitute assessments, unless specifically

waived as permitted by State law; and 4. Demonstrate proficiency, as determined by the School, in the specific communication skills required by the

State Board of Education. Testing Requirements for Graduation Students are required, with limited exceptions, to perform satisfactorily on the following EOC assessments: English I, English II, Algebra I, Biology, and United States History. A student who has not achieved sufficient scores on the EOC assessments to graduate will have opportunities to retake the assessments. State law and state rules also provide for certain scores on norm-referenced national standardized assessments to substitute for the requirement to meet satisfactory performance on an applicable EOC assessment should a student choose this option. See the College Readiness Counselor for more information on the State testing requirements for graduation. If a student fails to perform satisfactorily on an EOC assessment, the School will provide remediation in the content area for which the performance standard was not met. This may require student participation before or after normal school hours, or at times of the year outside of normal school operations.

Minimum, Recommended, and Advanced/Distinguished Achievement Graduation Programs For students who were enrolled in high school prior to the 2014–2015 school year, [CHARTER SCHOOL] offers Minimum, Recommended, and Advanced/Distinguished Achievement Graduation programs. Students enrolled in high school prior to the 2014–2015 school year also have the option to pursue the foundation graduation program as described below. Please note that participation to enroll in the Minimum High School Program will be granted only if a written agreement is reached between the student, a parent or person standing in parental relation, and an appropriate School administrator. In order for a student to take classes under the Minimum Program, the student must be at least 16 years of age; have completed at least two credits each in English language arts, math, science, and social studies courses that are required for graduation; or have failed grade 9 on one or more times.

Foundation Graduation Program Every student in a Texas public school who enters grade 9 in the 2014–2015 school year and thereafter will graduate under a new program called the “foundation school program.” Within the foundation graduation program are “endorsements,” which are paths of interest that include Science, Technology, Engineering, and Mathematics (“STEM”); Business and Industry; Public Services; Arts and Humanities; and Multidisciplinary Studies. Endorsements earned by a student will be noted on the student’s transcript and diploma. The foundation graduation program also involves the term “distinguished level of achievement,” which reflects the completion of at least one endorsement and Algebra II as one of the required advanced mathematics credits. State law and rules prohibit a student from graduating solely under the foundation graduation program without an endorsement unless, after the student’s sophomore year, the student and the student’s parent are advised of the specific benefits of graduating with an endorsement and submit written permission to an appropriate School administrator for the student to graduate without an endorsement. A student who anticipates graduating under the foundation graduation program without an endorsement and who wishes to attend a four-year university or college after graduation must carefully consider whether this will satisfy the admission requirements of the student’s desired college or university. Graduating under the foundation graduation program will also provide opportunities to earn “performance acknowledgements” that will be acknowledged on a student’s diploma and transcript. Performance acknowledgements are available for outstanding performance in bilingualism and biliteracy, in a dual credit course; on an AP or IB exam; on the PSAT, ACT-Plan, SAT, or ACT exam; or for earning a nationally or internationally recognized license or

41

certificate. The criteria for earning these performance acknowledgements are prescribed by state rules, and the College Readiness Counselor can provide more information about these acknowledgments. A student enrolled in high school prior to the 2014–2015 school year has the option of graduating under the foundation graduation program rather than the programs identified above that would otherwise be applicable to the student. See the College Readiness Counselor for additional information.

Physical Education [CHARTER SCHOOL] will ensure that students in full-day prekindergarten through grade 5 engage in at least 30 minutes per day or 135 minutes per week of moderate or vigorous physical activity. Students in middle or junior high school will engage in [30 minutes of moderate or vigorous physical activity per day for at least four semesters OR at least 225 minutes of moderate or vigorous physical activity within each two-week period for at least four semesters]. Physical Education Exemption Short-term exemptions from physical education is possible for students who have physical handicaps, illnesses, or other incapacities that a physician deems severe enough to warrant exemption or severe enough to warrant modified activity in such classes. Each case is handled on an individual basis as follows:

1. Each request for exemption or for modified activity must be accompanied by a physician’s certificate. Such certificates are honored, but must be renewed each year.

2. When the certificate will allow modified activities in class, the student should remain in physical education class. The teachers adjust the activities of the student to the disability.

3. An exempted student may be admitted to regular physical education activities only upon presentation of a written statement from the same physician who signed the original exemption.

Homework [INSERT DESCRIPTION OF THE SCHOOL’S HOMEWORK RULES, AND AN EXPLANATION OF THE HOMEWORK GRADING SYSTEM.]

Promotion and Retention A student may be promoted on the basis of academic achievement and/or demonstrated proficiency in the subject matter of the course or grade level. To earn credit in a course, a student must demonstrate mastery on grade level standards and meet school requirements for attendance. In addition, students at certain grade levels will be required to pass the state-mandated assessment test as a further requirement for promotion. A student in grades 9–12 will be advanced a grade level based on the number of course credits earned. In addition, students in certain grade levels – with limited exceptions – will be required to pass the State of Texas Assessments of Academic Readiness (“STAAR”). In order to be promoted to grade 6, students enrolled in grade 5 must perform satisfactorily on the mathematics and reading sections of the grade 5 assessment in English or Spanish. In order to be promoted to grade 9, students enrolled in grade 8 must perform satisfactorily on the mathematics and reading sections of the grade 8 assessment in English.

42

If a student in grade 5 or 8 is enrolled in a course that earns high school credit and for which an end-of-course (“EOC”) assessment will be administered, the student will not be subject to the promotion requirements described above for the relevant grade 5 or 8 assessment. If a student in grades 3–8 is enrolled in a class or course intended for students above his or her current grade level in which the student will be administered a state-mandated assessment, the student will be required to take an applicable state mandate assessment only for the course in which he or she is enrolled, unless applicable federal law requires otherwise. Parents of a student who does not perform satisfactorily on his or her exams will be notified that their child will participate in special instructional programs designed to improve performance. The student may be required to participate in this instruction before or after normal school hours or outside of the normal school year. A student in grade 5 or 8 will have two additional opportunities to take a failed assessment. If a student fails a second time, a grade placement committee will determine the additional special instruction the student will receive. After a third attempt, the student will be retained; however, the parent can appeal this decision to the committee. Whether the student is retained or promoted, an educational plan for the student will be designed to enable the student to perform at grade level by the end of the next school year. Students will also have multiple opportunities to retake EOC assessments. Certain students—some with disabilities and some with limited English proficiency—may be eligible for exemptions, accommodations, or deferred testing. Students with Disabilities Upon the recommendation of the Admission, Review, and Dismissal (“ARD”) Committee, a student with disabilities who is receiving special education services may be promoted and/or permitted to graduate under the provisions of his or her Individualized Education Program (“IEP”). A student who receives special education services and has completed four years of high school, but has not met the requirements of his or her IEP, may participate in graduation ceremonies and receive a certificate of attendance. Even if the student participates in graduation ceremonies to receive the certificate of attendance, he or she may remain enrolled to complete the IEP and earn his or her high school diploma; however, the student will only be allowed to participate in one graduation ceremony.

Report Cards and Grading Scales Report cards with student grades or performance are issued at least once every [six/nine/other] weeks. Report cards also contain information on student absences in each class or subject taken. Parents of students struggling to maintain adequate academic progress are requested to schedule a conference with the student’s teacher(s). At the end of the first [three or other] weeks of a grading period, [CHARTER SCHOOL] will issue a written progress report if a student’s performance in any course is near or below ___%, or is otherwise below the expected level of performance. Teachers follow grading guidelines that are approved by the Superintendent as reflecting each student’s academic achievement for the grading period, semester, or course. The official [CHARTER SCHOOL] grading scale is as follows:

[INSERT GRADING SCALE, e.g., A = 100%-90%, B = 89%-80%, etc.]

43

Special Programs Bilingual/ESL Services [CHARTER SCHOOL] offers Bilingual/English as a Second Language (“ESL”) services at all appropriate grade levels for English language learners who are limited in their English proficiency. The program is designed to assist students identified as having limited English proficiency with development in language – listening, speaking, reading, and writing. The goal of the ELS program is to provide additional English language assistance to students, enabling them to become academically successful in all classes. Students are assessed with state-approved Oral Language Proficiency and Norm-Referenced Tests to qualify for placement in the program. If test results indicate either limited oral or limited cognitive academic English ability, the student (with parent approval) is provided additional English language support. Special Education Services [CHARTER SCHOOL] has the responsibility of identifying, locating, and evaluating individuals with disabilities who are 5–21 years of age and who fall within the school’s jurisdiction. If you know or suspect that your child has a disability, please contact the Campus Director for information about available programs, assessments, and services. Special education services are specifically designed to meet the unique needs of students with disabilities. Each student who receives special education services has an Individual Education Plan (“IEP”), which is developed by the student’s Admission, Review, and Dismissal (“ARD”) Committee. The ARD Committee considers the student’s disability and determines appropriate accommodations, supplementary aids, and/or services that are necessary for the student to participate in the general curriculum. All special education services are provided in the least restrictive environment, which may be special education settings, general education settings, or a combination of both. All students receiving special education services are educated to the maximum extent appropriate with their non-disabled peers as well as participating in all school activities on the same basis as students who are not disabled. The Notice of Procedural Safeguards – Rights of Parents of Students with Disabilities, can be obtained from the Special Education Director or at the Texas Education Agency Special Education Website: http://www.tea.state.tx.us/special.ed/. For further information, please contact the Campus Director or designee. Providing Assistance to Students Who Have Learning Difficulties or Who Need Special Education Services If a student is experiencing learning difficulties, the parent may contact the Special Education Coordinator to learn about the School’s overall general education referral or screening system for support services. This system links students to a variety of support options, including referral for a special education evaluation. Students having difficulty in the regular classroom should be considered for tutorial, compensatory, and other academic or behavior support services that are available to all students including a process based on Response to Intervention (“RtI”). The implementation of RtI has the potential to have a positive impact on the School’s ability to meet the needs of all struggling students. At any time, a parent is entitled to request an evaluation for special education services by presenting a written request to the Special Education Coordinator or an administrative employee. [CHARTER SCHOOL] must, within 15 school days of receiving the request, either (1) give the parent an opportunity to give written consent for the evaluation or (2) refuse to provide the evaluation and provide the parent with written notice that explains why the child will not be evaluated. This written notice will include a statement that informs the parents of their rights if they disagree with the school. Additionally, the parent will receive a copy of the Notice of Procedural Safeguards – Rights of Parents of Students with Disabilities. If consent for evaluation is obtained, then [CHARTER SCHOOL] must complete the evaluation and report within 45 school days of the date it receives the written consent. [CHARTER SCHOOL] must give a copy of the evaluation report to the parent. Section 504 Services

44

[CHARTER SCHOOL] provides a free appropriate public education to each qualified student with a disability, regardless of the nature or severity of the student’s disability. A “student with a disability” is one who has a physical or mental impairment that substantially limits one or more of the student’s major life activities, has a record of having such an impairment, or is regarded as having such an impairment. A student with a disability is “qualified” if he or she is between the ages of three and 21, inclusive. An appropriate education is the provision of regular or special education and related services that are (1) designed to meet the student’s individual educational needs as adequately as the needs of students who do not have disabilities are met; and (2) based on adherence to procedures that satisfy federal requirements for educational setting, evaluation and placement, and procedural safeguards. Qualified students with disabilities will be placed in the regular educational environment, unless [CHARTER SCHOOL] demonstrates that education in the regular environment with the use of supplemental aids and services cannot be achieved satisfactorily. Should an alternate educational environment be necessary, [CHARTER SCHOOL] shall comply with all legal requirements regarding least restrictive environment and comparable facilities for students with disabilities. In providing or arranging for nonacademic and extracurricular services and activities, [CHARTER SCHOOL] shall ensure that a qualified student with a disability participates with students who do not have disabilities to the maximum extent appropriate. To be eligible for services and protections against discrimination on the basis of disability under Section 504 of the Rehabilitation Act, a student must be determined, as a result of an evaluation, to have a “physical or mental impairment” that substantially limits one or more major life activities. If a student has or is suspected of having a disability, or requires special services, parents or teachers should contact the Campus Director for information concerning available programs, assessments, and services. For further information, please contact the Section 504 Coordinator. Services for Title I Participants Information regarding the School’s Title I program may be obtained from the Superintendent or Campus Director.

State Assessments

Standardized Testing STAAR (State of Texas Assessment of Academic Readiness) Grades 3–8 In addition to routine tests and other measures of achievement, students at certain grade levels will take state-mandated assessments, such as the STAAR, in the following subjects:

1. Mathematics, annually in grades 3–8; 2. Reading, annually in grades 3–8; 3. Writing, including spelling and grammar, in grades 4 and 7; 4. Science in grades 5 and 8; and 5. Social studies in grade 8.

Successful performance on the reading and math assessments in grades 5 and 8 is required by law, unless the student is enrolled in a reading or math course intended for students above the student’s current grade level, in order for the student to be promoted to the next grade level. STAAR Modified and STAAR Alternate will be available for eligible students receiving special education services, as determined by the student’s ARD committee.

45

STAAR-L is a linguistically accommodated assessment that is available for certain limited English proficient students, as determined by the student’s Language Proficiency Assessment Committee. End-of-Course (EOC) Assessments for Students in Grades 9-12 Beginning with ninth graders in the 2011–2012 school year and, as modified by House Bill 5, end-of-course (“EOC”) assessments are administered for the following courses:

Algebra I; English I and English II; Biology; and United States History.

Satisfactory performance on the applicable assessments will be required for graduation. There are three testing windows during the school year in which a student may take an EOC assessment, which will occur during the fall, spring, and summer months. If a student does not meet satisfactory performance, the student will have additional opportunities to retake the assessment. STAAR Modified and STAAR Alternate, for students receiving special education services, will be available for eligible students, as determined by the student’s ARD committee. These particular EOC assessments may have different testing windows than the general assessments, and the ARD committee will determine whether successful performance on the assessments will be required for graduation. STAAR-L, which is a linguistically accommodated assessment, will be available for students who have been determined to be limited English proficient and who require this type of testing accommodation. TAKS (Texas Assessment of Knowledge and Skills) TAKS is a state-mandated assessment currently being transitioned to the STAAR program. Except in limited circumstances, a student in grade 12 during the 2013–2014 school year will be required to retake what is termed the “exit-level” TAKS in the subject areas of mathematics, English/language arts, social studies, and/or science, for which satisfactory performance is required for graduation, if the student did not pass any of these areas while in grade 11. TSI (Texas Success Initiative) Assessment Prior to enrollment in a Texas public college or university, most students must take a standardized test called the Texas Success Initiative (“TSI”) assessment. The purpose of the TSI assessment is to assess the reading, mathematics, and writing skills that entering freshmen-level students should have if they are to perform effectively in undergraduate certificate or degree programs in Texas public colleges and universities. This assessment may be required before a student enrolls in a dual-credit course offered through [CHARTER SCHOOL] as well. Beginning in fall 2013, all Texas public colleges and universities will begin administering a new TSI assessment, which will assist as one of several factors in determining whether the student is considered ready to enroll in college-level courses or whether the student needs to enroll in what is termed developmental education courses prior to enrollment in college level courses.

46

TELPAS The Texas English Language Proficiency Assessment System (“TELPAS”) is a system of statewide assessment administered to all Limited English Proficient (“LEP”) students in 3rd–12th grades. The TELPAS measures English ability based on the stage of language development of second language learners. These results will further the understanding of the educational needs of LEP students by providing a state-level measure of both their current academic English levels and their annual progress in English.

Summer School [CHARTER SCHOOL] offers summer school classes designed for students who did not complete all required work for the previous school year and for students who would like to take an additional course toward graduation.

Tutoring Students are encouraged and may be required to see teachers for tutoring. Tutoring services are also available for students receiving special education services. Private tutoring is the responsibility of a student’s parents. Teachers employed by [CHARTER SCHOOL] are not permitted to privately tutor their students for pay.

47

SECTION IV: STUDENT CODE OF CONDUCT

The Purpose of the Student Code of Conduct To function properly, education must provide an equal learning opportunity for all students by recognizing, valuing, and addressing the individual needs of every student. In addition to the regular curriculum, principles and practices of good citizenship must also be taught and modeled by school staff. To foster an orderly and distraction-free environment, [CHARTER SCHOOL] has established this Student Code of Conduct (“the Code”) in accordance with state law. The Code outlines prohibited behaviors and consequences for such behavior. The Code has been adopted by the Board of Directors, and provides information to parents and students regarding expectations for behavior, consequences of misconduct, and procedures for administering discipline. In accordance with state law, the Code will be posted at each school campus or will be available for review at the office of the Campus Director. Parents will be notified of any violation that may result in a student being suspended or expelled from the School. Students must be familiar with the standards set forth in the Student Code of Conduct, as well as campus and classroom rules. The Code does not define all types and aspects of student behavior, as [CHARTER SCHOOL] may impose campus or classroom rules in addition to those found in the Code. These rules may be posted in classrooms or given to the student and may or may not constitute violations of the Student Code of Conduct. When students participate in student activities, they will also be expected to follow the guidelines and constitutions that further specify the organization’s expectations, student behavior and consequences.

Jurisdiction [CHARTER SCHOOL] has disciplinary authority over a student:

1. During the regular school day and while the student is going to and from school on or off school transportation; 2. During lunch periods in which a student is allowed to leave campus; 3. While the student is in attendance at any school-related activity, regardless of time or location; 4. For any school-related misconduct, regardless of time or location; 5. For any mandatory or discretionary expulsion violation committed while on or off school property or while

attending a school-sponsored or school-related activity of another district in Texas; 6. When retaliation against a school employee or volunteer occurs or is threatened, regardless of time or location; 7. When the student commits a felony, as provided by Texas Education Code 37.006 or 37.0081; and 8. When criminal mischief is committed on or off school property or at a school-related event.

Note: In addition to disciplinary consequences, misdemeanor and felony offenses committed on campus will be reported to an appropriate law enforcement agency.

Standards for Student Conduct Each student is expected to:

Demonstrate courtesy, even when others do not. Behave in a responsible manner, always exercising self-discipline. Attend all classes, regularly and on time. Prepare for each class; take appropriate materials and assignments to class.

48

Meet school and campus standards of grooming and dress. Obey all campus and classroom rules. Respect the rights and privileges of other students and of teachers and other school staff. Respect the property of others, including school property and facilities. Cooperate with and assist the school staff in maintaining safety, order, and discipline. Avoid violations of the Code.

Discipline Management Techniques In general, discipline will be designed to correct misconduct and to encourage all students to adhere to their responsibilities as citizens of the school community. Disciplinary action will draw on the professional judgment of teachers and administrators and on a range of discipline management techniques. Disciplinary action will be correlated to the seriousness of the offense, the student’s age and grade level, the frequency of misbehavior, the student’s attitude, and the effect of the misconduct on the school environment. The following discipline management techniques may be used – alone or in combination – for misbehavior violating the Code or campus or classroom rules:

Assignment of school service or community service duties such as scrubbing desks or picking up litter. Behavioral contracts. Cooling-off time or “time out.” Corporal punishment. Counseling by teachers, counselors, or administrative personnel. In-school suspension or detention, as specified in the suspension section of the Code. Expulsion, as specified in the expulsion section of the Code. Grade reductions as permitted by policy. Out-of-school suspension, as specified in the suspension section of the Code. Parent-teacher conferences. Referral to an outside agency and/or legal authority for criminal prosecution in addition to disciplinary

measures imposed by the School. Rewards or demerits. School-assessed and school-administered probation. Seating changes within the classroom. Sending the student to the office or other assigned area. Techniques or penalties identified in individual student organizations’ extracurricular standards of behavior. Temporary confiscation of items that disrupt the educational process. Verbal correction. Withdrawal of privileges, such as participation in extracurricular activities and eligibility for seeking and

holding honorary offices, and/or membership in school-sponsored clubs or organizations. Withdrawal or restriction of bus privileges. Other strategies and consequences as specified by the Code.

Corporal Punishment [CHARTER SCHOOL] will NOT administer corporal punishment upon a student for misconduct. OR Corporal punishment – spanking or paddling the student – may be used as a discipline management technique in accordance with the Student Code of Conduct and school policy. Corporal punishment will only be administered with the parent’s written consent and in front of an adult witness. A parent may provide [CHARTER SCHOOL] a written

49

signed statement prohibiting the use of corporal punishment as a method of student discipline at any time during the school year.

Offenses and Consequences Level I Offenses: The following behaviors are prohibited at all school and school-related activities:

1. Insubordination. . 2. Cheating or copying the work of another. 3. Committing extortion, coercion, or blackmail (obtaining money or another object of value from an unwilling

person). 4. Committing or assisting in a robbery or theft even if it does not constitute a felony. 5. Damaging or vandalizing property owned by others. 6. Defacing or damaging school property, including textbooks, lockers, furniture, and other equipment, with

graffiti or by other means. See glossary. 7. Improperly discharging a fire extinguisher. 8. Disobeying conduct rules regarding school transportation. 9. Engaging in any misbehavior that gives school officials reasonable cause to believe that such conduct will

substantially disrupt the school program or incite violence. 10. Engaging in conduct that constitutes sexual harassment or sexual abuse, whether the conduct is by word,

gesture, or any other sexual conduct, including requests for sexual favors directed toward another student or a District employee. See “Freedom from Discrimination, Harassment, and Retaliation,” page ___.

11. Engaging in disruptive actions or demonstrations that substantially disrupt or materially interfere with school activities.

12. Engaging in harassment motivated by race, color, religion, national origin, disability, or age and directed toward another student or school employee. See “Freedom from Discrimination, Harassment, and Retaliation,” page ___.

13. Engaging in inappropriate verbal, physical, or sexual contact directed toward another student or a school employee.

14. Engaging in threatening behavior toward another student or school employee on or off school property. 15. Engaging in verbal or written exchanges that threaten the safety of another student, a school employee, or

school property. 16. Failing to comply with directives given by school personnel. 17. Falsifying records, passes, or other school-related documents. 18. Fighting or scuffling. 19. Forcing an individual to act through the use of force or threat of force. 20. Gambling. 21. Hazing. See glossary. 22. Inappropriate or indecent exposure of a student’s private body parts. See glossary. 23. Leaving school grounds or school-sponsored events without permission. 24. Making false accusations or hoaxes regarding school safety. 25. Possessing a cellular telephone or other telecommunications device at school during the school day. 26. Possessing a razor, box cutter, chain, or any other object used in a way that threatens or inflicts bodily injury to

another person. 27. Possessing a stun gun. 28. Possessing ammunition. 29. Possessing an air gun or BB gun. 30. Possessing fireworks of any kind, smoke or stink bombs, or any other pyrotechnic device. 31. Possessing mace or pepper spray. 32. Possessing pornographic material. 33. Possessing or selling a “look-alike” weapon. 34. Possessing or selling look-alike drugs or items attempted to be passed off as drugs or contraband.

50

35. Possessing or selling seeds or pieces of marijuana in less than a usable amount. 36. Possessing or using a laser pointer for other than an approved use. 37. Possessing or using any articles not generally considered to be weapons, including school supplies, when the

Campus Director or designee determines that a danger exists. 38. Possessing or using matches or a lighter. 39. Possessing published or electronic material that is designed to promote or encourage illegal behavior or that

could threaten school safety; using e-mail or Web sites at school to encourage illegal behavior; or threatening school safety.

40. Possessing, smoking, or using tobacco products. 41. Possessing, using, giving, or selling paraphernalia related to any prohibited substance. See glossary. 42. Refusing to accept discipline management techniques assigned by a teacher or Campus Director. 43. Repeatedly violating campus or classroom standards of behavior. 44. Sending or posting electronic messages that are abusive, obscene, sexually oriented, threatening, harassing,

damaging to another’s reputation, or illegal. 45. Stealing from students, staff, or the school. 46. Repeated tardiness. 47. Throwing objects that can cause bodily injury or property damage. 48. Using the Internet or other electronic communications to threaten students or employees, or cause disruption to

the educational program. 49. Violating computer use policies, rules, or agreements signed by the student, and/or agreements signed by the

student’s parent. See “Student Acceptable Use Policy,” page ___. 50. Violating dress and grooming standards as communicated in the Handbook. See “Dress and Grooming,”

page ___. Disciplinary Consequences (not in order of progressive disciplinary measures)

1. After school detention. 2. Application of one or more Discipline Management Techniques listed on page ___. 3. Confiscation of cell phones or other electronic devices. 4. Grade reductions for academic dishonesty. 5. In-school suspension. 6. Out-of-school suspension. 7. Removal from the classroom and/or placement in another classroom. 8. Restitution/restoration, if applicable. 9. Saturday Detention.

10. Saturday School. 11. School-assessed and school-administered probation. 12. Temporary confiscation of items that disrupt the educational process. 13. Thursday Night School. 14. Verbal correction. 15. Withdrawal of privileges, such as participation in extracurricular activities and eligibility for seeking and

holding honorary offices, and/or membership in school-sponsored clubs or organizations. Level II Offenses: The following behaviors are prohibited at all school and school-related activities:

1. Assault (Class C) – student on student. 2. Being a member of, pledging to become a member of, joining, or soliciting another person to join, or pledge to

become a member of a public school fraternity, sorority, or gang, as defined by Texas Education Code § 37.121.

3. False accusation of conduct that would constitute a misdemeanor or felony. 4. Fighting.

51

5. Forgery of school documents at school or otherwise. 6. Gang activity. 7. Harassment under Texas Educational Code § 37.001(b)(1). 8. Hazing under Texas Educational Code § 37.151(6). 9. Hit list under Texas Educational Code 37.001(b)(2).

10. Knife possession – not an illegal knife. 11. Non-Title five felony; school is notified by police. 12. Possession of stolen property. 13. Repetitive Level I Offenses – i.e., two or more Level I offenses within a semester. 14. Threats – student on personnel/facility. 15. Threats – student on student. 16. Using the Internet or other electronic communications to threaten students or employees, or cause disruption to

the school program. 17. Violating the School’s medication policy. See “Administration of Medication,” page ___.

Disciplinary Consequences

1. Any applicable Level I Disciplinary Consequence. 2. Out-of-school suspension for up to five days.

Disciplinary actions may be used individually or in combination for any offense. Level III Offenses The following behaviors are prohibited at all school and school-related activities:

1. Abusing a prescription drug, giving a prescription drug to another student, or possessing or being under the influence of another person’s prescription drug on school property or at a school-related event.

2. Aggravated assault. 3. Aggravated kidnapping. 4. Aggravated robbery. 5. Aggravated sexual assault 6. Any discretionary or mandatory expulsion violation under Texas Education Code, Chapter 37. 7. Any offense listed in Sections 37.006(a) or 37.007 (a), (b), and (d) of the Texas Education Code, no matter

when or where the offense takes place. 8. Arson. 9. Assault.

10. Bullying and/or cyberbullying, including intimidation by name-calling, using ethnic or racial slurs, or making derogatory statements that could disrupt the school program or incite violence. See “Freedom from Bullying and Cyberbullying,” page ___.

11. Burglary of a motor vehicle on campus. 12. Capital murder. 13. Commission of a felony offense listed under Title 5, Texas Penal Code. 14. Conduct endangering the health and safety of others. 15. Conduct punishable as a felony. 16. Criminal attempt to commit murder or capital murder. 17. Criminally negligent homicide. 18. Deliberate destruction or tampering with school computer data or networks. 19. Directing profanity, vulgar language, or obscene gestures toward another student or school employee. 20. Engaging in conduct punishable as a felony under Title 5, Texas Penal Code, when the conduct occurs off

school property and not at a school-sponsored or school-related event and (1) the student receives deferred prosecution; (2) a court or jury finds that the student has engaged in delinquent conduct; or (3) the Superintendent or designee has a reasonable belief that the student engaged in the conduct.

52

21. False alarm or report. 22. Felony criminal mischief against school property, another student, or school staff. 23. Gang activity (violent). 24. Inappropriate sexual conduct. 25. Indecency with a child. 26. Indecent exposure. 27. Issuing a false fire alarm. 28. Manslaughter. 29. Murder. 30. Persistent Level I offenses (four or more Level I offenses committed in any one school year). 31. Persistent Level II offenses (two or more Level II offenses committed in any one school year). 32. Possessing, selling, distributing, or being under the influence of inhalants. 33. Possessing, selling, distributing, or being under the influence of a simulated controlled substance. 34. Public lewdness. 35. Repeated failure to comply with directives given by school personnel. 36. Repeated violations of dress and grooming standards as communicated in the Handbook. See “Dress and

Grooming,” page ___. 37. Required registration as a sex offender. 38. Retaliation against any school employee or volunteer at any time or place. 39. Selling, giving, or delivering to another person or possessing, using, or being under the influence of marihuana,

controlled substance, dangerous drug, or alcoholic beverage. 40. Setting or attempting to set fire on school property (not arson). 41. Sexual abuse of a young child or children. 42. Sexual assault. 43. Targeting another individual for bodily harm. 44. Use, exhibition, or possession of a firearm, illegal knife, club, or prohibited weapon. 45. Vandalism of or conduct constituting criminal mischief with respect to school facilities or property.

Disciplinary Consequences

1. Out of school suspension for five–ten days. 2. Expulsion.

Consequences Detention Detention may be held on each day during school for up to eight hours. Students who serve detention must make arrangements to be picked up from school. Parents may request in person a delay of the detention; no phone calls or notes will be accepted. After School Detention

1. Students will bring materials to work on. Classroom materials may be sent by a teacher. 2. Students will not be permitted to go to their lockers during detention; all materials must be brought to the

detention room when reporting. 3. Sleeping is not permitted. 4. Students will follow all rules concerning classroom behavior. Failure to comply will mean suspension from

school. 5. Any student assigned to the detention room must stay the entire time. Students refusing to sit their time will be

suspended from school. Suspension [CHARTER SCHOOL] utilizes two kinds of suspension: in school suspension and out of school suspension.

53

In School Suspension The following rules and regulations apply to all students assigned to in school suspension:

1. Students must report to the detention room at ___ a.m. In school suspension will be run from ___ a.m. until dismissal time.

2. Students will bring materials to work on, including an in school suspension assignment with their teachers’ names, subjects, and assignments. Students are responsible for obtaining assignments from each teacher.

3. Students will not be permitted to go their lockers. All materials must be brought to the room when reporting. 4. Students may not bring food or drink into the detention room. 5. No disruptive behavior will be allowed. 6. Unexcused absences from suspension will be referred to the Campus Director. 7. Sleeping is prohibited. 8. Students must abide by the provisions of this Handbook and the Student Code of Conduct during their

suspension period. 9. A student who misses a scheduled in school suspension without a confirmed excuse will be assigned one day

out of school suspension. The missed in school suspension period will be rescheduled. If a student misses more than one scheduled in school suspension without a confirmed excuse, he or she may be subject to expulsion.

Failure to follow these guidelines will be reported to the Campus Director for further action, which may include up to three days of out of school suspension or any other Level I consequence. Out of School Suspension Notice of suspension and the reasons for the suspension will be given to the student by the Campus Director.

Removal from School Transportation A student being transported by [CHARTER SCHOOL] transportation to or from school or a school-sponsored or school-related activity may be removed from a school vehicle for conduct violating the school’s established standards for conduct in a school vehicle.

Conferences, Hearings and Appeals All students are entitled to conferences, hearings, and/or appeals of disciplinary matters as provided by state and federal law and school policy.

Process for Suspensions Lasting Up To Five Days In addition to the above list of Code of Conduct violations, the Campus Director has authority to suspend a student for a period of up to five school days for any of the following additional reasons:

1. The need to further investigate an incident, 2. A recommendation to expel the student, or 3. An emergency constituting endangerment to health or safety.

Prerequisites to Suspension Prior to suspending a student, the Campus Director or designee must attempt to hold an informal conference with the student to:

1. Notify the student of the accusations against him/her, 2. Allow the student to relate his or her version of the incident, and 3. Determine whether the student’s conduct warrants suspension.

54

Notification to Parents/Guardians If the Campus Director or designee determines the student’s conduct warrants suspension during the school day, the Campus Director or designee will make reasonable effort to notify the student’s parent(s) that the student has been suspended before the student is sent home. The Campus Director or designee will notify a suspended student’s parent(s) of the period of suspension, the grounds for the suspension, and the time and place for an opportunity to confer with the Campus Director. Credit During Suspension A student shall receive credit for work missed during the period of suspension if the student makes up work missed during the period of suspension within the same number of school days the student was absent on suspension.

Process for Out-of-School Suspensions Over Five Days and Expulsion Notice When the Campus Director or designee determine that a student’s conduct warrants suspension for more than five days or expulsion, but prior to taking any expulsion action, the Campus Director or designee will provide the student’s parent(s) with written notice of:

1. The reasons for the proposed disciplinary action; and 2. The date and location for a hearing before the Campus Director, within five school days from the date of the

disciplinary action. The notice shall further state that, at the hearing, the student:

1. May be present; 2. Shall have an opportunity to present evidence; 3. Shall be apprised and informed of the School’s evidence; 4. May be accompanied by his or her parent(s); and 5. May be represented by an attorney.

Hearing Before Campus Director [CHARTER SCHOOL] shall make a good faith effort to inform the student and the student’s parent(s) of the time and place for the hearing, and the school shall hold the hearing regardless of whether the student, the student’s parent(s) or another adult representing the student attends. The Campus Director or designee may audio record the hearing. Immediately following the hearing, the Campus Director or designee will notify the student and the student’s parent(s) in writing of his or her decision. The decision shall specify:

1. The length of the suspension or expulsion, if any; 2. When the expulsion is not permanent, the procedures for re-admittance at the end of the expulsion period; and 3. The right to appeal the Campus Director’s decision to the Board of Directors or the Board’s designee.

The notice shall also state that failure to timely request such a hearing constitutes a waiver of further rights in the matter. Appeal to the Board of Directors The student or his or her parent(s) may appeal the expulsion decision to the Board of Directors by notifying the Campus Director in writing within seven calendar days of the date of receipt of the Campus Director’s decision. The Board will review the audio or transcribed record from the hearing before the Campus Director at a specially called meeting. The Board will notify the student and his or her parent(s) of its decision, in writing, within five calendar days of the hearing. The decision of the Board is final and may not be appealed. Discipline consequences will not be deferred pending the outcome of an appeal of an expulsion to the Board.

55

No Credit Earned Except when required by law, students will not earn academic credit during a period of expulsion. Emergency Placement and Expulsion If the Campus Director or designee reasonably believes a student’s behavior is so unruly, disruptive, or abusive that it seriously interferes with a teacher’s ability to communicate effectively with students in a class, with the ability of a student’s classmates to learn, or with the operation of the school or a school-sponsored activity, the Campus Director or designee may order immediate removal of the student. Immediate suspension may be imposed by the Campus Director or designee if he or she reasonably believes such action is necessary to protect persons or property from eminent harm. At the time of such an emergency removal, the student will be given verbal notice of the reason for the action and appropriate hearings will be scheduled within a reasonable time after the emergency removal.

Placement of Students with Disabilities All disciplinary actions regarding students with disabilities shall be conducted in accordance with the most current federal and state laws. Suspension/Expulsion Requirement A student with a disability shall not be excluded from his or her current placement pending appeal to the Board of Directors for more than ten days without ARD Committee action to determine appropriate services in the interim. Pending appeal to a special education hearing officer, a student with a disability shall remain in the present education setting, unless the School and parents agree otherwise.

Gun-Free Schools Act In accordance with the Gun-Free Schools Act, [CHARTER SCHOOL] shall expel, from the student’s regular program for a period of one year, any student who is determined to have brought a firearm, as defined by federal law, to school. The Campus Director may modify the term of expulsion for a student or assess another comparable penalty that results in the student’s expulsion from the regular school program on a case-by-case basis. For the purposes of this law, “firearm” means:

1. Any weapon – including a starter gun – which will, or is designed to, or which may readily be converted to expel a projectile by the action of an explosive from the frame or receiver of any such weapon;

2. Any firearm muffler or firearm silencer; 3. Any destructive device. “Destructive device” means any explosive, incendiary or poison gas bomb, grenade,

rocket having a propellant charge of more than four ounces, missile having an explosive or incendiary charge of more than 1/4 ounce, mine, or device similar to any of the preceding described devices. It also means any type of weapon – other than a shotgun shell or a shotgun that is generally recognized as particularly suitable for sporting purposes – by whatever name known which will, or which may be readily converted to, expel a projectile by the action of an explosive or other propellant, and which has any barrel with a bore of more than 1/2 inch in diameter; and any combination of parts either designed or intended for use in converting any device into a destructive device as described, and from which a destructive device may be readily assembled.

Glossary Armor-piercing ammunition is handgun ammunition designed primarily for the purpose of penetrating metal or body armor and to be used primarily in pistols and revolvers. Arson occurs when a person starts a fire, regardless of whether the fire continues after ignition, or causes an explosion with intent to destroy or damage:

56

1. Any vegetation, fence, or structure on open-space land; or 2. Any building, habitation, or vehicle:

a. Knowing that it is within the limits of an incorporated city or town; b. Knowing that it is insured against damage or destruction; c. Knowing that it is subject to a mortgage or other security interest; d. Knowing that it is located on property belonging to another; e. Knowing that it has located within it property belonging to another; or f. When the person is reckless about whether the burning or explosion will endanger the life of some

individual or the safety of the property of another. Assault is defined in part by Texas Penal Code 22.01(a)(1). A person commits an assault if the person intentionally, knowingly, or recklessly causes bodily injury to another. Chemical dispensing device means a device, other than a small chemical dispenser sold commercially for personal protection, designed, made, or adapted for the purpose of causing an adverse psychological or physiological effect on a human being. Club means an instrument specially designed, made, or adapted for the purpose of inflicting serious bodily injury or death by striking a person with the instrument, including a blackjack, mace, and tomahawk. Deadly conduct occurs when a person commits an offense by recklessly engaging in conduct that places another in imminent danger of serious bodily injury or by knowingly discharging a firearm in the direction of an individual, habitation, building, or vehicle. Deferred adjudication may be offered to a student who is 17 or older, as an alternative to seeking a conviction in court. Deferred prosecution may be offered to a juvenile as an alternative to seeking a conviction in court for delinquent conduct or conduct indicating a need for supervision. Delinquent conduct means conduct that violates either state or federal law and is punishable by imprisonment or confinement in jail. Delinquent conduct also includes conduct that violates certain juvenile court orders, including probation orders. Delinquent conduct does not, however, include violations of traffic laws. Explosive weapon means any explosive or incendiary bomb, grenade, rocket, or mine that is designed, made, or adapted for the purpose of inflicting serious bodily injury, death, or substantial property damage, or for the purpose of causing such a load report as to cause undue public alarm or terror, and includes a device designed, made, or adapted for delivery or shooting an explosive weapon. False Alarm or Report occurs when a person knowingly initiates, communicates or circulates a report of a present, past, or future bombing, fire, offense, or other emergency that he or she knows is false or baseless and that would ordinarily:

1. Cause action by an official or volunteer agency organized to deal with emergencies; 2. Place a person in fear of imminent serious bodily injury; or 3. Prevent or interrupt the occupation of a building, room, or place of assembly.

Graffiti means making marks with aerosol paint or an indelible marker on tangible property of the owner without the effective consent of the owner. The markings may include inscriptions, slogans, drawings, or paintings.

57

Harassment means repeated unwelcome and offensive slurs, jokes, or other oral, written, graphic, or physical conduct related to an individual’s race, color, religion, national origin, disability, or age that creates an intimidating, hostile, or offensive educational or work environment. Hazing involves any knowing, intentional, or reckless act, occurring on or off the campus, by one person alone or acting with others, directed against a student, that endangers the mental or physical health or safety of a student for the purposes of pledging, initiation into, affiliation with, holding office in, or maintaining membership in an organization. Illegal Knife means a knife with a blade over 5-1/2 inches; hand instrument designed to cut or stab another by being thrown; dagger, including a dirk, stiletto, and poniard; bowie knife; sword; spear; or as otherwise defined by Board policy. Indecent Exposure means exposing one’s anus or genitals with intent to arouse or gratify the sexual desire of any person while being reckless about whether another is present who will be offended or alarmed by the act. Knuckles means any instrument consisting of finger rings or guards made of a hard substance that is designed, made, or adapted for the purpose of inflicting serious bodily injury or death by striking a person with a fist enclosed in the knuckles. Machine gun means any firearm that is capable of shooting more than two shots automatically, without manual reloading, by a single function of the trigger. Paraphernalia means any device that can be used to inhale, ingest, inject, or otherwise introduce a controlled substance into a human body. Possession means to have on a student’s person or in the student’s personal property, including but not limited to the student’s clothing, purse, or backpack; in any private vehicle used by the student for transportation to or from school or school-related activities, including but not limited to an automobile, truck, motorcycle, or bicycle; or any other school property used by the student, including but not limited to a locker or desk. Reasonable belief determination can be made by the Superintendent or designee using all available information, including the information furnished under Article 15.27 of the Code of Criminal Procedure. Self-defense means using force against another when and to the degree a person reasonably believes the force is immediately necessary to protect him or herself. Switchblade means any knife with a blade that folds, closes, or retracts into the handle or sheath and that opens automatically by pressing a button or by the force of gravity or centrifugal force. Short-barrel firearm means a rifle with a barrel length of less than 16 inches or a shotgun with a barrel length of less than 18 inches, or any weapon made from a rifle or shotgun that, as altered, has an overall length of less than 26 inches. Terroristic threat occurs when a person threatens to commit any offense involving violence to any person or property with intent to:

1. Cause a reaction of any type to his or her threat by an official or volunteer agency organized to deal with emergencies;

2. Place any person in fear of imminent serious bodily injury; 3. Prevent or interrupt the occupation or use of a building; room, place of assembly, or place to which the public

has access; place of employment or occupation; aircraft, automobile, or other form of conveyance; or other public place;

58

4. Cause impairment or interruption of public communications, public transportation, public water, gas, or power supply or other public service;

5. Place the public or a substantial group of the public in fear of serious bodily injury; or 6. Influence the conduct or activities of a branch or agency of the federal government, the state, or a political

subdivision of the state (including the School). Title 5 offenses involve injury to a person and include murder; kidnapping; assault; sexual assault; unlawful restraint; coercing, soliciting, or inducing gang membership if it causes bodily injury to a child; indecency with a child; injury to a child, an elderly person, or a disabled person; abandoning or endangering a child; deadly conduct; terroristic threat; aiding a person to commit suicide; and tampering with a consumer product. Under the influence means not having the normal use of mental or physical faculties; however, the student need not be legally intoxicated. Impairment of a person’s physical and/or mental faculties may be evidenced by a pattern of abnormal or erratic behavior and/or the presence of physical symptoms of drug or alcohol use. Use means that a student has voluntarily introduced into his or her body by any means a prohibited substance recently enough that it is detectable by the student’s physical appearance, actions, breath, or speech. Zip gun means a device or combination of devices, not originally a firearm, but adapted to expel a projectile through a smoothbore or rifled-bore barrel by using the energy generated by an explosion or burning substance.

59

SECTION V: ESPECIALLY FOR PARENTS

Your Involvement as a Parent A child’s education succeeds best when there is a strong partnership between home and school, a partnership that thrives on communication. Your involvement in this partnership may include:

1. Encouraging your student to put a high priority on education and working with your student on a daily basis to make the most of the educational opportunities the School provides. Be sure your child comes to school each day prepared, rested, in appropriate attire, and ready to learn.

2. Becoming familiar with all of your child’s school activities and with the academic programs, including special programs, offered by [CHARTER SCHOOL]. Discuss with the Campus Director any questions you may have about the options and opportunities available to your child.

3. Monitoring your student’s academic progress and contacting teachers as needed. 4. Attending scheduled conferences and requesting additional conferences as needed. To schedule a conference or

in-person conference with a teacher or Campus Director, please call the school office for an appointment. A teacher will usually return your call or meet with you at a mutually convenient time before or after school.

5. Becoming a school volunteer. For further information, contact the Campus Director. All volunteers must complete a Volunteer Application and criminal background check prior to volunteering.

6. Offering to serve as a parent representative on a planning committee to assist in the development of educational goals and plans to improve student achievement. For further information, contact the Superintendent’s office.

7. Attending Board meetings to learn more about [CHARTER SCHOOL]’s operations.

Surveys and Activities Students will not be required to participate without parental consent in any survey, analysis, or evaluation – funded in whole or in part by the U.S. Department of Education – that concerns:

1. Political affiliations or beliefs of the student or the student’s parent(s). 2. Mental or psychological problems of the student or the student’s family. 3. Sexual behavior or attitudes. 4. Illegal, antisocial, self-incriminating or demeaning behavior. 5. Critical appraisals of individuals with whom the student has a close family relationship. 6. Relationships privileged under law, such as relationships with lawyers, physicians and ministers. 7. Religious practices, affiliations, or beliefs of the student or parents. 8. Income, except when the information is required by law and will be used to determine the student’s eligibility

to participate in a special program or to receive financial assistance under such a program. Parents will be able to inspect the survey or other instrument and any instructional materials used in connection with such a survey, analysis or evaluation. “Opting Out” of Surveys and Activities Parents have a right to receive notice of and deny permission for their child’s participation in:

1. Any survey concerning the private information listed above, regardless of funding. 2. School activities involving the collection, disclosure, or use of personal information gathered from your child

for the purpose of marketing or selling that information. 3. Any non-emergency, invasive physical examination or screening required as a condition of attendance,

administered and scheduled by [CHARTER SCHOOL] in advance and not necessary to protect the immediate health and safety of the student. Exceptions are hearing, vision, or scoliosis screenings, or any physical exam or screening permitted or required under state law.

60

Notification of Teacher Qualification At the beginning of each school year, [CHARTER SCHOOL] will notify the parent of each student attending with information regarding the professional qualifications of their student’s classroom teachers. [CHARTER SCHOOL] will also provide this information upon request from a parent. The notification will include, at a minimum:

1. Whether the teacher has met state qualification and licensing criteria for the grade levels and subject areas in which the teacher provides instruction;

2. Whether the teacher is teaching under emergency or other provisional status through which state qualification or licensing criteria have been waived;

3. Undergraduate and graduate degree majors, graduate certifications, and the field of study of the certification or degree; and

4. Whether the child is provided services by paraprofessionals and, if so, their qualifications.

Accommodations for Children of Military Families Children of military families will be provided flexibility regarding certain [CHARTER SCHOOL] requirements, including:

Immunization requirements; Grade level, course, or educational program placement; Eligibility requirements for participating in extracurricular activities; and Graduation requirements.

In addition, absences related to a student visiting with his or her parent, including a stepparent or legal guardian, who has been called to active duty for, is on leave from, or is returning from a deployment of at least four months will be excused by the school. [CHARTER SCHOOL] will permit no more than five excused absences per year for this purpose. For the absence to be excused, the absence must occur no earlier than the 60th day before deployment or no later than the 30th day after the parent’s return from deployment.

Student or Parent Complaints and Concerns Student and parent complaints or concerns can usually be addressed by a phone call or a conference with a teacher. For those complaints and concerns that cannot be handled so easily, [CHARTER SCHOOL] has adopted a standard complaint policy as stated in the [CHARTER SCHOOL] policy manual. A copy of this policy may be obtained in the Campus Director’s or Superintendent’s office. In general, the student or parent should first discuss the complaint with the Campus Director. If unresolved, a written complaint and a request for a conference should be sent to the Superintendent. If still unresolved, the School provides for the presentation of a complaint before the Board of Directors.

61

SECTION VI: IMPORTANT NOTICES

Annual Notice of Parent and Student Rights (Annual FERPA Confidentiality Notice) The Family Educational Rights and Privacy Act (FERPA) affords parents and students over 18 years of age (eligible students) certain rights with respect to the student’s educational records. These rights include the following: The Right to Inspect and Review Parents and/or eligible students have the right to inspect and review the student’s educational records within 45 days of the day [CHARTER SCHOOL] receives a request for access. Parents or eligible students should submit to the Campus Director a written request that identifies the record(s) they wish to inspect. [CHARTER SCHOOL] will make arrangements for access and notify the parent or eligible student of the time and place where the records may be inspected. If circumstances effectively prevent the parent or eligible student from exercising the right to inspect and review the student’s educational records, [CHARTER SCHOOL] shall provide the parent or eligible student with a copy of the records requested or make other arrangements for the parent or eligible student to inspect and review the requested records. [CHARTER SCHOOL] shall not destroy any educational records if there is an outstanding request to inspect and review the records under this section. [CHARTER SCHOOL] may charge a reasonable fee for a copy of an education record that is made for the parent or eligible student, unless the imposition of a fee effectively prevents a parent or eligible student from exercising the right to inspect and review the student’s education records. [CHARTER SCHOOL] will not charge a fee to search for or to retrieve the educational records of a student. If the educational records of a student contain information on more than one student, the parent or eligible student may inspect and review or be informed of only the specific information about that student. The Right to Seek Amendment of the Student’s Educational Records Parents and/or eligible students may ask [CHARTER SCHOOL] to amend a record that they believe is inaccurate, misleading, or otherwise in violation of the privacy rights of the student. Such a request must be made to the Campus Director in writing, clearly identify the part of the record the parent or eligible student wants changed, and specify why it is inaccurate or misleading. [CHARTER SCHOOL] will decide whether to amend the record as requested within a reasonable time after receipt of the request. If [CHARTER SCHOOL] decides not to amend the record as requested by the parent or eligible student, it will notify the parent or eligible student of the decision and advise them of their right to a hearing regarding the request for amendment. If, as a result of the hearing, [CHARTER SCHOOL] decides that the information is inaccurate, misleading, or otherwise in violation of the privacy rights of the student, it shall amend the record accordingly and inform the parent or eligible student of the amendment in writing. If, as a result of the hearing, [CHARTER SCHOOL] decides that the information in the educational record is not inaccurate, misleading, or otherwise in violation of the privacy rights of the student, it shall inform the parent or eligible student of the right to place a statement in the record commenting on the contested information in the record or stating why he or she disagrees with the decision of the school, or both. If [CHARTER SCHOOL] places an amended statement in the educational records of a student, it is obligated to maintain the amended statement with the contested part of the record for as long as the record is maintained and disclose the statement whenever it discloses the portion of the record to which the statement relates.

62

The Right to Consent Prior to Disclosure Parents and/or eligible students have the right to consent to disclosures of personally identifiable information contained in the student’s educational records, except to the extent that FERPA authorizes disclosure without consent. One exception which permits disclosure without consent is disclosure to school officials with legitimate educational interests. A “school official” is a person employed by [CHARTER SCHOOL] as an administrator, supervisor, instructor, or support staff member (including health or medical staff and law enforcement unit personnel); a person serving on the Board of Directors; a person or company with whom [CHARTER SCHOOL] has outsourced services or functions it would otherwise use its own employees to perform (such as an attorney, auditor, medical consultant, or therapist); a parent or student serving on an official committee, such as a disciplinary or grievance committee; or a parent, student, or other volunteer assisting another school official in performing his or her tasks. A school official has a legitimate educational interest if the official needs to review an education record in order to fulfill his or her professional responsibility. Upon request, [CHARTER SCHOOL] discloses education records without consent to officials of another open-enrollment charter school, school district, or private school in which a student seeks or intends to enroll, or is already enrolled if the disclosure is for purposes of the student’s enrollment or transfer. The Right to File a Complaint Parents and/or eligible students have the right to file a complaint with the U.S. Department of Education concerning alleged failures by [CHARTER SCHOOL] to comply with the requirements of FERPA. These complaints should be addressed as follows:

Family Policy Compliance Office U.S. Department of Education 400 Maryland Avenue, SW Washington, D.C. 20202-4605

Access to Medical Records Parents are entitled to access their students’ medical records. Notice for Directory Information Under FERPA, [CHARTER SCHOOL] must, with certain exceptions, obtain written consent prior to the disclosure of personally identifiable information from a student’s education records. However, [CHARTER SCHOOL] may disclose personally identifiable information contained in the student’s educational records without obtaining prior written consent of the parent or eligible student if [CHARTER SCHOOL] has designated the information as “directory information.” [CHARTER SCHOOL] has designated the following categories of information as directory information for the purpose of disclosure relating to school-sponsored/school-affiliated purposes:

1. Student’s name; 4. Address; 5. Telephone listing; 6. Electronic mail address; 7. Photographs (including video images); 8. Date and place of birth 9. Major field of study

10. Dates of attendance; 11. Grade level; 12. Participation in officially recognized activities and sports;

63

13. Weight and height of members of athletic teams; 14. Degrees, honors, and awards received; and 15. The most recent educational agency or institution attended.

School-sponsored/school-affiliated purposes are those events/activities which [CHARTER SCHOOL] conducts and/or sponsors to support the school’s educational mission. Examples include, but are not limited to:

1. Extracurricular programs or events (e.g., school plays, concerts, athletic events, graduation ceremony), 2. Publications (e.g., newsletters, yearbook, etc.) 3. Honor roll and other student recognition lists, 4. Marketing materials of [CHARTER SCHOOL] (e.g., print media, website, videos, newspaper, etc.)

[CHARTER SCHOOL] has designated the following categories of information as directory information for the purpose of disclosure to military recruiters and institutions of higher education, but only for secondary students:

1. Student’s name, 2. Address, and 3. Telephone listing.

[CHARTER SCHOOL] shall not release directory information except for the purpose indicated above, namely:

1. Disclosure relating to school-sponsored/school-affiliated purposes; and 2. Disclosure to military recruiters and institutions of higher education, but only for secondary students.

A PARENT OR ELIGIBLE STUDENT MAY OPT OUT OF THE RELEASE OF DIRECTORY INFORMATION FOR EITHER OR BOTH OF THESE PURPOSES BY SUBMITTING A WRITTEN OBJECTION TO THE SCHOOL OFFICE WITHIN 15 SCHOOL DAYS AFTER RECEIVING THIS “ANNUAL NOTICE OF PARENT AND STUDENT RIGHTS (ANNUAL FERPA CONFIDENTIALITY NOTICE).”

64

FAMILY EDUCATIONAL RIGHTS AND PRIVACY ACT Use of Student Photos and Directory Information Opt Out Form

You have the right to choose whether your student’s information is released or not. Please check a box in the appropriate column below and return this form to your student’s school no later than the end of the first week of instruction after the student is enrolled. Parents, guardians, or eligible students who do not check a box, or who do not return this form, give their implied consent for release of directory information, consent to student photographs, and consent to release directory information to the military (grades 9–12 only). If you do not wish to allow disclosure of this information, please return this form directly to [CHARTER SCHOOL] either in person or by U.S. mail. If you have more than one student enrolled, you must complete a separate form for each student. INFORMATION ABOUT THE MILITARY The military requests, and is entitled to, the names, telephone numbers, and addresses of high school juniors and seniors, unless the parent, guardian or eligible student checks Box C in the high school portion of this form. The military typically requests this information in the Fall semester of each academic year. If you do not want information to be released to the military, you must return this form by October 1st in order to ensure that your preferences are entered in time. Parents, guardians and eligible students are encouraged to remember that checking Box C means that [CHARTER SCHOOL] will not release student information to the military, but it does not mean that the military might not gather student information from other sources not affiliated with the school.

ALL STUDENTS PLEASE MARK EACH APPLICABLE SPACE: A. _____ I do NOT consent to the release of directory information about the student named below outside the [CHARTER SCHOOL] system to sources such as an institution of higher education or newspapers and other media, except as authorized by law. B. _____ I do NOT consent to the release of photographs or directory information within the [CHARTER SCHOOL] system such as yearbooks, rosters for sports information, programs or articles.

ALL STUDENTS IN GRADES 9–12 RELEASE TO MILITARY: C. _____ I do NOT consent to the release of the above directory information to the military about the student named below.

________________________________________ ______________________________________ PRINT Student’s Full Legal Name Students Date of Birth (month/day/year) ________________________________________ ______________________________________ PRINT Parent/Guardian/Full Legal Name Parent/Guardian Signature ________________________________________ Date (month/day/year)

65

FAMILY EDUCATIONAL RIGHTS AND PRIVACY ACT Use of Student Photos and Directory Information Opt Out Form

You have the right to choose whether your student’s directory information (as defined in the Parent and Student Handbook) is released or not. Please check a box in the appropriate column below and return this form to your student’s school. Parents, guardians, or eligible students who do not check a box, or who do not return this form, give their implied consent for release of directory information, and consent to student photographs. If you do not wish to allow disclosure of this information, please return this form directly to [CHARTER SCHOOL] either in person or by U.S. mail. If you have more than one student enrolled, you must complete a separate form for each student.

ALL STUDENTS

PLEASE MARK EACH APPLICABLE SPACE

A. _____ I do NOT consent to the release by [CHARTER SCHOOL] of directory information about the student named below to outside sources, such as public or private schools outside the [CHARTER SCHOOL] system or newspapers and/or other media, except as authorized by law. B. _____ I do NOT consent to the release of photographs or directory information within the [CHARTER SCHOOL] system in sources such as yearbooks, rosters for sports information, and programs or articles.

________________________________________ ______________________________________ PRINT Student’s Full Legal Name Students Date of Birth (month/day/year) ________________________________________ ______________________________________ PRINT Parent/Guardian/Full Legal Name Parent/Guardian Signature ________________________________________ Date (month/day/year)

66

Use of Student Work in School Publications Occasionally, [CHARTER SCHOOL] wishes to display or publish student artwork, photos taken by the student, or other original work on the school’s website, a website affiliated or sponsored by the school (such as a classroom website), and in school publications. [CHARTER SCHOOL] agrees to use these student projects in this manner. Parents: Please circle one of the choices below: I, parent of (student’s name), (do give) (do not give) [CHARTER SCHOOL] permission to use my child’s artwork, photos, or other original work in the manner described above. Parent Signature: Date:

67

Student Acceptable Use Policy

Technology Mission Statement [CHARTER SCHOOL] is committed to utilizing the maximum potential of technology to enhance student learning and increase teacher effectiveness by providing students with technology-related experiences. Recognizing the ever-changing influences of technology on all aspects of our lives, [CHARTER SCHOOL] is dedicated to providing an integrated technological curriculum for all students and staff members. Students will have access to the technology necessary to produce, manage, communicate and retrieve information in an efficient manner for educational use. In the attainment of both present and future goals, [CHARTER SCHOOL] will provide a continually evolving staff development program oriented toward the integration of technology in areas of curriculum. Instructional Resource [CHARTER SCHOOL] is proud to bring network and Internet access to school employees and students, and believes the Internet offers many diverse and unique resources to both students and staff. [CHARTER SCHOOL]’s goal in providing this service to staff and students is to promote educational excellence in schools by facilitating resource sharing, innovative teaching, and communication skills. Students and staff have access to numerous research oriented and instructional resources via the Internet. On-line encyclopedias, professional journals, and databases filled with timely information on thousands of topics are just a few of the resources provided. On-campus computers have the technology necessary to support student research and to promote academic achievement. Student Safety [CHARTER SCHOOL] is aware that resources that are inappropriate or not designed for use in the educational setting may be accessed on the Internet. To protect students and staff from such inappropriate material, the school’s Internet access is filtered with one of the highest-rated Internet filtering systems available. However, users must recognize that it is impossible for [CHARTER SCHOOL] to restrict access to all controversial material and individuals must be responsible for their own actions in navigating the network. Purpose The purpose of this policy is to ensure school-level compliance with all procedures and regulations regarding the local area network and Internet usage. All students, parents, teachers, administrators and school employees who obtain their Internet access through [CHARTER SCHOOL] are expected to use these services appropriately. User Responsibilities The use of the Internet is a privilege. Abusive conduct will lead to the privilege being revoked. [CHARTER SCHOOL] is providing Internet resources for educational purposes only. Student/staff use of Internet resources must be related to an expressed educational and/or administrative goal or objective.

1. The use of the [CHARTER SCHOOL] Internet and computer network must be in support of educational goals, research, and class assignments and be consistent with the educational objectives of the school.

2. Users must have a valid, authorized account to access the network, and use only those computer resources that are authorized. Accounts may be used only in accordance with authorized purposes.

3. Individual accounts may be used only by the owner of the account except where specifically authorized by the [CHARTER SCHOOL] administration. In the case of class accounts, all use must be under the supervision of the sponsoring teacher/supervisor.

4. The user is responsible for safeguarding the computer account. Users are expected to protect access to accounts by periodically changing the password and keeping it confidential. They must respect the privacy of others by not tampering with their files, passwords or accounts.

68

Policy – Terms and Conditions Acceptable Use Users are to properly use school network resources for educational and/or administrative purposes. Respectful and responsible network etiquette and behavior should be in keeping with the school’s mission statement. Students and staff are expressly prohibited from accessing obscene, profane, vulgar, or pornographic sites or materials. Students are prohibited from sending or posting electronic messages that are abusive, obscene, sexually oriented, threatening, harassing, damaging to another’s reputation or illegal. This prohibition applies to conduct off school property if it results in a substantial disruption to the educational environment. Any person taking, disseminating, transferring or sharing obscene, sexually oriented, lewd or otherwise illegal images or other content, commonly referred to as “sexting,” will be disciplined according to the Student Code of Conduct and may, in certain circumstances, be reported to law enforcement. Because engaging in this type of behavior can lead to bullying or harassment, students involved in “sexting” or the sharing of inappropriate images or other content may also be disciplined for violating the [CHARTER SCHOOL] anti-harassment and bullying policies. Accordingly, we strongly encourage you to review with your child http://beforeyoutext.com, a state-developed program that addresses the consequences of engaging in inappropriate behavior using technology. Monitored Use Electronic mail transmissions and other use of the electronic communications system by students and employees shall not be considered confidential and may be monitored at any time by designated school staff to ensure appropriate use for educational or administrative purposes. Forgery or attempted forgery of electronic mail messages is prohibited. Only the school’s authorized IT Manager may read, delete, copy or modify the electronic mail of other system users. Vandalism Vandalism is defined as any malicious attempt to harm, disrupt or destroy data of another user of the [CHARTER SCHOOL] network or any other agencies or networks that are connected to the Internet. This includes, but is not limited to, the uploading or creating of computer viruses. Any of these actions may be viewed as violations of school policy, administrative regulations and, possibly, as criminal activity under applicable state and federal laws. Users must respect the privacy of other users, and will not intentionally seek information on, obtain copies of, or modify any file, data, or password belonging to another user, or represent themselves as another user unless explicitly authorized. Deliberate attempts to degrade or disrupt system performance and/or degrade, disrupt or bypass system security are violations of school policy and administrative regulations, and may constitute criminal activity under applicable laws. Any prohibited behavior under this policy will result in the cancellation of technology privileges. [CHARTER SCHOOL] will, in accordance with school policy, cooperate with local, state, or federal officials in any investigation concerning or relating to misuse of the [CHARTER SCHOOL] network. Network Etiquette Each network user is expected to:

1. Be polite (i.e., an all-caps message implies shouting); 2. Use appropriate language; 3. Refrain from any activity that may be considered “cyber bullying,” including but not limited to threats of

violence, extortion, obscene or harassing messages, harassment, stalking, child pornography, and sexual exploitation;

4. Maintain confidentiality of the user, colleagues, and students; 5. Respect copyright laws; and 6. Be respectful in all aspects of network use.

69

Consequences Violation of the [CHARTER SCHOOL] policies and procedures concerning use of the computer on the network will result in the same disciplinary actions that would result from similar violations in other areas of school policy, including the Student Code of Conduct. Any or all of the following consequences may be enforced if a student violates the terms of this policy:

1. Loss of computer privileges/Internet access, with length of time to be determined by campus administration. 2. Any campus-based disciplinary consequence, including suspension, as deemed appropriate by the

administration. 3. Suspension may be considered for flagrant violations or violations that corrupt the educational value of the

computers or the Internet. 4. Expulsion may be considered in instances where students have used [CHARTER SCHOOL] Internet access to

engage in conduct that constitutes felony criminal mischief, and/or have deliberately attempted to bypass installed security software or copy/modify another student’s work files.

70

[CHARTER SCHOOL]

Acceptable Use Agreement Acknowledgement Form I have read and agree to abide by the [CHARTER SCHOOL] Student Acceptable Use Policy. I further understand that any violation of this policy may constitute a criminal offense. Should I commit any violation, my Internet and computer access privileges may be revoked, and school disciplinary action and/or appropriate legal action may be taken. __________________________________ Student Name ___________________________________ ___________________________________ Student Signature Date (If you are under the age of 18 a parent or guardian must also read and sign this agreement.) As the parent or guardian of this student, I have read the [CHARTER SCHOOL] Student Acceptable Use Agreement. I understand that this access is designed for educational purposes. [CHARTER SCHOOL] has taken precautions to eliminate controversial material. However, I also recognize it is impossible for [CHARTER SCHOOL] to restrict access to all controversial materials and I will not hold [CHARTER SCHOOL] responsible for materials transmitted on the network. Further, I accept full responsibility for supervision if and when my child’s use is not in a school setting. I hereby give permission to issue an account for my child and certify that the information contained on this form is correct. ___________________________________ ___________________________________ Parent/Guardian Date

71

[CHARTER SCHOOL]

Electronic Communication Device Commitment Form (Regulation of Electronic Communication Devices)

Electronic communications at school and at school-related functions are subject to regulation by [CHARTER SCHOOL]. This Electronic Communication Device Commitment Form grants authority and permission to [CHARTER SCHOOL] to regulate electronic communication devices when these devices are brought to and/or used while on school property or when attending school related functions and events. Such communication devices include but are not limited to cellular phones, pagers, PDAs, and pocket computers. These regulations are made necessary in light of the unique opportunities these devices create for violations of law, school policies and to perpetrate conduct disruptive of an educational environment essential to the school’s educational program. These concerns are exacerbated by electronic security protections and the personal size of these devices that are often carried concealed in pockets and purses. Therefore, all students who would possess or use such devices on school property or at school-related activities are required to sign this form together with their parent, guardian or other adult person having the authority of a parent for school purposes. Each of you, by your signature below, agrees to the following:

The possession and use of cellular phones, pagers, PDAs and other electronic communication devices by a student on school property or at school-related events is prohibited.

If a student possesses such devices on school property or while attending school-related events, [CHARTER SCHOOL] is authorized and has my full consent to confiscate, power on or off, manipulate and do all things necessary to search my device and recover or intercept communications (including but not limited to text messaging) when reasonable suspicion exists that such device has been used to transmit or receive communications in violation of law, the Student Code of Conduct, school policy or regulation.

I further understand, agree and consent that an electronic communication device used or possessed in violation of law, the Student Code of Conduct, school policy or regulation is subject to confiscation and that [CHARTER SCHOOL] is not liable for any loss of or damage to confiscated devices.

SIGNATURE LINES AND DATES

____________________________ Date: _______________ (Signature of student) ____________________________ (Printed name of student)

_________________________ Date: _______________ (Signature of parent/guardian)

72

[CHARTER SCHOOL]

Food Allergy Notification Form Dear Parents, [CHARTER SCHOOL] is required by law to request, at the time of enrollment, that the parent or guardian of each student attending a School campus disclose the student’s food allergies. This form will satisfy this requirement. This form allows you to disclose whether your child has a food allergy or severe food allergy that you believe should be disclosed in order for [CHARTER SCHOOL] to take necessary precautions for your child’s safety. “Severe food allergy” means a dangerous or life-threatening reaction of the human boy to a food-borne allergen introduced by inhalation, ingestion, or skin contact that requires immediate medical attention. Please list any foods to which your child is allergic or severely allergic, as well as the nature of your child’s allergic reaction to the food. [CHARTER SCHOOL] will contact you for a note from your physician if your child has food allergies. Your child must have an EpiPen prescribed to help in the event of an emergency.

Food: Nature of allergic reaction to the food:

[CHARTER SCHOOL] will maintain the confidentiality of this form and the information provided above, and may disclose the information to teachers, school counselors, school nurses, and other appropriate school personnel only within the limitations of the Family Educational Rights and Privacy Act (“FERPA”) and Board policy. [CHARTER SCHOOL] will maintain this form as part of your child’s student record. Student Name: ______________________________________ Date of Birth: _____________________ Grade: __________ Parent Work Phone: ___________________ Home Phone: __________________ Parent/Guardian Name: _______________________________________ Date: ___________________ Parent/Guardian Signature: ______________________________________________________________ Date form received by the school: _____________________

73

[CHARTER SCHOOL]

Student/Parent Handbook

Acknowledgment and Approval of Student/Parent Handbook My signature below acknowledges that [CHARTER SCHOOL] has made its Student/Parent Handbook available to me; that I have been given notice of the rules, responsibilities and consequences outlined in the Student Code of Conduct; that I have been informed that when I or my child is enrolled at [CHARTER SCHOOL], all information herein is applicable to me, my child, and all school staff; and that I have expressed intent to review this Handbook and the Student Code of Conduct contained within and to abide thereby. Student Name: _________________________________________________________ (Please Print) Last First MI Grade: _____________ ______________________________________________________ Student Signature Date ______________________________________________________ Parent/Guardian Signature Date Please remove this page after it is signed, and return it to the school office. Thank you for allowing our staff the opportunity to partner with you in the education of your child.

Attachment F1

Narrative Start-Up Plan

In the period of time prior to the opening of the Early Career Academy, the Board will focus on policy

issues and will entrust planning and development of the Academic program and daily management of

the school to the Executive Director and the CMO. The CMO will assist the Board of Directors with

identification and recommendation for hire of the Executive Director. The Board of Directors will

approve and has the final authority over the hiring of the Executive Director.

The Board of Directors will be initially responsible for engaging stakeholders, and, once the Executive

Director is hired, he or she will devote significant time and energy each month to initiate and maintain

stakeholder engagement according to goals and policies put in place by the Board of Directors.

ESI Service Corp., as the CMO, will contribute the vast majority of human resources required to get the

school up and running. Funding and other resources will be contributed by the CMO, as noted in the

budget narrative. Resources from the CMO will include support from subject matter experts aligned

with all functional areas. This support system frees local leaders to focus on students and stakeholder

engagement. Examples of support from the CMO include real estate, purchasing, accounting, HR, legal,

compliance and information technology.

A draft high-level timeline with task ownership responsibilities is shown below in Table F1.1 - Start-Up

Timeline with Task Owner(s).

The charter school board will contract with the CMO to provide financial management services to the

School. The Early Career Academy’s Board of Directors will have exclusive control of funds received by

the charter school and the financial matters of the charter school. The board will appoint a Treasurer to

ensure oversight of the public funds. The Board of Directors will review and approve all accountings of

funds received and disbursed by the Early Career Academy. Further, it will be a responsibility of ECA’s

Executive Director to work with the CMO to ensure resources are managed efficiently and all required

information is available to the Board.

The CMO will be delivering support and systems for purchasing, accounting, and payroll under the terms

of the contract for services with the Early Career Academy. As such, the CMO will ensure adequate and

appropriate controls and procedures are in place during the pre-opening period. The CMO is a

subsidiary of a publicly-traded corporation, and already has robust financial controls in place. Further, a

Financial Policy and Procedures manual specific to Early Career Academy operations the will be in place

before the school receives any public monies.

Applicable financial controls will be put in place by the CMO, in collaboration with the charter school’s

board. Audit services will be contracted by the school with an auditor approved by TEA. Ongoing

monitoring of financial management for the Early Career Academy will be a responsibility of the

Executive Director and the Board of Directors.

Once vendors are selected by the Board of Directors, the Executive Director is responsible for managing

contracted services. Additional staff may assist as needed. Shared services from the CMO will assist

with sourcing and managing various relationships (e.g. foodservice vendor, technology vendors).

Table F1.1 – Start-Up Timeline with Task Owner(s)

MONTH/DATE AND TASK TASK OWNER(S)

SEPTEMBER 2015

Board review of Management Contact and Staffing Plans Board of Directors

Board add additional board members if necessary Board of Directors

Engage Board Counsel for review of policies and agreements Board of Directors

Finalize Management agreement with authorizer and the CMO Board of Directors

Board begins search for Superintendent / CEO (Board President to serve as

acting Superintendent until CEO is hired)

Board of Directors

OCTOBER 2015

Begin official search for Executive Directors Board of Directors, CMO

Resources

Begin implementation of community outreach / awareness plan Board of Directors, CMO

Resources

NOVEMBER 2015

Continue implementation of community outreach/ awareness plan Board of Directors, CMO

Resources

DECEMBER 2015

Finalize selection of Executive Director Board of Directors

JANUARY 2016

Official start / onboarding of Executive Director (salary / benefits paid by

CMO until April 2016).

Board of Directors, CMO

Resources

Continue implementation of community outreach/ awareness plan to recruit

students

Executive Director, CMO

Resources

Ensure that facility meets requirements and secure any needed local / state

approvals

Executive Director,

Founding Group

Begin Open Houses and Tours of the school for prospective

students/parents and provide registration packets to students and parents –

weekly schedule of tours through March 31.

Executive Director

Apply for TEASE account for TEA data reporting Board of Directors, CMO

Resources

FEBRUARY 2016

Create inventory state and federal reporting requirements by the school Board of Directors,

Executive Director

MARCH 2016

Begin selection and hiring process for teachers and staff Executive Director, CMO

Resources

APRIL 2016

Onboard hired CEO / Superintendent Board of Directors

Finalize prospective enrollment lists / lottery if needed Board of Directors,

Executive Director

Create Emergency Preparedness plan for school Executive Director

Set up school account at Texas Retirement System (for CEO / Superintendent

only)

Board of Directors

Create Health Services Plan for your school Executive Director

Develop student handbooks and procedures (including ESL and SPED) Board of Directors,

Executive Director

Finalize School Accounting Policies and Procedures Manual Board of Directors, CMO

Resources

MAY 2016

Begin vendor search for food service provider Executive Director, CMO

Prepare copies of the School Rules & Guidelines, Anti-Bullying Policy, and

Acceptable Use Policy for board approval

Board of Directors,

Executive Director

Review / Approval of policies by Board of Directors Board of Directors,

Executive Director

JUNE 2016

Assess curricular needs (textbooks or supplemental materials) and order

any needed materials


Resources

Assess technology needs and order any needed equipment Executive Director, CMO

Resources

Continue to interview and fill any staff openings remaining by the end of

June

Executive Director

Finalize facility operations plans (confirm ADA compliance, room utilization

plan, etc.)


Resources

Complete contract with food service provider Board of Directors, CMO

Resources

JULY 2016

Develop professional development plans for teachers Executive Director

Conduct teacher curriculum meetings Executive Director

Onboard Administrative staff Executive Director

Ensure that teachers have course materials needed for the opening of school Executive Director

AUGUST 2016

Onboard Teachers Executive Director

Conduct an orientation session with staff to educate them on charter

schools, Charter School Law, and the development of the Early Career

Academy

Executive Director

Prepare for all-school assembly Executive Director

Attachment F2

Budget Narrative

Budget Narrative – Assumptions A five-year budget projection with explanatory notes on most line items is included in Attachment F3. The budget is designed to support the mission of the Early Career Academy; providing the educational option of a career-focused high school in which students have the opportunity to earn a high school diploma and a tuition-free associate’s degree at the same time. Some notable unique features of the operating model of the Early Career Academy follow:

The CMO, ESI Service Corporation, will provide high-quality, turnkey educational space for the Early Career Academy within the facility of a college campus in Warrensville Heights, OH. Rent will be assessed at 50 square feet per enrolled student at a cost equal to the annual occupancy expense for the facility (average rent per square foot in the Houston campuses is approximately $22.30). Annual rent per student for the financial plan was $1,115.

The terms of the rent are based on student headcount, and rent will not be assessed until students are enrolled and attending classes, allowing the school to pay rent only for enrolled students. This eases the burden of facilities costs to ECA while it is growing to capacity.

The ECA board may apply for grants from various sources prior to opening, but the revenue projections are based only on state allotment funding.

To help deliver ECA’s unique educational offering, the CMO will be providing ongoing in-kind grants to the ECA for management and instructional services to insure fiscal strength of the charter schools. The in-kind grant is a credit to offset the fair-market value fees assessed by the CMO for access to curriculum resources, administration, and other services. The credit is to be determined by the ECA and CMO, such that the ECA pays amounts due for services and resources only to the extent funding sources allow.

Start-up funding included in the start-up budget will be provided as grant from ITT Educational Services, Inc., the parent company of the CMO. See Attachment F7 for a copy of the associated letter of financial support.

Following are explanations of the assumptions used to develop line items in the projected budget. REVENUES TOTAL STATE REVENUES

For each campus, capacity is 120 students per location in its first year, 240 in its second year.

Two locations opening in year 1; a third location opening in year 3

80% Attendance Rate for funding calculation

5% Special Education (mainstream) – chosen to be conservative for revenue calculation

6% ELL – based on average of ELL rates for Houston ISD (9%) and Alief ISD (3%) enrollments for grades 11 and 12

50% Compensatory Education enrollment – chosen to be conservative for revenue calculation; based on weighted average of economically disadvantaged enrollment for high schools within 15-mile radii around each campus. Economically Disadvantaged enrollments for urban district high schools in the focus areas range between 70% and 83%.

TOTAL FEDERAL REVENUES

In order to be conservative, the only federal funding included in the financial plan is a National School Lunch Program reimbursement. It is assumed that Title I federal funds would be used in a targeted manner, and as such are not assumed to be available as general revenue.

Reimbursement is calculated based on 40% Free Lunch and 10% Reduced Lunch enrollment. TOTAL LOCAL & OTHER REVENUES

Amounts projected are adequate to allow support for the enrollment ramp-up period and to enable ongoing fiscal strength for the charter schools.

The terms and details of the grants will be outlined in the final CMO contract. The CMO provides similar grants for one currently operating charter school in another state.

EXPENSES ADMINISTRATIVE STAFF PERSONNEL COSTS

1 Superintendent / CEO to report to charter school board

1 Executive Director / Principal for each location

1 Administrative Assistant for each location (will assist with attendance accounting)

Other administrative functions to be fulfilled by CMO (included in management fee) INSTRUCTIONAL PERSONNEL COSTS

Teachers – Regular o 4 teachers per location in its first year, 8 in its second year o Average salary $54,000 (most will need to be qualified to teach college courses) o Teacher count based on four student cohorts per grade

Teachers – SPED o 1 Special Education teacher per location o Average salary $54,000 o Teacher count assumes 5-7% mainstream enrollment; should enrollments exceed

expected, additional contracting may be added to meet need

Teaching Assistants o Average annual salary $25,000 o 1 FTE per location in its first year, 2 in its second year o May be multiple part-time employees depending on specific needs

PAYROLL TAXES AND BENEFITS

20% total payroll tax / benefit load o Social Security: 6.25% o Medicare: 1.45% o State Unemployment: 0.75% o Worker’s Compensation Insurance: 1.00% o Health Insurance: 7.60% o Retirement Contribution: 3.00%

CONTRACTED SERVICES

Accounting / Audit: $10,000 per location for state-approved auditor

Legal: $5,000 per location for legal expenses

Management Company Fee: 10% of state allotment annually

Nurse Services: $20,000 per location for part-time contracted services

Food Service / School Lunch: Estimated net expenses (after NSLP reimbursement of $1.27 per enrolled student

Special Ed Services: $300 per year each special education enrolled student for minor services that cannot be delivered by dedicated special education teachers

SCHOOL OPERATIONS

Board Expenses: $5,000 annually

Classroom / Teaching Supplies & Material: $41.67 annually per student

Special Ed Supplies & Materials: $208.33 annually per special education student

Textbooks / Workbooks: E-Textbooks for @ $14.22 per student per course

Supplies & Materials other: Curriculum Fees @$60 per student per course

Equipment / Furniture: $0; Included in rent expense

Telephone: $0; Included in rent expense

Technology:

o LMS expense @ $39,000 per location

o Technology fee to CMO @$200 per enrolled student

o Student laptops @ $325 per new student

Student Testing & Assessment: $0; included in curriculum fee

Field Trips: Allowance of $25 per enrolled student annually

Transportation (student): $0; Transportation will not be provided. Any required transportation

(ADA or IEP) will be provided, but a reasonable estimate cannot be made

Student Services: $5,000 allowance per location for miscellaneous services

Office Expense: $1,200 annual allowance per location

Staff Development: $1,500 annually per teacher

Student Recruitment / Marketing

o Charter school marketing / recruitment expenses (advertising / recruiting activities)

o In year zero, allowance is $35,000 per location for initial community awareness

o Year one estimate is $10,000 per location; ongoing estimate is $5,000 per location

FACILITY OPERATIONS & MAINTENANCE

Insurance: $20,000 annually per location

Janitorial Services: $0; included in rent expense

Building and Land Rent / Lease:

o Variable charge based on annual building occupancy cost per square foot (avg. $22.30)

o Assessed at 50 square feet per student – average $1,115 per enrolled student annually

Repairs & Maintenance: $0; included in rent expense

Security Services: $0; included in rent expense

Utilities: $0; included in rent expense

If revenues are lower than expected in the first operating year (i.e. if enrollments do not meet

expectations), there are a few options the board may choose to pursue as contingencies. The board

may choose to open only one of the two locations in the first year if initial community interest is lower

than planned. If both locations are opened with low enrollments, staff resources could be shared

between sites (teachers, executive director / principal). CMO resources may be able to perform extra

duties in year one until enrollment revenues can support planned staffing. The board has no current

plans to pursue debt financing to support operations in the initial years. Additionally, the co-location of

the Early Career Academies with existing college campuses, coupled with a variable per-student rent

agreement, provides an initial operating cushion that few start-up charter schools enjoy.

Attachment F3

Financial Plan Workbook

Lead Applicant Name: David Catalano

Contact Email: [email protected] Phone: (317)706‐9478

Year One Fiscal Year End: 2016School Days: 180

Early Career AcademyNew Applicaton Budget(s) & Cash Flow(s) Template

1

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

24

25

26

27

28

29

30

31

32

33

34

35

36

37

38

39

40

41

42

43

44

45

46

47

48

49

50

51

52

53

54

A B C D E

Early Career AcademyEstimate of State Aid Entitlement Input 12/22/2014 15:36

Total - Per Grades - First Year

Pre‐Kindergarten (Enter 1/2 of actual enrollment because you will only

be funded for 1/2 day per child) ‐

Kindergarten ‐

1st Grade ‐

2nd Grade ‐

3rd Grade ‐

4th Grade ‐

5th Grade ‐

6th Grade ‐

7th Grade ‐

8th Grade ‐

9th Grade ‐

10th Grade ‐

11th Grade 240.00

12th Grade ‐ Total - All Grades

Total Number of Students Enrolled 240.0

Total Number of High School Students Enrolled 240.00

Percentage Rate of Attendance 80%

Special Education Data: Extended Year Service

Number Enrolled in Homebound - -

Number Enrolled in Hospital Class - -

Number Enrolled in Speech Therapy - -

Number Enrolled in Resource Room - -

Number Enrolled in Self-Contained Mild/Mod/Sev - -

Number Enrolled in Full-Time Early Childhood - -

Number Enrolled in Off-Home Campus - -

Number Enrolled in VAC - -

Number Enrolled from State Schools - -

Number Enrolled in Residential Care & Treatment - -

Number Enrolled in Mainstream 12.00 -

Career and Technology (C&T) Data: Advanced C&T FTE

Number Enrolled in One-hour Class - -

Number Enrolled in Two-hour Class - -

Number Enrolled in Three-hour Class - -

Number Enrolled in Four-hour Class - -

Number Enrolled in Five-hour Class - -

Number Enrolled in Six-hour Class - -

Gifted and Talented Enrolled -

Number of Pregnancy Related Students Enrolled -

Number Enrolled in Bilingual/ESL 14.00

Special Education Error Check

Career and Technology Error Check

Available School Fund ADA -

Compensatory Education Enrollment 120.00

Regular Program Transportation Allotment -

Special Education Program Transportation Allotment -

Career and Technology Program Transportation Allotment -

Transportation Total -$

Data Entry - page 2 of 22Printed on 12/22/2014

12/22/2014 15:36

ENROLLMENT FISCAL YEAR END 2016 2017 2018 2019 2020

Pre‐Kindergarten (Enter 1/2 of actual enrollment because you will

only be funded for 1/2 day per child) ‐

Kindergarten ‐ ‐ ‐ ‐ ‐

1st Grade ‐ ‐ ‐ ‐ ‐

2nd Grade ‐ ‐ ‐ ‐ ‐

3rd Grade ‐ ‐ ‐ ‐ ‐

4th Grade ‐ ‐ ‐ ‐ ‐

5th Grade ‐ ‐ ‐ ‐ ‐

6th Grade ‐ ‐ ‐ ‐ ‐

7th Grade ‐ ‐ ‐ ‐ ‐

8th Grade ‐ ‐ ‐ ‐ ‐

9th Grade ‐ ‐ ‐ ‐ ‐

10th Grade ‐ ‐ ‐ ‐ ‐

11th Grade 240.00 240.00 360.00 360.00 360.00

12th Grade ‐ 240.00 240.00 360.00 360.00

Total Number of High School Students Enrolled 240.00 480.00 600.00 720.00 720.00

Total Number of All Students Enrolled (Average Membership) 240.00 480.00 600.00 720.00 720.00

Average Daily Attendance (ADA) 192.00 384.00 480.00 576.00 576.00

Average Daily Attendance % 80% 80% 80% 80% 80%

Percent change YOY 100% 25% 20% 0%

STUDENT POPULATIONSpecial Education Data: 2016 EYS 2016 2017 EYS 2017 2018 EYS 2018 2019 EYS 2019 2020 EYS 2020

Number Enrolled in Homebound ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Number Enrolled in Hospital Class ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Number Enrolled in Speech Therapy ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Number Enrolled in Resource Room ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Number Enrolled in Self‐Contained Mild/Mod/Sev ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Number Enrolled in Full‐Time Early Childhood ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Number Enrolled in Off‐Home Campus ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Number Enrolled in VAC ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Number Enrolled from State Schools ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Number Enrolled in Residential Care & Treatment ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Number Enrolled in Mainstream 12.00 ‐ 24.00 30.00 ‐ 36.00 ‐ 36.00 ‐

Special Education Student Count (SPED) 12.00 ‐ 24.00 ‐ 30.00 ‐ 36.00 ‐ 36.00 ‐

Special Education Student Count % 5.00% 5.00% 5.00% 5.00% 5.00%

100% 0% 25% 0% 20% 0% 0% 0%

Career and Technology (C&T) Data:2016 Advanced

C&T FTE

2016

2017 Advanced

C&T FTE

2017

2018 Advanced

C&T FTE

2018

2019 Advanced

C&T FTE

2019

2020 Advanced

C&T FTE 2020

Number Enrolled in One‐hour Class ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Number Enrolled in Two‐hour Class ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Number Enrolled in Three‐hour Class ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Number Enrolled in Four‐hour Class ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Number Enrolled in Five‐hour Class ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Number Enrolled in Six‐hour Class ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Career & Technology Students Enrolled ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

% of Career & Technology Students

0% 0% 0% 0% 0% 0% 0% 0%

2016 2017 2018 2019 2020

Number Gifted and Talented Students Enrolled ‐ ‐ ‐ ‐ ‐

% of Gifted and Talented Students Enrolled

Number of Pregnancy Related Students ‐ ‐ ‐ ‐ ‐

% of Pregnancy Related Students Enrolled

Number of Students Enrolled in Bilinguel/ESL 14.00 28.00 36.00 43.00 43.00

% of Students Enrolled in Bilinguel/ESL 5.83% 5.83% 6.00% 5.97% 5.97%

Special Education Error Check

Career and Technology Error Check

Available School Fund ADA ‐ ‐ ‐ ‐ ‐

Comensatory Education Enrollment 120.00 240.00 300.00 360.00 360.00

Transportation 2016 2017 2018 2019 2020

Regular Program Transportation Allotment ‐$ ‐$ ‐$ ‐$ ‐$

Special Education Program Transportation Allotment ‐$ ‐$ ‐$ ‐$ ‐$

Career and Technology Program Transportation Allotment ‐$ ‐$ ‐$ ‐$ ‐$

Transportation Total ‐$ ‐$ ‐$ ‐$ ‐$

Percent change YOY 0% 0% 0% 0%


ENROLLMENT and STUDENT POPULATION

Data for following fiscal years must be based on reasonable estimates and projections.

Data for following fiscal years must be based on

reasonable estimates and projections.

Data for following fiscal years must be based on

reasonable estimates and projections.

Percent change YOY

Percent change YOY

Early Career Academy 12/22/2014 15:36

Estimate of State Aid Entitlement OutputTemplate Date 06/21/2013-Preliminary TOTAL

Refined ADA 192.000HS ADA 192.000ASF ADA 0.000SPECIAL EDUCATION FTE Extended Year Service

Number Enrolled in Homebound 0.000 0.000Hospital Class 0.000 0.000Speech Therapy 0.000 0.000Resource Room 0.000 0.000Self-Contained Mild/Mod/Sev 0.000 0.000Full-Time Early Childhood 0.000 0.000Off-Home Campus 0.000 0.000VAC 0.000 0.000State Schools 0.000 0.000Residential Care & Treatment 0.000 0.000

TOTAL SPECIAL EDUCATION FTE 0.000 0.000TOTAL SPECIAL EDUCATION WEIGHTED FTE 0.000 0.000

Career & Technology FTEs 0.000Advanced Career & Technology FTES 0.000Regular Program ADA 192.000

Mainstream ADA 9.600Gifted & Talented Enrollment 0.000Compensatory Ed Enrollment 120.000 Pregnancy-related FTEs 0.000Bilingual ADA 11.200Adjusted GYA 0.9731

TOTAL WEIGHTED AVERAGE DAILY ATTENDANCE (WADA) 283.679 FUNDING DATA:

State Average Basic Allotment 4,805$ State Average Adjusted Basic Allotment 5,078$ State Average Adjusted Allotment 6,152$ State Average DTR- Level II 0.05355State Average DTR- Level III 0.04686Available School Fund Rate -$

FUNDING BREAKDOWN BY PROGRAM

Regular Program Block Grant 1,181,184$ Special Education Block Grant (Spend 52% of Amount as proposed) -$ Mainstream Special Education(Spend 52% of Amount as proposed) 64,965$ Residential Care & Treatment (Spend 52% of Amount as proposed) -$ State Schools (Spend 52% of Amount as proposed) -$ Extended Year Services Special Education (EYS) Grant (Spend 100% of Amount as propos -$

TOTAL SPECIAL EDUCATION 64,965$ Career & Technology Grant (Spend 58% of Amount as proposed) -$ Gifted & Talented Op Grant (Spend 55% of Amount as proposed) -$ Regular Compensatory Ed (Spend 52% of Amount as proposed) 147,648$ Pregnancy Related Services Allocation (Spend 52% of Amount as proposed) -$ Military Allotment -$ Bilingual Education Block Grant (Spend 52% of Amount as proposed) 6,890$ TRANSPORTATION

Regular Program -$ Special Education -$ Career and Technology -$

TOTAL TRANSPORTATION -$

High School Allotment 52,800$ State Share of Tier I 1,453,487$ Tier II Level 1 91,093$ Tier II Level 2 42,470$

TOTAL TIER II 133,563$ TOTAL FOUNDATION 1,587,050$

OTHER PROGRAMS

Staff Salary Allotment -$ Additional State Aid for Tax Reduction (ASATR) -$

TOTAL OTHER PROGRAMS -$

TOTAL 1,587,050$ TOTAL AVAILABLE SCHOOL FUND (ASF) (May be zero in first year) -$ TOTAL FOUNDATION SCHOOL FUND (FSF) 1,587,050$

Please note estimates of state aid calculated during the school year are based on projected charter school and school district attendance estimates, estimated school district maintenance and operations (M&O) tax rates, and estimated tax collections.

Estimation of state aid earned can be significantly impacted by factors that will not be known to the State Funding Division until the "Final" Summary of Finances (SOF) is

calculated in April. It is strongly recommended that charter schools budget conservatively to accommodate these unexpected changes.

1 2009-2010 HB1 Revenue Per WADA *0.9263 4,604.638$ HB1REV_WADA

2 2009-2010 State Average HB1 Revenue Per WADA*0.9263 4,604.637$ STAVG_HB1REV_WADA

3 2013-2014 WADA 283.679 WADA

4 2013-2014 Base Target Revenue (Greater of Line 1 x Line 3 or Line2 x Line 3) 1,306,239$

5 2013-2014 HB3646 Minimum Increase (Line 3 x $120*0.9263) 31,533$ MININC

6 2013-2014 Minimum Revenue (Line 4 + Line 5) 1,337,772$ MIN_REV

7 Transportation Adjustment -$ ADJTRN

8 2013-2014 New Instructional Facility Allotment -$ FM113230

9 2008-2009 Educator Salary Increase ($23.63 x 2008-2009 WADA*0.9263) -$ FM099150

10 2013-2014 Adjusted Minimum Revenue (Line 6 + Line 7 + Line 8 + Line 9) 1,337,772$ ADJMINREV

11 2013-2014 Tier I State Aid 1,453,487$ FM113900

12 Additional State Aid For Tax Reduction (If Line 11 < Line 10 Then Line 10 - Line 11) -$ FM113715

13 2013-2014 Revenue @ Compressed Tax Rate/RACR (Line 11 + Line 12) 1,453,487$ RACR

14 2013-2014 Revenue per WADA @ Compressed Tax Rate (RACR/WADA) (Line 13/Line3) 5,124$ RACRW

12/22/2014 15:36

12/22/2014 15:36

Year Count Year 1 Year 2 Year 3 Year 4 Year 5 Year 1 Year 2 Year 3 Year 4 Year 5

FYE 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020

0.00% 2.00% 2.00% 2.00% 2.00%

100.00% 102.0000% 104.0400% 106.1208% 108.2432%

Superintendent / CEO Executive Management 75,000$ 1.0 1.0 1.0 1.0 1.0 75,000$ 76,500$ 78,030$ 79,591$ 81,182$

ECA Executive Director Instructional Management 80,000$ 2.0 2.0 3.0 3.0 3.0 Prinicpal / Academic Officer Role 160,000$ 163,200$ 249,696$ 254,690$ 259,784$

Early Career Academy Instructor Teachers ‐ Regular 54,000$ 8.0 16.0 20.0 24.0 24.0 432,000$ 881,280$ 1,123,632$ 1,375,326$ 1,402,832$

Special Education Instructor Teachers ‐ SPED 54,000$ 2.0 2.0 3.0 3.0 3.0 108,000$ 110,160$ 168,545$ 171,916$ 175,354$

Career Academy Counselor Teaching Assistants 25,000$ 2.0 4.0 5.0 6.0 6.0 FTE estimated for part‐time resources 50,000$ 102,000$ 130,050$ 159,181$ 162,365$

Administrative Assistant Administrative Staff 40,000$ 2.0 2.0 3.0 3.0 3.0 Incl. Student Attendance Accounting 80,000$ 81,600$ 124,848$ 127,345$ 129,892$

‐$ ‐$ ‐$ ‐$ ‐$ ‐$

‐$ ‐$ ‐$ ‐$ ‐$ ‐$

‐$ ‐$ ‐$ ‐$ ‐$ ‐$

‐$ ‐$ ‐$ ‐$ ‐$ ‐$

‐$ ‐$ ‐$ ‐$ ‐$ ‐$

‐$ ‐$ ‐$ ‐$ ‐$ ‐$

‐$ ‐$ ‐$ ‐$ ‐$ ‐$

‐$ ‐$ ‐$ ‐$ ‐$ ‐$

‐$ ‐$ ‐$ ‐$ ‐$ ‐$

‐$ ‐$ ‐$ ‐$ ‐$ ‐$

‐$ ‐$ ‐$ ‐$ ‐$ ‐$

‐$ ‐$ ‐$ ‐$ ‐$ ‐$

‐$ ‐$ ‐$ ‐$ ‐$ ‐$

‐$ ‐$ ‐$ ‐$ ‐$ ‐$

‐$ ‐$ ‐$ ‐$ ‐$ ‐$

‐$ ‐$ ‐$ ‐$ ‐$

‐$ ‐$ ‐$ ‐$ ‐$

‐$ ‐$ ‐$ ‐$ ‐$

‐$ ‐$ ‐$ ‐$ ‐$

‐$ ‐$ ‐$ ‐$ ‐$

‐$ ‐$ ‐$ ‐$ ‐$

‐$ ‐$ ‐$ ‐$ ‐$

‐$ ‐$ ‐$ ‐$ ‐$

‐$ ‐$ ‐$ ‐$ ‐$

‐$ ‐$ ‐$ ‐$ ‐$

‐$ ‐$ ‐$ ‐$ ‐$

‐$ ‐$ ‐$ ‐$ ‐$

‐$ ‐$ ‐$ ‐$ ‐$

‐$ ‐$ ‐$ ‐$ ‐$

‐$ ‐$ ‐$ ‐$ ‐$

‐$ ‐$ ‐$ ‐$ ‐$

‐$ ‐$ ‐$ ‐$ ‐$

‐$ ‐$ ‐$ ‐$ ‐$

‐$ ‐$ ‐$ ‐$ ‐$

‐$ ‐$ ‐$ ‐$ ‐$

‐$ ‐$ ‐$ ‐$ ‐$

‐$ ‐$ ‐$ ‐$ ‐$

‐$ ‐$ ‐$ ‐$ ‐$

‐$ ‐$ ‐$ ‐$ ‐$

‐$ ‐$ ‐$ ‐$ ‐$

‐$ ‐$ ‐$ ‐$ ‐$

‐$ ‐$ ‐$ ‐$ ‐$

‐$ ‐$ ‐$ ‐$ ‐$

‐$ ‐$ ‐$ ‐$ ‐$

‐$ ‐$ ‐$ ‐$ ‐$

‐$ ‐$ ‐$ ‐$ ‐$

‐$ ‐$ ‐$ ‐$ ‐$

‐$ ‐$ ‐$ ‐$ ‐$

‐$ ‐$ ‐$ ‐$ ‐$

‐$ ‐$ ‐$ ‐$ ‐$

‐$ ‐$ ‐$ ‐$ ‐$

‐$ ‐$ ‐$ ‐$ ‐$

Total $ 328,000 17.0 27.0 35.0 40.0 40.0 905,000$ 1,414,740$ 1,874,801$ 2,168,048$ 2,211,409$


Position Description

Position Category

(Categories Match Up to the

Categories on the Five Year Budget)

Number of FTE NOTES Salary Totals

Starting

Salary

Yearly Raise %

12/22/2014 15:36

2016 2017 2018 2019 2020 NOTES

REVENUE

TOTAL STATE REVENUES 1,587,050.26 0.00% 100.00% 25.00% 20.00% 0.00% Texas Foundation funding @ 80% ADA

TOTAL FEDERAL REVENUES 54,950 0.00% 100.00% 25.00% 20.00% 0.00% Federal School Lunch Program Funding

TOTAL LOCAL & OTHER REVENUES 967,622 0.00% ‐36.48% 40.39% ‐13.58% ‐8.92% In‐kind credit from CMO for services

TOTAL REVENUE 2,609,622.66


REVENUE AND EXPENSE ASSUMPTIONS

Enter the % increase below for which the amount entered in

column F should increase each year. Consider using the % changes in

Enrollment Tab

EXPENSES


Social Security 6.20% 6.20% 6.20% 6.20% 6.20%

Medicare 1.45% 1.45% 1.45% 1.45% 1.45%

State Unemployment 0.75% 0.75% 0.75% 0.75% 0.75%

Worker's Compensation Insurance 1.00% 1.00% 1.00% 1.00% 1.00%

Custom Other Tax #1 0.00% 0.00% 0.00% 0.00% 0.00%

Custom Other Tax #2 0.00% 0.00% 0.00% 0.00% 0.00%

Health Insurance 7.60% 7.60% 7.60% 7.60% 7.60%

Dental Insurance 0.00% 0.00% 0.00% 0.00% 0.00%

Vision Insurance 0.00% 0.00% 0.00% 0.00% 0.00%

Life Insurance 0.00% 0.00% 0.00% 0.00% 0.00%

Retirement Contribution 3.00% 3.00% 3.00% 3.00% 3.00%

Custom Fringe #1 0.00% 0.00% 0.00% 0.00% 0.00%

Custom Fringe #2 0.00% 0.00% 0.00% 0.00% 0.00%

TOTAL PAYROLL TAXES AND BENEFITS

TOTAL PERSONNEL, TAX & BENEFIT EXPENSES

CONTRACTED SERVICES

Accounting / Audit 20,000 0.00% 0.00% 50.00% 0.00% 0.00% Est. audit expense @ $10,000 per campus

Legal 10,000 0.00% 0.00% 50.00% 0.00% 0.00%

Management Company Fee 158,705 0.00% 100.00% 25.00% 20.00% 0.00% Service fees @10% State Revenue

Nurse Services 40,000 0.00% 0.00% 50.00% 0.00% 0.00% Contracted School Nurse Services

Food Service / School Lunch 98,842 0.00% 100.00% 25.00% 20.00% 0.00% Est. net cost of school lunches: $1.27 per day

Payroll Services ‐ 0.00% 0.00% 0.00% 0.00% 0.00%

Special Ed Services 2,700 0.00% 100.00% 25.00% 20.00% 0.00% Misc. Special Ed. Svcs. @ $300 per student

Titlement Services (i.e. Title I) ‐ 0.00% 0.00% 0.00% 0.00% 0.00%

Custom Contracted Services #1 ‐ 0.00% 0.00% 0.00% 0.00% 0.00%



TOTAL CONTRACTED SERVICES

Enter the % increase below for which the amount entered in

column F should increase each year.

For each line item in the Payroll, Taxes & Benefits section enter the % of

Total Payroll that line item should represent.

SCHOOL OPERATIONS

Board Expenses 5,000 0.00% 0.00% 0.00% 0.00% 0.00%

Classroom / Teaching Supplies & Materials 8,000 0.00% 100.00% 25.00% 20.00% 0.00%

Special Ed Supplies & Materials 2,000 0.00% 100.00% 25.00% 20.00% 0.00%

Textbooks / Workbooks 46,073 0.00% 100.00% 25.00% 20.00% 0.00% E‐Textbooks for @ $14.22 per student per course

Supplies & Materials other 194,400 0.00% 100.00% 25.00% 20.00% 0.00% Curriculum Fees @$60 per student per course

Equipment / Furniture ‐ 0.00% 0.00% 0.00% 0.00% 0.00% All equipment / furniture leased ‐ included in rent

Telephone ‐ 0.00% 0.00% 0.00% 0.00% 0.00% Included in rent

Technology 218,800 0.00% 17.55% 42.53% 5.24% 0.00% Laptops @$325 each; Tech. Fees; LMS expense

Student Testing & Assessment ‐ 0.00% 0.00% 0.00% 0.00% 0.00% Included in LMS expense

Field Trips 4,800 0.00% 100.00% 25.00% 20.00% 0.00% Field trip allowance of $25 per student

Transportation (student) ‐ 0.00% 0.00% 0.00% 0.00% 0.00%

Student Services ‐ other 10,000 0.00% 0.00% 50.00% 0.00% 0.00% Misc. Student Services

Office Expense 2,400 0.00% 0.00% 50.00% 0.00% 0.00% Office Supplies

Staff Development 1,500 0.00% 80.00% 27.78% 17.39% 0.00% Prof. Development @$150 per teacher

Staff Recruitment ‐ 0.00% 0.00% 0.00% 0.00% 0.00%

Student Recruitment / Marketing 20,000 0.00% ‐50.00% 50.00% 0.00% 0.00% Charter school marketing / recruitment

School Meals / Lunch ‐ 0.00% 0.00% 0.00% 0.00% 0.00%

Travel (Staff) ‐ 0.00% 0.00% 0.00% 0.00% 0.00%

Fundraising ‐ 0.00% 0.00% 0.00% 0.00% 0.00%

Custom Operations #1 ‐ 0.00% 0.00% 0.00% 0.00% 0.00%



TOTAL SCHOOL OPERATIONS

FACILITY OPERATION & MAINTENANCE

Insurance 40,000 0.00% 0.00% 50.00% 0.00% 0.00% Est. cost $20,000 per campus

Janitorial Services ‐ 0.00% 0.00% 0.00% 0.00% 0.00% Included in Facility Rent

Building and Land Rent / Lease 267,600 0.00% 100.00% 25.00% 20.00% 0.00% Variable rent: Average $1,115 Per Student

Repairs & Maintenance ‐ 0.00% 0.00% 0.00% 0.00% 0.00% Included in Facility Rent

Security Services ‐ 0.00% 0.00% 0.00% 0.00% 0.00% Included in Facility Rent

Utilities ‐ 0.00% 0.00% 0.00% 0.00% 0.00% Included in Facility Rent

Custom Facilities Operations #1 ‐ 0.00% 0.00% 0.00% 0.00% 0.00%



TOTAL FACILITY OPERATION & MAINTENANCE

RESERVES / CONTIGENCY ‐ 0.00% 0.00% 0.00% 0.00% 0.00%

TOTAL EXPENSES

NET OPERATING INCOME (before Depreciation)

DEPRECIATION & AMORTIZATION ‐ 0.00% 0.00% 0.00% 0.00% 0.00%

NET OPERATING INCOME (including Depreciation)

12/22/2014 15:36

SUMMARYTotal Revenue 2,609,623 3,898,628 4,967,873 5,671,675 5,605,171 Description of Assumptions and Variances

Total Expenses 2,236,819 3,661,227 4,781,210 5,544,466 5,596,499

Net Operating Income (before Depreciation) 372,803 237,401 186,664 127,209 8,672

Revenue Per Pupil 10,873 8,122 8,280 7,877 7,785

Expenses Per Pupil 9,320 7,628 7,969 7,701 7,773

YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

2016 2017 2018 2019 2020

REVENUETOTAL STATE REVENUES 1,587,050$ 3,174,101$ 3,967,626$ 4,761,151$ 4,761,151$ Texas Foundation funding @ 80% ADA

TOTAL FEDERAL REVENUES 54,950$ 109,901$ 137,376$ 164,851$ 164,851$

TOTAL LOCAL & OTHER REVENUES 967,622$ 614,627$ 862,872$ 745,673$ 679,169$ In‐kind credit from CMO for services

TOTAL REVENUE 2,609,623$ 3,898,628$ 4,967,873$ 5,671,675$ 5,605,171$

PROJECTED BUDGET / OPERATING PLAN FOR INITIAL CHARTER PERIOD


EXPENSESADMINISTRATIVE STAFF PERSONNEL COSTS

Executive Management 75,000 76,500 78,030 79,591 81,182

Instructional Management 160,000 163,200 249,696 254,690 259,784

Deans, Directors & Coordinators ‐ ‐ ‐ ‐ ‐

CFO / Director of Finance ‐ ‐ ‐ ‐ ‐

Operation / Business Manager ‐ ‐ ‐ ‐ ‐

Administrative Staff 80,000 81,600 124,848 127,345 129,892

Other ‐ Administrative ‐ ‐ ‐ ‐ ‐

TOTAL ADMINISTRATIVE STAFF PERSONNEL COSTS 315,000$ 321,300$ 452,574$ 461,625$ 470,858$

INSTRUCTIONAL PERSONNEL COSTS

Teachers ‐ Regular 432,000 881,280 1,123,632 1,375,326 1,402,832

Teachers ‐ SPED 108,000 110,160 168,545 171,916 175,354

Substitute Teachers ‐ ‐ ‐ ‐ ‐

Teaching Assistants 50,000 102,000 130,050 159,181 162,365

Specialty Teachers ‐ ‐ ‐ ‐ ‐

Aides ‐ ‐ ‐ ‐ ‐

Therapists & Counselors ‐ ‐ ‐ ‐ ‐

Other ‐ Instructional ‐ ‐ ‐ ‐ ‐

TOTAL INSTRUCTIONAL PERSONNEL COSTS 590,000$ 1,093,440$ 1,422,227$ 1,706,422$ 1,740,551$

NON‐INSTRUCTIONAL PERSONNEL COSTS

Nurse ‐ ‐ ‐ ‐ ‐

Librarian ‐ ‐ ‐ ‐ ‐

Custodian ‐ ‐ ‐ ‐ ‐

Security ‐ ‐ ‐ ‐ ‐

Other ‐ Non‐Instructional ‐ ‐ ‐ ‐ ‐

TOTAL NON‐INSTRUCTIONAL PERSONNEL COSTS ‐$ ‐$ ‐$ ‐$ ‐$

TOTAL PERSONNEL EXPENSES 905,000$ 1,414,740$ 1,874,801$ 2,168,048$ 2,211,409$


Social Security 56,110 87,714 116,238 134,419 137,107

Medicare 13,123 20,514 27,185 31,437 32,065

State Unemployment 6,788 10,611 14,061 16,260 16,586

Worker's Compensation Insurance 9,050 14,147 18,748 21,680 22,114

Custom Other Tax #1 ‐ ‐ ‐ ‐ ‐

Custom Other Tax #2 ‐ ‐ ‐ ‐ ‐

Health Insurance 68,780 107,520 142,485 164,772 168,067

Dental Insurance ‐ ‐ ‐ ‐ ‐

Vision Insurance ‐ ‐ ‐ ‐ ‐

Life Insurance ‐ ‐ ‐ ‐ ‐

Retirement Contribution 27,150 42,442 56,244 65,041 66,342

Custom Fringe #1 ‐ ‐ ‐ ‐ ‐

Custom Fringe #2 ‐ ‐ ‐ ‐ ‐

TOTAL PAYROLL TAXES AND BENEFITS 181,000$ 282,948$ 374,960$ 433,610$ 442,282$

TOTAL PERSONNEL, TAX & BENEFIT EXPENSES 1,086,000$ 1,697,688$ 2,249,761$ 2,601,658$ 2,653,691$

CONTRACTED SERVICES

Accounting / Audit 20,000 20,000 30,000 30,000 30,000 Est. audit expense @ $10,000 per campus

Legal 10,000 10,000 15,000 15,000 15,000

Management Company Fee 158,705 317,410 396,763 476,115 476,115 Service fees @10% State Revenue

Nurse Services 40,000 40,000 60,000 60,000 60,000 Contracted School Nurse Services

Food Service / School Lunch 98,842 197,683 247,104 296,525 296,525 Est. net cost of school lunches: $1.27 per day

Payroll Services ‐ ‐ ‐ ‐ ‐

Special Ed Services 2,700 5,400 6,750 8,100 8,100 Misc. Special Ed. Svcs. @ $300 per student

Titlement Services (i.e. Title I) ‐ ‐ ‐ ‐ ‐

Custom Contracted Services #1 ‐ ‐ ‐ ‐ ‐



TOTAL CONTRACTED SERVICES 330,247$ 590,493$ 755,617$ 885,740$ 885,740$

SCHOOL OPERATIONS

Board Expenses 5,000 5,000 5,000 5,000 5,000

Classroom / Teaching Supplies & Materials 8,000 16,000 20,000 24,000 24,000

Special Ed Supplies & Materials 2,000 4,000 5,000 6,000 6,000

Textbooks / Workbooks 46,073 92,146 115,182 138,218 138,218 E‐Textbooks for @ $14.22 per student per course

Supplies & Materials other 194,400 388,800 486,000 583,200 583,200 Curriculum Fees @$60 per student per course

Equipment / Furniture ‐ ‐ ‐ ‐ ‐ All equipment / furniture leased ‐ included in rent

Telephone ‐ ‐ ‐ ‐ ‐ Included in rent

Technology 218,800 257,200 366,600 385,800 385,800 Laptops @$325 each; Tech. Fees; LMS expense

Student Testing & Assessment ‐ ‐ ‐ ‐ ‐ Included in LMS expense

Field Trips 4,800 9,600 12,000 14,400 14,400 Field trip allowance of $25 per student

Transportation (student) ‐ ‐ ‐ ‐ ‐

Student Services ‐ other 10,000 10,000 15,000 15,000 15,000 Misc. Student Services

Office Expense 2,400 2,400 3,600 3,600 3,600 Office Supplies

Staff Development 1,500 2,700 3,450 4,050 4,050 Prof. Development @$150 per teacher

Staff Recruitment ‐ ‐ ‐ ‐ ‐

Student Recruitment / Marketing 20,000 10,000 15,000 15,000 15,000 Charter school marketing / recruitment

School Meals / Lunch ‐ ‐ ‐ ‐ ‐

Travel (Staff) ‐ ‐ ‐ ‐ ‐

Fundraising ‐ ‐ ‐ ‐ ‐

Custom Operations #1 ‐ ‐ ‐ ‐ ‐



TOTAL SCHOOL OPERATIONS 512,973$ 797,846$ 1,046,832$ 1,194,268$ 1,194,268$


Insurance 40,000 40,000 60,000 60,000 60,000 Est. cost $20,000 per campus

Janitorial Services ‐ ‐ ‐ ‐ ‐ Included in Facility Rent

Building and Land Rent / Lease 267,600 535,200 669,000 802,800 802,800 Variable rent: Average $1,115 Per Student

Repairs & Maintenance ‐ ‐ ‐ ‐ ‐ Included in Facility Rent

Security Services ‐ ‐ ‐ ‐ ‐ Included in Facility Rent

Utilities ‐ ‐ ‐ ‐ ‐ Included in Facility Rent

Custom Facilities Operations #1 ‐ ‐ ‐ ‐ ‐



TOTAL FACILITY OPERATION & MAINTENANCE 307,600$ 575,200$ 729,000$ 862,800$ 862,800$

RESERVES / CONTIGENCY ‐ ‐ ‐ ‐ ‐

TOTAL EXPENSES 2,236,819$ 3,661,227$ 4,781,210$ 5,544,466$ 5,596,499$

NET OPERATING INCOME (before Depreciation) 372,803$ 237,401$ 186,664$ 127,209$ 8,672$

DEPRECIATION & AMORTIZATION ‐ ‐ ‐ ‐ ‐

NET OPERATING INCOME (including Depreciation) 372,803$ 237,401$ 186,664$ 127,209$ 8,672$

12/22/2014 15:36

SUMMARYTotal Revenue 300,000 Description of Assumptions and Variances

Total Expenses 277,500

Net Operating Income (before Depreciation) 22,500

REVENUETOTAL STATE REVENUES

TOTAL FEDERAL REVENUES

TOTAL LOCAL & OTHER REVENUES 300,000$ Start‐Up Grants from CMO @ $150,000 per campus

TOTAL REVENUE 300,000$

Early Career Academy PROJECTED START‐UP BUDGET / OPERATING PLAN

FOR INITIAL CHARTER PERIOD

Start‐Up

Period


Executive Management 31,250 Superintendent / CEO

Instructional Management 66,667 Exec. Director Salaries for 5 months (2 campuses)

Deans, Directors & Coordinators ‐

CFO / Director of Finance ‐

Operation / Business Manager ‐

Administrative Staff 13,333 Admin. Assistants for 2 months (2 campuses)

Other ‐ Administrative ‐

TOTAL ADMINISTRATIVE STAFF PERSONNEL COSTS 111,250$


Teachers ‐ Regular 36,000 Teachers hired 1 month prior to opening (2 campuses)

Teachers ‐ SPED 9,000 Teachers hired 1 month prior to opening (2 campuses)

Substitute Teachers ‐

Teaching Assistants ‐

Specialty Teachers ‐

Aides ‐

Therapists & Counselors ‐

Other ‐ Instructional ‐

TOTAL INSTRUCTIONAL PERSONNEL COSTS 45,000$


Nurse ‐

Librarian ‐

Custodian ‐

Security ‐

Other ‐ Non‐Instructional ‐

TOTAL NON‐INSTRUCTIONAL PERSONNEL COSTS ‐$

TOTAL PERSONNEL EXPENSES 156,250$


Social Security 9,688

Medicare 2,266

State Unemployment 1,172

Worker's Compensation Insurance 1,563

Custom Other Tax #1 ‐

Custom Other Tax #2 ‐

Health Insurance 11,875

Dental Insurance ‐

Vision Insurance ‐

Life Insurance ‐

Retirement Contribution 4,688

Custom Fringe #1 ‐

Custom Fringe #2 ‐

TOTAL PAYROLL TAXES AND BENEFITS 31,250$

TOTAL PERSONNEL, TAX & BENEFIT EXPENSES 187,500$

CONTRACTED SERVICES

Accounting / Audit ‐

Legal 20,000

Management Company Fee ‐

Nurse Services ‐

Food Service / School Lunch ‐

Payroll Services ‐

Special Ed Services ‐

Titlement Services (i.e. Title I) ‐

Custom Contracted Services #1 ‐



TOTAL CONTRACTED SERVICES 20,000$

SCHOOL OPERATIONS

Board Expenses ‐

Classroom / Teaching Supplies & Materials ‐

Special Ed Supplies & Materials ‐

Textbooks / Workbooks ‐

Supplies & Materials other ‐

Equipment / Furniture ‐

Telephone ‐

Technology ‐

Student Testing & Assessment ‐

Field Trips ‐

Transportation (student) ‐

Student Services ‐ other ‐

Office Expense ‐

Staff Development ‐

Staff Recruitment ‐

Student Recruitment / Marketing 70,000 Initial estimated Student Recruitment marketing / advertisting

School Meals / Lunch ‐

Travel (Staff) ‐

Fundraising ‐

Custom Operations #1 ‐



TOTAL SCHOOL OPERATIONS 70,000$


Insurance ‐

Janitorial Services ‐

Building and Land Rent / Lease ‐

Repairs & Maintenance ‐

Security Services ‐

Utilities ‐

Custom Facilities Operations #1 ‐



TOTAL FACILITY OPERATION & MAINTENANCE ‐$

RESERVES / CONTIGENCY ‐

TOTAL EXPENSES 277,500$

NET OPERATING INCOME (before Depreciation) 22,500$

DEPRECIATION & AMORTIZATION ‐

NET OPERATING INCOME (including Depreciation) 22,500$

Total FSP from latest Summary of Finances (SOF) 1,587,050$

Prior Year Settle-Up or Audit Adjustments from FSP Ledger -$

Current Year FSP Payments Year to Date from FSP Ledger -$

FSP Remaining Balance 1,587,050$

Number of Remaining FSP Payments 12$

Remaining Balance to be Paid this Month 8.3%

Payment 131,725$

Payment MonthRemaining Payments

% of Unpaid Balance

Estimated Payments Schedule

September 12 8.3% 131,725$

October 11 9.1% 132,435$

November 10 10.1% 133,612$

December 9 11.1% 132,010$

January 8 12.4% 131,101$

February 7 14.4% 133,368$

March 6 16.6% 131,605$

April 5 19.9% 131,578$

May 4 25.1% 132,934$

June 3 33.2% 131,699$

July 2 49.7% 131,697$

August 1 100.0% 133,287$

1,587,050$

12/22/2014 15:36

12/22/2014 15:36

PROJECTED START‐UP BUDGET / OPERATING PLAN FOR INITIAL CHARTER PERIOD

SUMMARY CHECK vs. Budget

(Must Be Zero)

Total Revenue 30,417 48,083 42,250 36,417 44,417 98,417 300,000 ‐ Description of Assumptions and Variances

Total Expenses 26,667 44,333 38,500 32,667 40,667 94,667 277,500 ‐

Net Operating Income (before Depreciation) 3,750 3,750 3,750 3,750 3,750 3,750 22,500 ‐

CASH FLOW ADJUSTMENTS ‐ ‐ ‐ ‐ ‐ ‐ ‐

BEGINNING CASH BALANCE (cash and cash equivalents) ‐ 3,750 7,500 11,250 15,000 18,750

ENDING CASH BALANCE (cash and cash equivalents) 3,750 7,500 11,250 15,000 18,750 22,500

Enter the months period prior to opening day of school. March Arpil May June July August TOTAL

REVENUETOTAL STATE REVENUES ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐

TOTAL FEDERAL REVENUES ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐

TOTAL LOCAL & OTHER REVENUES 30,417$ 48,083$ 42,250$ 36,417$ 44,417$ 98,417$ 300,000$ ‐

TOTAL REVENUE 30,417$ 48,083$ 42,250$ 36,417$ 44,417$ 98,417$ 300,000$ ‐



Executive Management ‐ 6,250 6,250 6,250 6,250 6,250 31,250 ‐

Instructional Management ‐ 13,333 13,333 13,333 13,333 13,333 66,667 ‐

Deans, Directors & Coordinators ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

CFO / Director of Finance ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Operation / Business Manager ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Administrative Staff ‐ ‐ ‐ ‐ 6,667 6,667 13,333 ‐

Other ‐ Administrative ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

TOTAL ADMINISTRATIVE STAFF PERSONNEL COSTS ‐$ 19,583$ 19,583$ 19,583$ 26,250$ 26,250$ 111,250$ ‐


Teachers ‐ Regular ‐ ‐ ‐ ‐ ‐ 36,000 36,000 ‐

Teachers ‐ SPED ‐ ‐ ‐ ‐ ‐ 9,000 9,000 ‐

Substitute Teachers ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Teaching Assistants ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Specialty Teachers ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Aides ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Therapists & Counselors ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Other ‐ Instructional ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

TOTAL INSTRUCTIONAL PERSONNEL COSTS ‐$ ‐$ ‐$ ‐$ ‐$ 45,000$ 45,000$ ‐


Nurse ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Librarian ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Custodian ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Security ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Other ‐ Non‐Instructional ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

TOTAL NON‐INSTRUCTIONAL PERSONNEL COSTS ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐

TOTAL PERSONNEL EXPENSES ‐$ 19,583$ 19,583$ 19,583$ 26,250$ 71,250$ 156,250$ ‐


Social Security ‐ 1,214 1,214 1,214 1,628 4,418 9,688 ‐

Medicare ‐ 284 284 284 381 1,033 2,266 ‐

State Unemployment ‐ 147 147 147 197 534 1,172 ‐

Worker's Compensation Insurance ‐ 196 196 196 263 713 1,563 ‐

Custom Other Tax #1 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Custom Other Tax #2 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Health Insurance ‐ 1,488 1,488 1,488 1,995 5,415 11,875 ‐

Dental Insurance ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Vision Insurance ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Life Insurance ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Retirement Contribution ‐ 588 588 588 788 2,138 4,688 ‐

Custom Fringe #1 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Custom Fringe #2 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

TOTAL PAYROLL TAXES AND BENEFITS ‐$ 3,917$ 3,917$ 3,917$ 5,250$ 14,250$ 31,250$ ‐

TOTAL PERSONNEL, TAX & BENEFIT EXPENSES ‐$ 23,500$ 23,500$ 23,500$ 31,500$ 85,500$ 187,500$ ‐

CONTRACTED SERVICES

Accounting / Audit ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Legal 3,333.33 3,333.33 3,333.33 3,333.33 3,333.33 3,333.33 20,000 ‐

Management Company Fee ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Nurse Services ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Food Service / School Lunch ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Payroll Services ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Special Ed Services ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Titlement Services (i.e. Title I) ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Custom Contracted Services #1 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐



TOTAL CONTRACTED SERVICES 3,333$ 3,333$ 3,333$ 3,333$ 3,333$ 3,333$ 20,000$ ‐

SCHOOL OPERATIONS

Board Expenses ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Classroom / Teaching Supplies & Materials ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Special Ed Supplies & Materials ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Textbooks / Workbooks ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Supplies & Materials other ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Equipment / Furniture ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Telephone ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Technology ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Student Testing & Assessment ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Field Trips ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Transportation (student) ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Student Services ‐ other ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Office Expense ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Staff Development ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Staff Recruitment ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Student Recruitment / Marketing 23,333 17,500 11,667 5,833 5,833 5,833 70,000 ‐

School Meals / Lunch ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Travel (Staff) ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Fundraising ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Custom Operations #1 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐



TOTAL SCHOOL OPERATIONS 23,333$ 17,500$ 11,667$ 5,833$ 5,833$ 5,833$ 70,000$ ‐


Insurance ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Janitorial Services ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Building and Land Rent / Lease ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Repairs & Maintenance ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Security Services ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Utilities ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Custom Facilities Operations #1 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐



TOTAL FACILITY OPERATION & MAINTENANCE ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐

RESERVES / CONTIGENCY ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

TOTAL EXPENSES 26,667$ 44,333$ 38,500$ 32,667$ 40,667$ 94,667$ 277,500$ ‐

NET OPERATING INCOME (before Depreciation) 3,750$ 3,750$ 3,750$ 3,750$ 3,750$ 3,750$ 22,500$ ‐

DEPRECIATION & AMORTIZATION ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

NET OPERATING INCOME (including Depreciation) 3,750$ 3,750$ 3,750$ 3,750$ 3,750$ 3,750$ 22,500$ ‐

CHECK vs. Budget

(Must Be Zero)

212,360 213,070 220,353 218,751 217,842 220,109 218,345 218,318 219,675 218,440 218,438 213,922 2,609,623 ‐ Description of Assumptions and Variances

186,402 186,402 186,402 186,402 186,402 186,402 186,402 186,402 186,402 186,402 186,402 186,402 2,236,819 ‐

25,959 26,668 33,951 32,349 31,440 33,707 31,944 31,917 33,273 32,038 32,036 27,521 372,803 0

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

22,500 48,459 75,127 109,078 141,427 172,867 206,575 238,519 270,435 303,708 335,746 367,783

48,459 75,127 109,078 141,427 172,867 206,575 238,519 270,435 303,708 335,746 367,783 395,303

September October November December January February March April May June July August TOTAL

131,725$ 132,435$ 133,612$ 132,010$ 131,101$ 133,368$ 131,605$ 131,578$ 132,934$ 131,699$ 131,697$ 133,287$ 1,587,050$ ‐ State Revenue timing per TX payment formula

‐$ ‐$ 6,106$ 6,106$ 6,106$ 6,106$ 6,106$ 6,106$ 6,106$ 6,106$ 6,106$ ‐$ 54,950$ ‐

80,635$ 80,635$ 80,635$ 80,635$ 80,635$ 80,635$ 80,635$ 80,635$ 80,635$ 80,635$ 80,635$ 80,635$ 967,622$ ‐

212,360$ 213,070$ 220,353$ 218,751$ 217,842$ 220,109$ 218,345$ 218,318$ 219,675$ 218,440$ 218,438$ 213,922$ 2,609,623$ ‐

Early Career Academy YEAR ONE PROJECTED BUDGET / OPERATING PLAN FOR INITIAL CHARTER PERIOD

6,250 6,250 6,250 6,250 6,250 6,250 6,250 6,250 6,250 6,250 6,250 6,250 75,000 ‐

13,333 13,333 13,333 13,333 13,333 13,333 13,333 13,333 13,333 13,333 13,333 13,333 160,000 ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 80,000 ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

26,250$ 26,250$ 26,250$ 26,250$ 26,250$ 26,250$ 26,250$ 26,250$ 26,250$ 26,250$ 26,250$ 26,250$ 315,000$ ‐

36,000 36,000 36,000 36,000 36,000 36,000 36,000 36,000 36,000 36,000 36,000 36,000 432,000 ‐

9,000 9,000 9,000 9,000 9,000 9,000 9,000 9,000 9,000 9,000 9,000 9,000 108,000 ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 50,000 ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

49,167$ 49,167$ 49,167$ 49,167$ 49,167$ 49,167$ 49,167$ 49,167$ 49,167$ 49,167$ 49,167$ 49,167$ 590,000$ ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐

75,417$ 75,417$ 75,417$ 75,417$ 75,417$ 75,417$ 75,417$ 75,417$ 75,417$ 75,417$ 75,417$ 75,417$ 905,000$ ‐

4,676 4,676 4,676 4,676 4,676 4,676 4,676 4,676 4,676 4,676 4,676 4,676 56,110 ‐

1,094 1,094 1,094 1,094 1,094 1,094 1,094 1,094 1,094 1,094 1,094 1,094 13,123 ‐

566 566 566 566 566 566 566 566 566 566 566 566 6,788 ‐

754 754 754 754 754 754 754 754 754 754 754 754 9,050 ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

5,732 5,732 5,732 5,732 5,732 5,732 5,732 5,732 5,732 5,732 5,732 5,732 68,780 ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

2,263 2,263 2,263 2,263 2,263 2,263 2,263 2,263 2,263 2,263 2,263 2,263 27,150 ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

15,083$ 15,083$ 15,083$ 15,083$ 15,083$ 15,083$ 15,083$ 15,083$ 15,083$ 15,083$ 15,083$ 15,083$ 181,000$ ‐

90,500$ 90,500$ 90,500$ 90,500$ 90,500$ 90,500$ 90,500$ 90,500$ 90,500$ 90,500$ 90,500$ 90,500$ 1,086,000$ ‐

1,667 1,667 1,667 1,667 1,667 1,667 1,667 1,667 1,667 1,667 1,667 1,667 20,000 ‐

833 833 833 833 833 833 833 833 833 833 833 833 10,000 ‐

13,225 13,225 13,225 13,225 13,225 13,225 13,225 13,225 13,225 13,225 13,225 13,225 158,705 ‐

3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333 40,000 ‐

8,237 8,237 8,237 8,237 8,237 8,237 8,237 8,237 8,237 8,237 8,237 8,237 98,842 ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

225 225 225 225 225 225 225 225 225 225 225 225 2,700 ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

27,521$ 27,521$ 27,521$ 27,521$ 27,521$ 27,521$ 27,521$ 27,521$ 27,521$ 27,521$ 27,521$ 27,521$ 330,247$ ‐

417 417 417 417 417 417 417 417 417 417 417 417 5,000 ‐

667 667 667 667 667 667 667 667 667 667 667 667 8,000 ‐

167 167 167 167 167 167 167 167 167 167 167 167 2,000 ‐

3,839 3,839 3,839 3,839 3,839 3,839 3,839 3,839 3,839 3,839 3,839 3,839 46,073 ‐

16,200 16,200 16,200 16,200 16,200 16,200 16,200 16,200 16,200 16,200 16,200 16,200 194,400 ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

18,233 18,233 18,233 18,233 18,233 18,233 18,233 18,233 18,233 18,233 18,233 18,233 218,800 ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

400 400 400 400 400 400 400 400 400 400 400 400 4,800 ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

833 833 833 833 833 833 833 833 833 833 833 833 10,000 ‐

200 200 200 200 200 200 200 200 200 200 200 200 2,400 ‐

125 125 125 125 125 125 125 125 125 125 125 125 1,500 ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

1,667 1,667 1,667 1,667 1,667 1,667 1,667 1,667 1,667 1,667 1,667 1,667 20,000 ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

42,748$ 42,748$ 42,748$ 42,748$ 42,748$ 42,748$ 42,748$ 42,748$ 42,748$ 42,748$ 42,748$ 42,748$ 512,973$ ‐

3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333 40,000 ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

22,300 22,300 22,300 22,300 22,300 22,300 22,300 22,300 22,300 22,300 22,300 22,300 267,600 ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

25,633$ 25,633$ 25,633$ 25,633$ 25,633$ 25,633$ 25,633$ 25,633$ 25,633$ 25,633$ 25,633$ 25,633$ 307,600$ ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

186,402$ 186,402$ 186,402$ 186,402$ 186,402$ 186,402$ 186,402$ 186,402$ 186,402$ 186,402$ 186,402$ 186,402$ 2,236,819$ ‐

25,959$ 26,668$ 33,951$ 32,349$ 31,440$ 33,707$ 31,944$ 31,917$ 33,273$ 32,038$ 32,036$ 27,521$ 372,803$ 0

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

25,959$ 26,668$ 33,951$ 32,349$ 31,440$ 33,707$ 31,944$ 31,917$ 33,273$ 32,038$ 32,036$ 27,521$ 372,803$ 0

Attachment F4

Audit Report

In response to the instructions found on page 8 in the Generation Twenty Open-Enrollment Charter

Application Instructions and Guidelines, and in accordance with applicable law, enclosed as Attachment

F.4 is an unaudited financial record for the Early Career Academy. Note that the neither the Early Career

Academy nor its sponsoring entity, the Education Strategy Foundation, have any financial activity

inception to date, as the entity was formed during 2014. Therefore, the unaudited statements reflect

no financial activity.

Assets

Current Assets:Cash and cash equivalents -$ Contributions receivable -$

Total Current Assets -$

Other Assets -$

Total Assets -$

Liabilities and Net Assets

Current Liabilities:Accounts Payable -$ Deferred Revenue -$

Total Current Liabilities -$

Notes Payable -$

Total Liabilities -$

Net Assets:Unrestricted net assets -$ Temporarily restricted net assets -$

Total Net Assets -$

Total Liabilities and Net Assets -$

EARLY CAREER ACADEMYUnaudited Record of Financial Position

As of December 31, 2014

Unrestricted Net Assets

Temporarily Restricted Net Assets

Total Net Assets

Revenues

Local Support:Contributions -$ -$ -$ Fundraising activities -$ -$ -$ Interest and other income -$ -$ -$

Total Local Support -$ -$ -$

Net assets released from restrictions -$ -$ -$

Total Revenues -$ -$ -$

Expenses

Program services: -$ -$ Support services:

Administrative support services -$ -$ Fund raising -$ -$

Total Expenses -$ -$

Change in Net Assets -$ -$ -$ Net Assets, Beginning -$ -$ -$ Net Assets, Ending -$ -$ -$

EARLY CAREER ACADEMYUnaudited Record of Activities


Cash flows from operating activities:Grant payments -$ Contributions and fund-raising activities -$ Miscellaneous sources -$ Payments to vendors for goods and services rendered -$ Payments to personnel for services rendered -$

Net cash provided by operating activities -$

Change in Cash -$ Cash, Beginning -$ Cash, Ending -$

EARLY CAREER ACADEMYUnaudited Record of Cash Flows


Attachment F5

Credit Report

Credit Report

No documents are being provided because the sponsoring entity was incorporated after January 1,

2012.

Attachment F6

IRS Form 990

In response to the instructions found on page 8 in the Generation Twenty Open-Enrollment Charter

Application Instructions and Guidelines, and in accordance with applicable law, IRS form 990 is not

available for the charter applicant’s sponsoring entity, the Education Strategy Foundation.

The Education Strategy Foundation was formed in 2014 and has not yet filed IRS Form 990, Form 990-N,

or Form 990-EZ.

Attachment F7

Community Resources or Partnerships

Attachment F8

Facilities Information

of 15

COMMERCIAL SUBLEASE

BETWEEN:

ITT EDUCATIONAL SERVICES, INC. (“SUBLANDLORD”)

AND

ESI SERVICE CORP. AND EARLY CAREER ACADEMY, INC. (“SUBTENANTS”)

FOR

CERTAIN SPACE AT 2950 SOUTH GESSNER HOUSTON, TX 77063

of 15

SECTION 1 – BASIC SUBLEASE PROVISIONS

1.01. Date, Parties, and Recitals. This COMMERCIAL SUBLEASE (“Sublease”) is made as of

the Effective Date (as defined in Section 11.09 below) by and between: ITT EDUCATIONAL SERVICES, INC., a Delaware corporation (“Sublandlord”) AND The following two entities, which are jointly and severally entering into this Sublease with Sublandlord as co-Subtenants, and shall be referred to, collectively, as “Subtenant” hereinafter: EARLY CAREER ACADEMY, INC., a non-profit education corporation holding a charter from ________________________________, AND ESI SERVICE CORP., a Delaware corporation.

Reference is made to that certain Educational Products and Services Agreement (“EPSA”) between EARLY CAREER ACADEMY, INC. (“ECA”) and ESI SERVICE CORP. (“ESISC”), dated _________________, 2014 whereby ESISC will provide certain educational products and services to ECA. A true and correct copy of the executed EPSA is attached hereto and incorporated herein as Exhibit A. Notwithstanding that ECA and ESISC may be referred to individually in this Sublease, both are jointly and severally obligated under the terms and conditions of this Sublease and wherever the term “Subtenant” is used it means both ECA and ESISC. Both parties acknowledge and agree that this Sublease is made subject to the terms and conditions of that certain NET COMMERCIAL LEASE between GESSNER 2014 L.P., a Texas Limited Partnership (“Master Landlord”) and Sublandlord dated June 24, 1994, as previously or may be hereafter amended (“Master Lease”), a current copy of which is attached as Exhibit B to this Sublease. The terms and conditions of the Master Lease shall control in the event of any conflict between the terms and conditions of this Sublease and those of the Master Lease. 1.02. Subleased Premises. Sublandlord hereby subleases to Subtenant, the space necessary for Subtenant to operate in the Building (as defined in this paragraph below) for the Permitted Use (as defined in Section 1.04 below), during the necessary daytime hours (meaning between 7:00am to 5:00pm) on Business Days (as defined in Section 11.02 below), provided Sublandlord and Subtenant shall agree upon the space to be used and the times such space will be used by Subtenant prior to each academic quarter of Sublandlord’s technical college during the Sublease term. If the parties cannot agree upon the space then either party shall have the right to terminate the Sublease with no further obligation to the other. The Subleased Premises shall be contained within a building located at 2950 South Gessner, Houston, TX 77063 (“Building”), on a site (“Land”) as legally described on Exhibit B to the Master Lease (the Building and the Land collectively hereinafter known as the “Project”). The Subleased Premises is being subleased to Subtenant in its “AS IS” condition without any warranties whatsoever, express or implied, including, without limitation the

of 15

warranties of habitability or fitness for a particular purpose. Notwithstanding the foregoing, Sublandlord represents that the Subleased Premises will be approved by all relevant state and local authorities required to approve the space prior to the commencement of classes by Subtenant. Subtenant may terminate this Sublease if such approvals are not obtained before such time. 1.03. Common Areas and Furnishings. In addition to its use of the Subleased Premises, Subtenant and its agents, employees and invitees have the nonexclusive right with others designated by Sublandlord to the free use of the common areas (for their intended and normal purposes) of the Building, including without limitation, entrances, hallways, lobbies, public restrooms, elevators, stairways, loading docks, ramps, drives, platforms, passageways, sidewalks, pipes, conduits, wires, equipment, driveways, parking areas, open spaces, other similar public areas and access ways (collectively “Common Area”), except that no student of Subtenant shall occupy the common atrium within the Building or use the Common Area restrooms after class has begun and until such student intends to leave the Building for the day on any day in which school is in session. Subtenant shall also have access to and use of all of Sublandlord’s furniture, equipment, and utilities within the Subleased Premises (“Furnishings”) during the Sublease Term, subject to the conditions of Section 3.03(a) below. Sublandlord (or Master Landlord) may change (including, without limitation, removal, modification, replacement, or repositioning of items or portions of) the Common Area or Furnishings, in its sole discretion, provided such changes do not materially or unreasonably interfere with Subtenant’s access to, or use of, the Subleased Premises or do not lessen the quality of the facility or the quality and quantity of furnishings provided to Subtenant at the commencement of this Sublease. 1.04. Use. Subtenant shall use the Subleased Premises solely for the purpose of operating the Charter School described in the EPSA (“Permitted Use”), unless Sublandlord gives its advance written consent to another use. Subtenant agrees that the Permitted Use shall not materially interfere with Sublandlord operating its existing technical college within the Building at any time during the Sublease term. If Sublandlord provides Subtenant with notice that its activities related to the Permitted Use are materially interfering with Sublandlord’s operations, then the parties shall mutually agree upon a plan to mitigate such interference. If no agreement can be reached, either Sublandlord or Subtenant may terminate the Sublease with no further liability to the other. Subtenant shall occupy the Subleased Premises, conduct its business and control its agents, employees, invitees, and visitors in a lawful and reputable way and so as not to create any nuisance or otherwise interfere with, annoy, or disturb other persons within the Building beyond what would be reasonably expected given the nature of the Permitted Use. Subtenant shall not commit, or allow to be committed, any waste on the Subleased Premises. 1.05. Term. The parties hereto agree that the Term of this Sublease shall begin on the Effective Date and shall be co-terminus with the term of the Master Lease and, thus, shall end on the date of expiration or earlier termination of the Master Lease term (“Termination Date”), provided Subtenant is given reasonable prior written notice of any early termination of the Master Lease. Notwithstanding the foregoing, any extension of the term of the Master Lease entered into between Master Landlord and Sublandlord shall not extend the term of this Sublease, without a separate express written agreement between Mater Landlord, Sublandlord, and Subtenant. In the event that Sublandlord notifies Subtenant of the early termination of the Master Lease, this Sublease shall automatically terminate on the Termination Date stated in such notice without the requirement of any further documentation and Subtenant and Sublandlord shall have no obligation to the other party pursuant to this Sublease after such early Termination Date.

of 15

1.06. Parking. Subtenant shall have the non-exclusive use of up to 121 of the Parking Spaces located around the Building during the hours between 7:00 am and 5:00pm, Monday through Friday. SECTION 2 – RENT 2.01. Rent. Beginning on the first day Subtenant begins to occupy the Subleased Premises for the Permitted Use (“Commencement Date”), Subtenant shall pay to Sublandlord an annual amount equal to Nine-hundred Thirty-one and 00/100 Dollars ($931.00) per student enrolled by Subtenant (“Base Rent”). For Base Rent purposes “per student enrolled” will be the arithmetic average of all official state student count days. The Base Rent shall be paid:

(i) in monthly installments, which shall automatically be adjusted based on the periodic adjustment of the Facilities Rent described in Schedule 1 of Schedule A to the EPSA;

(ii) without advance notice, demand, offset or deduction, unless the offset or deduction is

made by Subtenant as permitted herein or to recover any unpaid court judgment Subtenant has against Sublandlord;

(iii) in advance by the first day of each month during the Sublease term; and

(iv) to Sublandlord as set forth in Subsection 11.03 below, or as Sublandlord may

hereafter specify in writing to Subtenant. If the Commencement Date is not on the first day of a month, and/or the Termination Date is not the last day of a month, the Base Rent for that partial month will be prorated based on the actual number of days in the month. SECTION 3 – AFFIRMATIVE OBLIGATIONS 3.01. Compliance With Laws.

3.01(a). Sublandlord’s Compliance. Sublandlord shall, on the Commencement Date and at all times thereafter throughout the Sublease term (including any extension of the Sublease term pursuant to the terms hereof), keep the structural components of the Building, all Common Areas, and all other areas of the Project in compliance with all current and future applicable laws, ordinances, rules, regulations, and guidelines of state, federal, municipal, and other governmental authorities, relating to the use, condition, and occupancy of the Project, including, without limitation, the Resource Conservation and Recovery Act, the Comprehensive Environmental Response Act, and the Americans with Disabilities Act (collectively “Applicable Laws”).

of 15

3.01(b). Subtenant’s Compliance. Subtenant shall comply with all Applicable Laws that relate to its use of the Subleased Premises, other than structural issues with the Building or other items that Sublandlord is responsible for under Section 3.01(a) above.

3.02. Janitorial, Utilities, and Access.

3.02(a). Janitorial. Sublandlord shall provide and pay the cost of all janitorial services with respect to the Subleased Premises that Subtenant occupies during the Sublease term. 3.02(b). Utility Services. Sublandlord shall provide and pay the cost of all utility services with respect to the Subleased Premises.

3.02(c). Access. Subtenant, its employees, agents, and invitees shall have access to the Subleased Premises during Subtenant’s normal business hours which shall be agreed upon between the parties. Sublandlord shall have the right to lock the Building beyond Subtenant’s normal business hours pursuant to its normal procedures.

3.03. Repairs and Maintenance.

3.03(a). Subtenant’s Care of Subleased Premises and Furnishings. Subtenant shall keep the Subleased Premises and all Furnishings in good, clean and sanitary condition. Notwithstanding anything to the contrary in Section 5 below, Subtenant shall repair or replace (or pay to Sublandlord the reasonable cost of such repair or replacement), in Sublandlord’s sole discretion, any damage to the Furnishings caused by acts or omissions of Subtenant or Subtenant’s employees, agents, students, invitees, or contractors, normal wear and tear excepted, provided the total cost of any such damage, and related damage resulting from the same act or omission, falls below Sublandlord’s property insurance deductible or Sublandlord deems, in Sublandlord’s sole discretion, making a claim for such damage to Sublandlord’s property insurer would be unduly burdensome.

3.03(b). Sublandlord’s Care of Subleased Premises, Building and Project. It is intended by the parties hereto that Subtenant have no obligation to repair and maintain the Subleased Premises, Building or Project. Sublandlord shall keep the Building and the Subleased Premises maintained in good working order.

SECTION 4 – NEGATIVE OBLIGATIONS 4.01. Alterations. Subtenant shall have no right to make any alterations to the Subleased Premises.

4.02. Assignment and Subleasing. Subtenant shall not transfer, mortgage, encumber, assign, or sublease all or part of the Subleased Premises without Sublandlord’s advance written consent.

SECTION 5 – INSURANCE 5.01. Insurance.

5.01(a). Intentionally Omitted.

of 15

5.01(b). Property Insurance. Each party shall keep its personal property (including, without limitation, any Furnishings) and trade fixtures in the Subleased Premises insured in an amount equal to one hundred percent (100%) of the replacement cost of the property and fixtures. 5.01(c). Use. Subtenant shall not use the Subleased Premises in any way which would be hazardous or which would in any way increase the cost of or render void or voidable the insurance required above in Subsections 5.01(a) and (b). 5.01(d). Liability Insurance. Sublandlord and Subtenant shall each maintain comprehensive general liability insurance, including public liability and property damage, with a minimum combined single limit of liability of two million dollars ($2,000,000) for personal injuries or deaths of persons occurring in or about the Project and Subleased Premises. 5.01(e). Waiver of Subrogation. Because Sublandlord and Subtenant waive and release all rights, claims, demands, and causes of action that either party may have against the other party on account of any loss or damage to real or personal property as more specifically set forth in Section 5.02(c) below, the assignment of any such claim by way of subrogation (or otherwise) to an insurance company (or any other person) will be precluded, and each party therefore agrees to immediately give its respective insurance company or companies written notice of the terms of such mutual waivers and to have their respective insurance policies properly endorsed, if necessary, to prevent the invalidation of such insurance coverages by reason of such waivers. Furthermore, upon request from the other party, each party agrees to provide evidence that notice has been given to their insurance company as set forth in this paragraph, including evidence of any necessary endorsement. 5.01(f). Insurance Criteria. Insurance policies required by this Sublease shall:

(i) be issued by insurance companies with general policyholder’s ratings of at least A and a financial rating of at least XI in the most current Best’s Insurance Reports available on the Commencement Date. If the Best’s ratings are changed or discontinued, the parties will agree to an equivalent method of rating insurance companies;

(ii) provide that the insurance not be canceled or materially change in the scope

or amount of coverage, unless thirty (30) days’ advance notice is given to the nonprocuring party;

(iii) be permitted to be carried through a “blanket policy” or “umbrella” coverage;

(iv) be maintained during the entire Sublease term (including any extension

terms); and

(v) provide that the procuring party is responsible for any deductible obligation.

of 15

5.01(g). Evidence of Insurance. Subtenant shall give certificates of insurance to the Sublandlord upon request. The certificate will specify amounts, types of coverage and the insurance criteria specified in this Subsection 5.01.

5.02. Indemnification and Release of Claims.

5.02(a). Subtenant’s Indemnity. Subtenant indemnifies, defends, and holds Sublandlord harmless from claims made by third parties for personal injury, death, or property damage occurring in or about the Subleased Premises, the Building, the Project or College Facilities that are caused by the negligence or willful misconduct of Subtenant, its agents, employees, or invitees.

5.02(b). Sublandlord’s Indemnity. Sublandlord indemnifies, defends, and holds Subtenant harmless from claims made by third parties for personal injury, death, or property damage occurring in or about the Subleased Premises, the Building, the Project or College Facilities that are caused by the negligence or willful misconduct of Sublandlord, its agents, employees, or invitees. 5.02(c). Release of Claims. Sublandlord and Subtenant intend that their respective insurers be solely responsible for making them whole with regard to their respective property losses, if any. Accordingly, notwithstanding Subsections 5.02(a) and (b) above, Sublandlord and Subtenant waive and release all rights, claims, demands, and causes of action that either party (an “Injured Party”) may have against the other party and/or the other party’s shareholders, partners, members, officers, directors and/or employees on account of any loss or damage to real or personal property suffered by the Injured Party.

5.03. Transfer of Subleased Premises. Sublandlord (or Master Landlord) may transfer and assign, in whole or in part, its rights and obligations with respect to the Project and the Subleased Premises. If the Project or Building in which the Subleased Premises are located is sold or transferred (whether voluntarily or involuntarily), Sublandlord’s obligations and liabilities under this Sublease which accrue after the transfer will be the sole responsibility of the new owner. SECTION 6 – LOSS OF PREMISES 6.01. Damages. 6.01(a). Definition. “Relevant Space” means:

(i) the Subleased Premises as defined in Subsection 1.02 above; (ii) access to the Subleased Premises;

(iii) any part of the Building in which the Subleased Premises are located or the

Project that provides services to the Subleased Premises; and

(iv) the Parking Spaces.

of 15

6.01(b). Repair of Damage. If the Relevant Space is damaged in part or whole from any insured cause and the Relevant Space can be substantially repaired and restored within two hundred ninety (290) days from the date of the damage using standard working methods and procedures, Sublandlord shall either designate other reasonably equivalent space as the Subleased Premises or Sublandlord or Master Landlord may promptly and diligently repair and restore the Relevant Space to substantially the same condition as existed before the damage. If the Relevant Space is damaged in whole or in part by an uninsured cause, or if the proceeds of insurance plus the amount of any deductible obligation of Sublandlord or Master Landlord are insufficient to pay for the repair of any damages to the Relevant Space, then Sublandlord or Master Landlord will have the option to either repair the damage, designate other reasonably equivalent space as the Subleased Premises or to cancel this Sublease as of the date of the cause by written notice to Subtenant. If the Relevant space is to be repaired and restored, then the repair and restoration will be made within two hundred ninety (290) days from the date of the damage, unless the delay is due to causes beyond Sublandlord’s or Master Landlord’s control. Nevertheless, if the Relevant Space is not repaired and restored within three hundred sixty-five (365) days from the date of the damage, then Subtenant may cancel this Sublease at any time thereafter by giving written notice to Sublandlord. Sublandlord shall provide written notice to Subtenant within sixty (60) days after the date that the Relevant Space is damaged as to whether the Relevant Space can be repaired within the two hundred ninety (290) day period set forth above. If the Relevant Space cannot be repaired and restored within the two hundred ninety (290) day period and the damage to the Relevant Space has left the Subleased Premises untenantable for the use intended by Subtenant, then either party may cancel this Sublease by giving written notice to the other party.

6.02. Condemnation.

6.02(a). Definitions. The terms “eminent domain,” “condemnation,” “taken,” and the like in this Subsection 6.02 include any takings, acquisitions or purchases for public or quasi-public use by any authority. 6.02(b). Entire Taking. If all of the (i) Subleased Premises, (ii) Building in which the Subleased Premises are located, (iii) Project, or (iv) Parking Spaces required for reasonable access to, or use of, the Subleased Premises are taken by eminent domain, this Sublease shall automatically terminate on the date title vests.

6.02(c). Partial Taking. If the taking of a part of the (i) Subleased Premises, (ii) Building in which the Subleased Premises are located, (iii) Project, or (iv) Parking Spaces prevents Subtenant from continuing its business operations in substantially the same manner and space then Subtenant may terminate this Sublease on the date title vests. If there is a partial taking as to the usable square footage of the Building and this Sublease continues, then the Sublease shall end as to the part taken. 6.02(d). Repair. If in the event of a partial taking in which the Sublease is not canceled as provided above in Subsection 6.02(c), then Sublandlord (or Master Landlord), at its expense, will promptly repair and restore the (i) Subleased Premises, (ii) Building in which the Subleased Premises are located, (iii) Project, and (iv) Parking Spaces, to the condition that existed immediately before the taking (except for the part taken).

of 15

6.02(e). Awards and Damages. Any award from the condemning authority shall belong to Sublandlord or Master Landlord.

SECTION 7 – DEFAULT 7.01. Subtenant Default. Each of the following constitutes a default by Subtenant under this Sublease (“Subtenant Default”):

(i) A breach of any obligation of Subtenant set forth in this Sublease. (ii) Subtenant’s failure to vacate or stay any of the following within ninety (90) days

after they occur:

(1) a petition in bankruptcy is filed by or against Subtenant; (2) Subtenant is adjudicated as bankrupt or insolvent;

(3) a receiver, trustee, or liquidator is appointed for all or a substantial part of

Subtenant’s property; or

(4) Subtenant makes an assignment for the benefit of creditors.

(iii) Subtenant commits any act resulting in a lien being filed against the Subleased Premises, and Subtenant fails to discharge the lien pursuant to Subsection 9.02(a) below within ten (10) days after Subtenant receives written notice from Sublandlord that such a lien has been filed.

7.02. Sublandlord’s Remedies.

7.02(a). Remedies. If a Subtenant Default arises, Sublandlord may immediately or at any time thereafter terminate this Sublease upon Subtenant’s receipt of written notice from Sublandlord of such termination. 7.02(b). Attorney’s Fees and Costs. Subtenant shall also pay all reasonable attorney’s fees and other costs of suit (and appeal, if necessary) incurred by Sublandlord, if it becomes necessary for Sublandlord to employ an attorney or other agent to bring suit to (i) collect any amounts due by Subtenant under this Sublease, or (ii) enforce any provisions of this Sublease. 7.02(c). Waiver of Subtenant Default or Remedy. Failure of Sublandlord to notify Subtenant of a Subtenant Default immediately upon its occurrence or take any action in the event of such Subtenant Default, shall not constitute a waiver of such Subtenant Default. Sublandlord shall have the right to declare such Subtenant Default at any time and take such action as is lawful or authorized under this Sublease. Pursuit of any one or more of the remedies set forth above in Subsection 7.02(a) shall not preclude pursuit of any one or more of the other remedies provided therein or elsewhere in this Sublease or by law or equity.

of 15

7.02(d). Mitigation. Sublandlord shall use its best efforts to mitigate its damages in the event of any Subtenant Default.

7.03. Sublandlord Default. Sublandlord’s failure to perform or observe any of its Sublease obligations within ten (10) days after Sublandlord receives written notice from Subtenant that any such performance or observance is past due is a default under this Sublease (each a “Sublandlord Default”). Any Sublandlord Default must be cured immediately or as soon as practical. If any Sublandlord Default cannot be cured within a reasonable period of time that would make it impossible for Subtenant to use the Subleased Premises for the Permitted Use, then either party shall have the right to terminate the Sublease with no further obligation to the other. If Subtenant brings suit against Sublandlord for any breach by Sublandlord of any of its obligations hereunder, and such a breach is determined to have occurred, Sublandlord shall pay Subtenant all costs and expenses incurred by Subtenant with respect thereto, including, without limitation, all reasonable attorney’s fees. 7.04. Survival. The remedies of the parties after a Subtenant Default or Sublandlord Default, the parties’ indemnities in Subsection 5.02 above, and Sublandlord’s obligation to mitigate damages in Subsection 7.02(d) above will survive the termination of this Sublease. SECTION 8 – NONDISTURBANCE 8.01. Liens and Nondisturbance. Subtenant accepts this Sublease subject and subordinate to any mortgage, deed of trust, or other lien now or hereafter recorded or otherwise on the Subleased Premises, but only if and upon the execution by each such lienholder of a Nondisturbance and Attornment Agreement with Sublandlord. If the interest of Master Landlord under the Master Lease is transferred by reason of foreclosure or other proceedings for enforcement of any lien on the Building, this Sublease shall continue and Subtenant will attorn to and recognize the transferee (“Purchaser”) under the terms and conditions of the Master Lease for the balance of the remaining Sublease term, including any extensions or renewals, with the same force and effect as if the Purchaser were Master Landlord under the Lease. Such attornment shall be effective upon Sublandlord’s and Purchaser’s execution of a Nondisturbance and Attornment Agreement. 8.02. Estoppel Certificate.

8.02(a). Obligation. Either party (“Answering Party”) shall from time to time, within ten (10) business days after receiving a written request from the other party (“Asking Party”), execute and deliver to the Asking Party a written statement. This written statement, which may be relied on by the Asking Party and any third party with whom the Asking Party is dealing will certify, if true or applicable at such time:

(i) Subtenant is in possession of the Subleased Premises; (ii) the condition of the Subleased Premises is acceptable to the Answering Party;

(iii) the Sublease is unmodified and in full effect or in full effect as modified,

stating the date and nature of the modification;

of 15

(iv) whether to the Answering Party’s knowledge the Asking Party is in default under this Sublease or whether the Answering Party has any claims or demands against the Asking Party and, if so, specifying such default, claim, or demand;

(v) the current month’s rent has been paid, but is not, and shall not be, paid for

more than one month in advance; and

(vi) to other correct and reasonably ascertainable facts that are covered by the Sublease terms.

8.02(b). Remedy. The Answering Party’s failure to comply with its obligation in Subsection 8.02(a) above shall be a default under this Sublease by the Answering Party.

8.03. Quiet Enjoyment. If there is no Subtenant Default, Sublandlord warrants that Subtenant’s peaceable and quiet enjoyment of the Subleased Premises shall not be disturbed by anyone at any time during the Sublease term because of acts or omissions of Sublandlord subject to the rights of any lender pursuant to the Nondisturbance and Attornment Agreement described in Subsection 8.01, if any, (including any extensions or renewal thereof) or Master Landlord pursuant to the Lease. Notwithstanding the foregoing, Sublandlord and Subtenant acknowledge and agree that Sublandlord shall continue to operate its technical college out of the Building and may continue to access all Common Areas and other spaces adjoining or adjacent to the Subleased Premises within the Building during its normal business hours. SECTION 9 – SUBLANDLORD’S RIGHTS 9.01. Rules. 9.01(a). Rules for the Building. Subtenant, its employees, agents and invitees shall comply with the reasonable rules applicable to the Project (“Rules”) which are in effect and may be changed from time to time by Sublandlord or Master Landlord.

9.01(b). Conflict with Sublease. If a Rule conflicts with or is inconsistent with any Sublease provision, the Sublease provision controls, except if such Rule is made pursuant to the Master Lease, then the terms and conditions with regard to such Rule are contained in the Master Lease. 9.01(c). Enforcement. Sublandlord shall not unreasonably enforce the Rules against Subtenant, its employees, agents or invitees.

9.02. Mechanic’s Liens.

9.02(a). Discharge Lien. Subtenant shall, within twenty (20) days after receiving notice of any mechanic’s lien for material or work claimed to have been furnished to the Subleased Premises on Subtenant’s behalf and at Subtenant’s request, except for work contracted by Sublandlord (including, without limitation, the Improvements):

(i) discharge the lien; or

of 15

(ii) post a bond equal to the amount of the disputed claim with companies

reasonably satisfactory to Sublandlord.

If Subtenant posts a bond, it will contest the validity of the lien. Subtenant shall indemnify, defend, and hold Sublandlord harmless from losses incurred as a result of such liens. 9.02(b). Sublandlord’s Discharge. If Subtenant does not discharge such lien or post the bond within the twenty (20) day period, Sublandlord may pay any amounts, including interest and reasonable attorney’s fees, to discharge such lien. Subtenant shall than be liable to Sublandlord for the amounts paid by Sublandlord and shall reimburse Sublandlord immediately upon written demand thereof.

9.03. Right to Enter. Sublandlord and Master Landlord shall have the right, at all reasonable hours with reasonable prior notice, to enter the Subleased Premises to clean, repair or inspect the Subleased Premises, or to conduct any other activity that Sublandlord deems reasonably necessary. 9.04. Holdover. Subtenant shall vacate immediately upon the Termination Date of this Sublease. Subtenant shall have no right to holdover. No month-to-month tenancy or any other tenancy shall be created in the event that Subtenant does not vacate.

9.05. Permitted Signs. No sign, advertisement, or notice (collectively “Signs”) will be displayed, painted or affixed by Subtenant on any part of the (I) Project or Building in which the Subleased Premises are located, (II) parking facilities, or (III) other portion of the Subleased Premises visible from outside of the Subleased Premises, without Sublandlord’s and Master Landlord’s prior written consent.

SECTION 10 – OMITTED SECTION 11 – MISCELLANEOUS 11.01. Broker’s Warranty. The parties warrant that no brokers were used in connection with this Sublease and that no commissions shall be due to any broker or any other party with respect to this Sublease. The party who breaches this warranty shall defend, hold harmless and indemnify the nonbreaching party from all costs, expenses, and/or liability arising from the breach. 11.02. Notices. All notices required or permitted to be given under any provision of this Sublease shall be in writing (unless otherwise specified) and shall be deemed duly given, if sent by certified mail, registered mail, or nationwide overnight delivery service, postage prepaid, and, pending written notice to the other of a different address, addressed as follows:

(i) If to Sublandlord:

ITT Educational Services, Inc. 13000 North Meridian Street Carmel, Indiana 46032-1404 Attention: Director of Real Estate

of 15

(ii) If to ECA:

Early Career Academy, Inc. c/o _____________ 2950 South Gessner Houston, TX 77063

(iii) If to ESISC:

ESI Service Corp. c/o General Counsel 13000 North Meridian Street Carmel, Indiana 46032-1404

Any notice required or permitted to be given under any provision of this Sublease received severally from either ECA or ESISC by Sublandlord or received by either ECA or ESISC severally from Sublandlord shall be deemed to have been received by all parties to this Sublease jointly.

11.03. Place of Payment. All payments required hereunder to be made by Subtenant to Sublandlord shall be sent to Sublandlord at the address set forth above, electronically by ACH transfer to a bank account designated by Sublandlord in writing, or to any other address Sublandlord may specify from time to time by prior written notice delivered to Subtenant. All payments required hereunder to be made by Sublandlord to Subtenant shall be sent to Subtenant at the address set forth above, or at any other address Subtenant may specify from time to time by prior written notice delivered to Sublandlord. 11.04. Partial Invalidity. If any Sublease provision or its application is invalid or unenforceable, the remainder of this Sublease shall not be impaired or affected and shall remain binding and enforceable. 11.05. Waiver. The failure of either party to exercise any of its rights hereunder is not a waiver of those rights. A party waives only those rights specified in writing and signed by the waiving party. 11.06. Binding on Successors. This Sublease is binding on, and inures to the benefit of, the parties and their respective heirs, successors, representatives, and permitted assigns. 11.07. Governing Law. This Sublease is governed by the laws of the State of Texas. 11.08. Effective Date. The date this Sublease is signed by the last party to sign it (as indicated by the date associated with that party’s signature) will be deemed the date of this Sublease (“Effective Date”). 11.09. Recording. Recording of this Sublease is prohibited. 11.10. Survival of Remedies. The parties’ remedies will survive this Sublease’s termination as set forth in Section 7.04 above.

of 15

11.11. Authority of Parties. Each party warrants that it is authorized to enter into this Sublease, that the person signing on its behalf is duly authorized to execute this Sublease, and that no other signatures are necessary. 11.12. Business Day. “Business Days” means Monday through Friday, inclusive, excluding holidays recognized by either Subtenant or Sublandlord. Throughout the Sublease, wherever “days” are used the term will refer to calendar days. Wherever the term “business days” is used, the term will refer to business days. Notwithstanding the forgoing, Subtenant shall have the access to the Subleased Premises as set forth in Section 3.02(c). 11.13. Captions. The captions inserted in this Sublease are for convenience only and in no way define, limit, or otherwise describe the scope or intent of this Sublease or any provision hereof. 11.14. Time. Time is of the essence in the performance of all obligations contained in this Sublease. 11.15. Counterparts. This Sublease may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original, but all such counterparts together will constitute only one instrument. 11.16. Entire Agreement. This Sublease contains the entire agreement between the parties about the Subleased Premises and Project, and there are no verbal representations, warranties, understandings, stipulations, agreements, or promises pertaining to this Sublease that are not incorporated herein. Except for the Covenants for which Subsection 9.01 controls, this Sublease may be amended only by a writing signed by both parties. 11.17. Definition of Sublease. This Sublease consists of the following:

(i) Title Page; (ii) Sections 1 through 11;

(iii) Signature Pages; and

(iv) Exhibits A & B.

[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE TO FOLLOW]

of 15

IN WITNESS WHEREOF, Subtenant and Sublandlord, by their duly authorized representatives, have caused this Sublease to be executed all as of the date set forth beneath their signature below. “Sublandlord” ITT EDUCATIONAL SERVICES, INC. A Delaware corporation By: __________________________________ Kevin M. Modany CEO Date: _________________________________ “Subtenant”

EARLY CAREER ACADEMY, INC., a non-profit education corporation holding a charter from __________________________________

By: ___________________________________ Name:_________________________________ Title: __________________________________ Date: __________________________________ AND ESI SERVICE CORP., a Delaware corporation By: ___________________________________ Name:_________________________________ Title: __________________________________ Date: __________________________________

of 15

COMMERCIAL LEASE

BETWEEN:

ITT EDUCATIONAL SERVICES, INC. (“LANDLORD”)

AND

ESI SERVICE CORP. AND EARLY CAREER ACADEMY, INC. (“TENANTS”)

FOR

CERTAIN SPACE AT 1001 MAGNOLIA AVENUE

WEBSTER, TX 77598

of 15

SECTION 1 – BASIC LEASE PROVISIONS

1.01. Date, Parties, and Recitals. This COMMERCIAL LEASE (“Lease”) is made as of the

Effective Date (as defined in Section 11.09 below) by and between: ITT EDUCATIONAL SERVICES, INC., a Delaware corporation (“Landlord”) AND The following two entities, which are jointly and severally entering into this Lease with Landlord as co-tenants, and shall be referred to, collectively, as “Tenant” hereinafter: EARLY CAREER ACADEMY, INC., a non-profit education corporation holding a charter from Grand Valley State University, AND ESI SERVICE CORP., a Delaware corporation.

Reference is made to that certain Educational Products and Services Agreement (“EPSA”) between EARLY CAREER ACADEMY, INC. (“ECA”) and ESI SERVICE CORP. (“ESISC”), dated _________________, 201_ whereby ESISC will provide certain educational products and services to ECA. A true and correct copy of the executed EPSA is attached hereto and incorporated herein as Exhibit A. Notwithstanding that ECA and ESISC may be referred to individually in this Lease, both are jointly and severally obligated under the terms and conditions of this Lease and wherever the term “Tenant” is used it means both ECA and ESISC. In the event ECA decides, in ECA’s sole discretion, to contract with a different service provider than ESISC for substantially the same services to be provided pursuant to the EPSA (“Substitute Provider”), ECA will obtain an agreement with such Substitute Provider that such Substitute Provider will observe and perform all of the obligations of ESISC pursuant to this Lease and ECA shall notify Landlord in writing immediately thereafter of such agreement (“Substitute Agreement”), including a copy of such Substitute Agreement, and the identity of and contact information for such Substitute Provider. ESISC shall be replaced by any such Substitute Provider as co-Tenant under this Lease and ESISC shall have no further obligation to Landlord pursuant to this Lease (except those obligations accrued and which would survive expiration or earlier termination of this Lease) as of the effective date of any valid Substitute Agreement. 1.02. Leased Premises. Landlord hereby leases to Tenant, the space necessary for Tenant to operate in the Building (as defined in this paragraph below) for the Permitted Use (as defined in Section 1.04 below), during the necessary daytime hours (meaning between 7:00am to 5:00pm) on Business Days (as defined in Section 11.02 below), provided Landlord and Tenant shall agree upon the space to be used and the times such space will be used by Tenant prior to each academic quarter of Landlord’s technical college during the Lease term. If the parties cannot agree upon the space then either party shall have the right to terminate the Lease with no further obligation to the other. The Leased Premises shall be contained within a building located at 1001 Magnolia Avenue, Webster, TX 77598 (“Building”), on a 5.46 acre site (“Land”), commonly known as ITT Technical

of 15

Institute, Houston (North), Texas (the Building and the Land collectively hereinafter known as the “Project”). The Leased Premises is being leased to Tenant in its “AS IS” condition without any warranties whatsoever, express or implied, including, without limitation the warranties of habitability or fitness for a particular purpose. Notwithstanding the foregoing, Landlord represents that the Leased Premises will be approved by all relevant state and local authorities required to approve the space prior to the commencement of classes by Tenant. Tenant may terminate this Lease if such approvals are not obtained before such time. 1.03. Common Areas and Furnishings. In addition to its use of the Leased Premises, Tenant and its agents, employees and invitees have the nonexclusive right with others designated by Landlord to the free use of the common areas (for their intended and normal purposes) of the Building, including without limitation, entrances, hallways, lobbies, public restrooms, elevators, stairways, loading docks, ramps, drives, platforms, passageways, sidewalks, pipes, conduits, wires, equipment, driveways, parking areas, open spaces, other similar public areas and access ways (collectively “Common Area”). Tenant shall also have access to and use of all of Landlord’s furniture, equipment, and utilities within the Leased Premises (“Furnishings”) during the Lease Term, subject to the conditions of Section 3.03(a) below. Landlord may change (including, without limitation, removal, modification, replacement, or repositioning of items or portions of) the Common Area or Furnishings, in its sole discretion, provided such changes do not materially or unreasonably interfere with Tenant’s access to, or use of, the Leased Premises or do not lessen the quality of the facility or the quality and quantity of furnishings provided to Tenant at the commencement of this Lease. 1.04. Use. Tenant shall use the Leased Premises solely for the purpose of operating the Charter School described in the EPSA (“Permitted Use”), unless Landlord gives its advance written consent to another use. Tenant agrees that the Permitted Use shall not materially interfere with Landlord operating its existing technical college within the Building at any time during the Lease term. If Landlord provides Tenant with notice that its activities related to the Permitted Use are materially interfering with Landlord’s operations, then the parties shall mutually agree upon a plan to mitigate such interference. If no agreement can be reached, either Landlord or Tenant may terminate the lease with no further liability to the other. Tenant shall occupy the Leased Premises, conduct its business and control its agents, employees, invitees, and visitors in a lawful and reputable way and so as not to create any nuisance or otherwise interfere with, annoy, or disturb other persons within the Building beyond what would be reasonably expected given the nature of the Permitted Use. Tenant shall not commit, or allow to be committed, any waste on the Leased Premises. 1.05. Term. The parties hereto agree that the Term of this Lease shall begin on the Effective Date and shall be co-terminus with the term of the EPSA, as defined in Section 6 of the EPSA (“Term of the EPSA”), including any extensions thereof, and shall expire or terminate upon the expiration or earlier termination of the EPSA (“Termination Date”), provided Landlord is given reasonable prior written notice from Tenant of any early termination or extension, by either ECA or ESISC, of the Term of the EPSA. In the event that Tenant notifies Landlord of the early termination of the EPSA, this Lease shall automatically terminate on the Termination Date stated in such notice without the requirement of any further documentation and Tenant and Landlord shall have no obligation to the other party pursuant to this Lease after such early Termination Date. 1.06. Parking. Tenant shall have the non-exclusive use of all of the parking spaces in the parking lot located around the Building.

of 15

SECTION 2 – RENT 2.01. Rent. Beginning on the first day Tenant begins to occupy the Leased Premises for the Permitted Use (“Commencement Date”), Tenant shall pay to Landlord an annual amount equal to One-thousand Forty-nine and 00/100 Dollars ($1,049) per student enrolled by Tenant (“Base Rent”). For Base Rent purposes “per student enrolled” will be the arithmetic average of all official state student count days. The Base Rent shall be paid:

(i) in monthly installments, which shall automatically be adjusted based on the periodic adjustment of the Facilities Rent as stated in Schedule 1 of Schedule A to the EPSA;


made by Tenant as permitted herein or to recover any unpaid court judgment Tenant has against Landlord;

(iii) in advance by the first day of each month during the Lease term; and

(iv) to Landlord as set forth in Subsection 11.03 below, or as Landlord may hereafter

specify in writing to Tenant. If the Commencement Date is not on the first day of a month, and/or the Termination Date is not the last day of a month, the Base Rent for that partial month will be prorated based on the actual number of days in the month. SECTION 3 – AFFIRMATIVE OBLIGATIONS 3.01. Compliance With Laws.

3.01(a). Landlord’s Compliance. Landlord shall, on the Commencement Date and at all times thereafter throughout the Lease term (including any extension of the Lease term pursuant to the terms hereof), keep the structural components of the Building, all Common Areas, and all other areas of the Project in compliance with all current and future applicable laws, ordinances, rules, regulations, and guidelines of state, federal, municipal, and other governmental authorities, relating to the use, condition, and occupancy of the Project, including, without limitation, the Resource Conservation and Recovery Act, the Comprehensive Environmental Response Act, and the Americans with Disabilities Act (collectively “Applicable Laws”).

3.01(b). Tenant’s Compliance. Tenant shall comply with all Applicable Laws that relate to its use of the Leased Premises, other than structural issues with the Building or other items that Landlord is responsible for under Section 3.01(a) above.

of 15


3.02(a). Janitorial. Landlord shall provide and pay the cost of all janitorial services with respect to the Leased Premises that Tenant occupies during the Lease term. 3.02(b). Utility Services. Landlord shall provide and pay the cost of all utility services with respect to the Leased Premises.

3.02(c). Access. Tenant, its employees, agents, and invitees shall have access to the Leased Premises during Tenant’s normal business hours which shall be agreed upon between the parties. Landlord shall have the right to lock the Building beyond Tenant’s normal business hours pursuant to its normal procedures.


3.03(a). Tenant’s Care of Leased Premises and Furnishings. Tenant shall keep the Leased Premises and all Furnishings in good, clean and sanitary condition. Notwithstanding anything to the contrary in Section 5 below, Tenant shall repair or replace (or pay to Landlord the reasonable cost of such repair or replacement), in Landlord’s sole discretion, any damage to the Furnishings caused by acts or omissions of Tenant or Tenant’s employees, agents, students, invitees, or contractors, normal wear and tear excepted, provided the total cost of any such damage, and related damage resulting from the same act or omission, falls below Landlord’s property insurance deductible or Landlord deems, in Landlord’s sole discretion, making a claim for such damage to Landlord’s property insurer would be unduly burdensome.

3.03(b). Landlord’s Care of Leased Premises, Building and Project. It is intended by the parties hereto that Tenant have no obligation to repair and maintain the Leased Premises, Building or Project. Landlord shall keep the Building and the Leased Premises maintained in good working order.

SECTION 4 – NEGATIVE OBLIGATIONS 4.01. Alterations. Tenant shall have no right to make any alterations to the Leased Premises.

4.02. Assignment and Subleasing. Tenant shall not transfer, mortgage, encumber, assign, or sublease all or part of the Leased Premises without Landlord’s advance written consent.


5.01(a). Insurance. Landlord shall keep the Building (including, without limitation, the Improvements) insured against damage and destruction by fire, hail, windstorm, vandalism, explosion, and other perils, including without limitation, earthquake coverage, in the amount of the full replacement value of such Building, as the value may exist from time to time. Landlord’s insurance carrier shall be licensed in the State of Texas. Upon written request

of 15

from Tenant, Landlord shall provide Tenant with written evidence (certificate of insurance) of such insurance coverage. 5.01(b). Property Insurance. Each party shall keep its personal property (including, without limitation, any Furnishings) and trade fixtures in the Leased Premises insured in an amount equal to one hundred percent (100%) of the replacement cost of the property and fixtures. 5.01(c). Use. Tenant shall not use the Leased Premises in any way which would be hazardous or which would in any way increase the cost of or render void or voidable the insurance required above in Subsections 5.01(a) and (b). 5.01(d). Liability Insurance. Landlord and Tenant shall each maintain comprehensive general liability insurance, including public liability and property damage, with a minimum combined single limit of liability of two million dollars ($2,000,000) for personal injuries or deaths of persons occurring in or about the Project and Leased Premises. 5.01(e). Waiver of Subrogation. Because Landlord and Tenant waive and release all rights, claims, demands, and causes of action that either party may have against the other party on account of any loss or damage to real or personal property as more specifically set forth in Section 5.02(c) below, the assignment of any such claim by way of subrogation (or otherwise) to an insurance company (or any other person) will be precluded, and each party therefore agrees to immediately give its respective insurance company or companies written notice of the terms of such mutual waivers and to have their respective insurance policies properly endorsed, if necessary, to prevent the invalidation of such insurance coverages by reason of such waivers. Furthermore, upon request from the other party, each party agrees to provide evidence that notice has been given to their insurance company as set forth in this paragraph, including evidence of any necessary endorsement. 5.01(f). Insurance Criteria. Insurance policies required by this Lease shall:





(iv) be maintained during the entire Lease term (including any extension terms);

and


of 15

5.01(g). Evidence of Insurance. Tenant shall give certificates of insurance to the Landlord upon request. The certificate will specify amounts, types of coverage and the insurance criteria specified in this Subsection 5.01.


5.02(a). Tenant’s Indemnity. Tenant indemnifies, defends, and holds Landlord harmless from claims made by third parties for personal injury, death, or property damage occurring in or about the Leased Premises, the Building, the Project or College Facilities that are caused by the negligence or willful misconduct of Tenant, its agents, employees, or invitees.

5.02(b). Landlord’s Indemnity. Landlord indemnifies, defends, and holds Tenant harmless from claims made by third parties for personal injury, death, or property damage occurring in or about the Leased Premises, the Building, the Project or College Facilities that are caused by the negligence or willful misconduct of Landlord, its agents, employees, or invitees. 5.02(c). Release of Claims. Landlord and Tenant intend that their respective insurers be solely responsible for making them whole with regard to their respective property losses, if any. Accordingly, notwithstanding Subsections 5.02(a) and (b) above, Landlord and Tenant waive and release all rights, claims, demands, and causes of action that either party (an “Injured Party”) may have against the other party and/or the other party’s shareholders, partners, members, officers, directors and/or employees on account of any loss or damage to real or personal property suffered by the Injured Party.

5.03. Transfer of Leased Premises. Landlord may transfer and assign, in whole or in part, its rights and obligations with respect to the Project and the Leased Premises. If the Project or Building in which the Leased Premises are located is sold or transferred (whether voluntarily or involuntarily), Landlord’s obligations and liabilities under this Lease which accrue after the transfer will be the sole responsibility of the new owner. SECTION 6 – LOSS OF PREMISES 6.01. Damages. 6.01(a). Definition. “Relevant Space” means:

(i) the Leased Premises as defined in Subsection 1.02 above; (ii) access to the Leased Premises;

(iii) any part of the Building in which the Leased Premises are located or the

Project that provides services to the Leased Premises; and


6.01(b). Repair of Damage. If the Relevant Space is damaged in part or whole from any insured cause and the Relevant Space can be substantially repaired and restored within two

of 15

hundred ninety (290) days from the date of the damage using standard working methods and procedures, Landlord shall either designate other reasonably equivalent space as the Leased Premises or promptly and diligently repair and restore the Relevant Space to substantially the same condition as existed before the damage. If the Relevant Space is damaged in whole or in part by an uninsured cause, or if the proceeds of insurance plus the amount of any deductible obligation of Landlord are insufficient to pay for the repair of any damages to the Relevant Space, then Landlord will have the option to either repair the damage, designate other reasonably equivalent space as the Leased Premises or to cancel this Lease as of the date of the cause by written notice to Tenant. If the Relevant space is to be repaired and restored, then the repair and restoration will be made within two hundred ninety (290) days from the date of the damage, unless the delay is due to causes beyond Landlord’s control. Nevertheless, if the Relevant Space is not repaired and restored within three hundred sixty-five (365) days from the date of the damage, then Tenant may cancel this Lease at any time thereafter by giving written notice to Landlord. Landlord shall provide written notice to Tenant within sixty (60) days after the date that the Relevant Space is damaged as to whether the Relevant Space can be repaired within the two hundred ninety (290) day period set forth above. If the Relevant Space cannot be repaired and restored within the two hundred ninety (290) day period and the damage to the Relevant Space has left the Leased Premises untenantable for the use intended by Tenant, then either party may cancel this Lease by giving written notice to the other party.

6.02. Condemnation.

6.02(a). Definitions. The terms “eminent domain,” “condemnation,” “taken,” and the like in this Subsection 6.02 include any takings, acquisitions or purchases for public or quasi-public use by any authority. 6.02(b). Entire Taking. If all of the (i) Leased Premises, (ii) Building in which the Leased Premises are located, (iii) Project, or (iv) Parking Spaces required for reasonable access to, or use of, the Leased Premises are taken by eminent domain, this Lease shall automatically terminate on the date title vests.

6.02(c). Partial Taking. If the taking of a part of the (i) Leased Premises, (ii) Building in which the Leased Premises are located, (iii) Project, or (iv) Parking Spaces prevents Tenant from continuing its business operations in substantially the same manner and space then Tenant may terminate this Lease on the date title vests. If there is a partial taking as to the usable square footage of the Building and this Lease continues, then the Lease shall end as to the part taken. 6.02(d). Repair. If in the event of a partial taking in which the Lease is not canceled as provided above in Subsection 6.02(c), then Landlord, at its expense, will promptly repair and restore the (i) Leased Premises, (ii) Building in which the Leased Premises are located, (iii) Project, and (iv) Parking Spaces, to the condition that existed immediately before the taking (except for the part taken). 6.02(e). Awards and Damages. Any award from the condemning authority shall belong to Landlord.

of 15

SECTION 7 – DEFAULT 7.01. Tenant Default. Each of the following constitutes a default by Tenant under this Lease (“Tenant Default”):

(i) A breach of any obligation of Tenant set forth in this Lease. (ii) Tenant’s failure to vacate or stay any of the following within ninety (90) days after

they occur:

(1) a petition in bankruptcy is filed by or against Tenant; (2) Tenant is adjudicated as bankrupt or insolvent;


Tenant’s property; or

(4) Tenant makes an assignment for the benefit of creditors.

(iii) Tenant commits any act resulting in a lien being filed against the Leased Premises, and Tenant fails to discharge the lien pursuant to Subsection 9.02(a) below within ten (10) days after Tenant receives written notice from Landlord that such a lien has been filed.

7.02. Landlord’s Remedies.

7.02(a). Remedies. If a Tenant Default arises, Landlord may immediately or at any time thereafter terminate this Lease upon Tenant’s receipt of written notice from Landlord of such termination. 7.02(b). Attorney’s Fees and Costs. Tenant shall also pay all reasonable attorney’s fees and other costs of suit (and appeal, if necessary) incurred by Landlord, if it becomes necessary for Landlord to employ an attorney or other agent to bring suit to (i) collect any amounts due by Tenant under this Lease, or (ii) enforce any provisions of this Lease. 7.02(c). Waiver of Tenant Default or Remedy. Failure of Landlord to notify Tenant of a Tenant Default immediately upon its occurrence or take any action in the event of such Tenant Default, shall not constitute a waiver of such Tenant Default. Landlord shall have the right to declare such Tenant Default at any time and take such action as is lawful or authorized under this Lease. Pursuit of any one or more of the remedies set forth above in Subsection 7.02(a) shall not preclude pursuit of any one or more of the other remedies provided therein or elsewhere in this Lease or by law or equity. 7.02(d). Mitigation. Landlord shall use its best efforts to mitigate its damages in the event of any Tenant Default.

7.03. Landlord Default. Landlord’s failure to perform or observe any of its Lease obligations within ten (10) days after Landlord receives written notice from Tenant that any such performance

of 15

or observance is past due is a default under this Lease (each a “Landlord Default”). Any Landlord Default must be cured immediately or as soon as practical. If any Landlord Default cannot be cured within a reasonable period of time that would make it impossible for Tenant to use the Leased Premises for the Permitted Use, then either party shall have the right to terminate the Lease with no further obligation to the other. If Tenant brings suit against Landlord for any breach by Landlord of any of its obligations hereunder, and such a breach is determined to have occurred, Landlord shall pay Tenant all costs and expenses incurred by Tenant with respect thereto, including, without limitation, all reasonable attorney’s fees. 7.04. Survival. The remedies of the parties after a Tenant Default or Landlord Default, the parties’ indemnities in Subsection 5.02 above, and Landlord’s obligation to mitigate damages in Subsection 7.02(d) above will survive the termination of this Lease. SECTION 8 – NONDISTURBANCE 8.01. Liens and Nondisturbance. Tenant accepts this Lease subject and subordinate to any mortgage, deed of trust, or other lien now or hereafter recorded or otherwise on the Leased Premises, but only if and upon the execution by each such lienholder of a Nondisturbance and Attornment Agreement. If the interest of Landlord under this Lease is transferred by reason of foreclosure or other proceedings for enforcement of any lien on the Leased Premises, this Lease shall continue and Tenant will attorn to and recognize the transferee (“Purchaser”) under the terms and conditions of this Lease for the balance of the remaining Lease term, including any extensions or renewals, with the same force and effect as if the Purchaser were Landlord under this Lease. Such attornment shall be effective upon Tenant’s and Purchaser’s execution of a Nondisturbance and Attornment Agreement. 8.02. Estoppel Certificate.


(i) Tenant is in possession of the Leased Premises; (ii) the condition of the Leased Premises is acceptable to the Answering Party;

(iii) the Lease is unmodified and in full effect or in full effect as modified, stating

the date and nature of the modification;

(iv) whether to the Answering Party’s knowledge the Asking Party is in default under this Lease or whether the Answering Party has any claims or demands against the Asking Party and, if so, specifying such default, claim, or demand;



of 15

(vi) to other correct and reasonably ascertainable facts that are covered by the

Lease terms.

8.02(b). Remedy. The Answering Party’s failure to comply with its obligation in Subsection 8.02(a) above shall be a default under this Lease by the Answering Party.

8.03. Quiet Enjoyment. If there is no Tenant Default, Landlord warrants that Tenant’s peaceable and quiet enjoyment of the Leased Premises shall not be disturbed by anyone at any time during the Lease term because of acts or omissions of Landlord subject to the rights of any lender pursuant to the Nondisturbance and Attornment Agreement described in Subsection 8.01 (including any extensions or renewal thereof). Notwithstanding the foregoing, Landlord and Tenant acknowledge and agree that Landlord shall continue to operate its technical college out of the Building and may continue to access all Common Areas and other spaces adjoining or adjacent to the Leased Premises within the Building during its normal business hours. SECTION 9 – LANDLORD’S RIGHTS 9.01. Rules. 9.01(a). Rules for the Building. Tenant, its employees, agents and invitees shall comply with the reasonable rules applicable to the Project (“Rules”) which are in effect and may be changed from time to time by Landlord.

9.01(b). Conflict with Lease. If a Rule conflicts with or is inconsistent with any Lease provision, the Lease provision controls. 9.01(c). Enforcement. Landlord shall not unreasonably enforce the Rules against Tenant, its employees, agents or invitees.


9.02(a). Discharge Lien. Tenant shall, within twenty (20) days after receiving notice of any mechanic’s lien for material or work claimed to have been furnished to the Leased Premises on Tenant’s behalf and at Tenant’s request, except for work contracted by Landlord (including, without limitation, the Improvements):

(i) discharge the lien; or (ii) post a bond equal to the amount of the disputed claim with companies

reasonably satisfactory to Landlord.

If Tenant posts a bond, it will contest the validity of the lien. Tenant shall indemnify, defend, and hold Landlord harmless from losses incurred as a result of such liens. 9.02(b). Landlord’s Discharge. If Tenant does not discharge such lien or post the bond within the twenty (20) day period, Landlord may pay any amounts, including interest and reasonable attorney’s fees, to discharge such lien. Tenant shall than be liable to Landlord

of 15

for the amounts paid by Landlord and shall reimburse Landlord immediately upon written demand thereof.

9.03. Right to Enter. Landlord shall have the right, at all reasonable hours with reasonable prior notice, to enter the Leased Premises to clean, repair or inspect the Leased Premises, or to conduct any other activity that Landlord deems reasonably necessary. 9.04. Holdover. Tenant shall vacate immediately upon the Termination of this Lease. Tenant shall have no right to holdover. No month-to-month tenancy or any other tenancy shall be created in the event that Tenant does not vacate.

9.05. Permitted Signs. No sign, advertisement, or notice (collectively “Signs”) will be displayed, painted or affixed by Tenant on any part of the (I) Project or Building in which the Leased Premises are located, (II) parking facilities, or (III) other portion of the Leased Premises visible from outside of the Leased Premises, without Landlord’s prior written consent.

SECTION 10 – OMITTED SECTION 11 – MISCELLANEOUS 11.01. Broker’s Warranty. The parties warrant that no brokers were used in connection with this Lease and that no commissions shall be due to any broker or any other party with respect to this Lease. The party who breaches this warranty shall defend, hold harmless and indemnify the nonbreaching party from all costs, expenses, and/or liability arising from the breach. 11.02. Notices. All notices required or permitted to be given under any provision of this Lease shall be in writing (unless otherwise specified) and shall be deemed duly given, if sent by certified mail, registered mail, or nationwide overnight delivery service, postage prepaid, and, pending written notice to the other of a different address, addressed as follows:

(i) If to Landlord:


(ii) If to ECA:

Early Career Academy, Inc. c/o ________________ 1001 Magnolia Avenue HOUSTON, TX 77090

(iii) If to ESISC:

ESI Service Corp. c/o General Counsel

of 15

13000 North Meridian Street Any notice required or permitted to be given under any provision of this Lease received severally from either ECA or ESISC by Landlord or received by either ECA or ESISC severally from Landlord shall be deemed to have been received by all parties to this Lease jointly.

11.03. Place of Payment. All payments required hereunder to be made by Tenant to Landlord shall be sent to Landlord at the address set forth above, electronically by ACH transfer to a bank account designated by Landlord in writing, or to any other address Landlord may specify from time to time by prior written notice delivered to Tenant. All payments required hereunder to be made by Landlord to Tenant shall be sent to Tenant at the address set forth above, or at any other address Tenant may specify from time to time by prior written notice delivered to Landlord. 11.04. Partial Invalidity. If any Lease provision or its application is invalid or unenforceable, the remainder of this Lease shall not be impaired or affected and shall remain binding and enforceable. 11.05. Waiver. The failure of either party to exercise any of its rights hereunder is not a waiver of those rights. A party waives only those rights specified in writing and signed by the waiving party. 11.06. Binding on Successors. This Lease is binding on, and inures to the benefit of, the parties and their respective heirs, successors, representatives, and permitted assigns. 11.07. Governing Law. This Lease is governed by the laws of the State of Texas. 11.08. Effective Date. The date this Lease is signed by the last party to sign it (as indicated by the date associated with that party’s signature) will be deemed the date of this Lease (“Effective Date”). 11.09. Recording. Recording of this Lease is prohibited. 11.10. Survival of Remedies. The parties’ remedies will survive this Lease’s termination as set forth in Section 7.04 above. 11.11. Authority of Parties. Each party warrants that it is authorized to enter into this Lease, that the person signing on its behalf is duly authorized to execute this Lease, and that no other signatures are necessary. 11.12. Business Day. “Business Days” means Monday through Friday, inclusive, excluding holidays recognized by either Tenant or Landlord. Throughout the Lease, wherever “days” are used the term will refer to calendar days. Wherever the term “business days” is used, the term will refer to business days. Notwithstanding the forgoing, Tenant shall have the access to the Leased Premises as set forth in Section 3.02(c). 11.13. Captions. The captions inserted in this Lease are for convenience only and in no way define, limit, or otherwise describe the scope or intent of this Lease or any provision hereof. 11.14. Time. Time is of the essence in the performance of all obligations contained in this Lease.

of 15

11.15. Counterparts. This Lease may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original, but all such counterparts together will constitute only one instrument. 11.16. Entire Agreement. This Lease contains the entire agreement between the parties about the Leased Premises and Project, and there are no verbal representations, warranties, understandings, stipulations, agreements, or promises pertaining to this Lease that are not incorporated herein. Except for the Covenants for which Subsection 9.01 controls, this Lease may be amended only by a writing signed by both parties. 11.17. Definition of Lease. This Lease consists of the following:



(iv) Exhibit A.


of 15

IN WITNESS WHEREOF, Tenant and Landlord, by their duly authorized representatives, have caused this Lease to be executed all as of the date set forth beneath their signature below. “Landlord” ITT EDUCATIONAL SERVICES, INC. A Delaware corporation By: __________________________________ Kevin M. Modany CEO Date: _________________________________ “Tenant”

EARLY CAREER ACADEMY, INC., a non-profit education corporation holding a charter from _____________________________


of 15

COMMERCIAL LEASE

BETWEEN:

ITT EDUCATIONAL SERVICES, INC. (“LANDLORD”)

AND

ESI SERVICE CORP. AND EARLY CAREER ACADEMY, INC. (“TENANTS”)

FOR

CERTAIN SPACE AT 1001 MAGNOLIA AVENUE

WEBSTER, TX 77598

of 15

SECTION 1 – BASIC LEASE PROVISIONS

1.01. Date, Parties, and Recitals. This COMMERCIAL LEASE (“Lease”) is made as of the

Effective Date (as defined in Section 11.09 below) by and between: ITT EDUCATIONAL SERVICES, INC., a Delaware corporation (“Landlord”) AND The following two entities, which are jointly and severally entering into this Lease with Landlord as co-tenants, and shall be referred to, collectively, as “Tenant” hereinafter: EARLY CAREER ACADEMY, INC., a non-profit education corporation holding a charter from Grand Valley State University, AND ESI SERVICE CORP., a Delaware corporation.

Reference is made to that certain Educational Products and Services Agreement (“EPSA”) between EARLY CAREER ACADEMY, INC. (“ECA”) and ESI SERVICE CORP. (“ESISC”), dated _________________, 201_ whereby ESISC will provide certain educational products and services to ECA. A true and correct copy of the executed EPSA is attached hereto and incorporated herein as Exhibit A. Notwithstanding that ECA and ESISC may be referred to individually in this Lease, both are jointly and severally obligated under the terms and conditions of this Lease and wherever the term “Tenant” is used it means both ECA and ESISC. In the event ECA decides, in ECA’s sole discretion, to contract with a different service provider than ESISC for substantially the same services to be provided pursuant to the EPSA (“Substitute Provider”), ECA will obtain an agreement with such Substitute Provider that such Substitute Provider will observe and perform all of the obligations of ESISC pursuant to this Lease and ECA shall notify Landlord in writing immediately thereafter of such agreement (“Substitute Agreement”), including a copy of such Substitute Agreement, and the identity of and contact information for such Substitute Provider. ESISC shall be replaced by any such Substitute Provider as co-Tenant under this Lease and ESISC shall have no further obligation to Landlord pursuant to this Lease (except those obligations accrued and which would survive expiration or earlier termination of this Lease) as of the effective date of any valid Substitute Agreement. 1.02. Leased Premises. Landlord hereby leases to Tenant, the space necessary for Tenant to operate in the Building (as defined in this paragraph below) for the Permitted Use (as defined in Section 1.04 below), during the necessary daytime hours (meaning between 7:00am to 5:00pm) on Business Days (as defined in Section 11.02 below), provided Landlord and Tenant shall agree upon the space to be used and the times such space will be used by Tenant prior to each academic quarter of Landlord’s technical college during the Lease term. If the parties cannot agree upon the space then either party shall have the right to terminate the Lease with no further obligation to the other. The Leased Premises shall be contained within a building located at 1001 Magnolia Avenue, Webster, TX 77598 (“Building”), on a 5.46 acre site (“Land”), commonly known as ITT Technical

of 15

Institute, Houston (North), Texas (the Building and the Land collectively hereinafter known as the “Project”). The Leased Premises is being leased to Tenant in its “AS IS” condition without any warranties whatsoever, express or implied, including, without limitation the warranties of habitability or fitness for a particular purpose. Notwithstanding the foregoing, Landlord represents that the Leased Premises will be approved by all relevant state and local authorities required to approve the space prior to the commencement of classes by Tenant. Tenant may terminate this Lease if such approvals are not obtained before such time. 1.03. Common Areas and Furnishings. In addition to its use of the Leased Premises, Tenant and its agents, employees and invitees have the nonexclusive right with others designated by Landlord to the free use of the common areas (for their intended and normal purposes) of the Building, including without limitation, entrances, hallways, lobbies, public restrooms, elevators, stairways, loading docks, ramps, drives, platforms, passageways, sidewalks, pipes, conduits, wires, equipment, driveways, parking areas, open spaces, other similar public areas and access ways (collectively “Common Area”). Tenant shall also have access to and use of all of Landlord’s furniture, equipment, and utilities within the Leased Premises (“Furnishings”) during the Lease Term, subject to the conditions of Section 3.03(a) below. Landlord may change (including, without limitation, removal, modification, replacement, or repositioning of items or portions of) the Common Area or Furnishings, in its sole discretion, provided such changes do not materially or unreasonably interfere with Tenant’s access to, or use of, the Leased Premises or do not lessen the quality of the facility or the quality and quantity of furnishings provided to Tenant at the commencement of this Lease. 1.04. Use. Tenant shall use the Leased Premises solely for the purpose of operating the Charter School described in the EPSA (“Permitted Use”), unless Landlord gives its advance written consent to another use. Tenant agrees that the Permitted Use shall not materially interfere with Landlord operating its existing technical college within the Building at any time during the Lease term. If Landlord provides Tenant with notice that its activities related to the Permitted Use are materially interfering with Landlord’s operations, then the parties shall mutually agree upon a plan to mitigate such interference. If no agreement can be reached, either Landlord or Tenant may terminate the lease with no further liability to the other. Tenant shall occupy the Leased Premises, conduct its business and control its agents, employees, invitees, and visitors in a lawful and reputable way and so as not to create any nuisance or otherwise interfere with, annoy, or disturb other persons within the Building beyond what would be reasonably expected given the nature of the Permitted Use. Tenant shall not commit, or allow to be committed, any waste on the Leased Premises. 1.05. Term. The parties hereto agree that the Term of this Lease shall begin on the Effective Date and shall expire on the date that is three (3) years after the Effective Date (“Termination Date”), unless earlier terminated as allowed pursuant to other provisions of this Lease. 1.06. Parking. Tenant shall have the non-exclusive use of all of the parking spaces in the parking lot located around the Building. SECTION 2 – RENT 2.01. Rent. Beginning on the first day Tenant begins to occupy the Leased Premises for the Permitted Use (“Commencement Date”), Tenant shall pay to Landlord an annual amount equal to One-thousand Forty-nine and 00/100 Dollars ($1,049) per student enrolled by Tenant (“Base

of 15

Rent”). For Base Rent purposes “per student enrolled” will be the arithmetic average of all official state student count days. The Base Rent shall be paid:

(i) in monthly installments, which shall automatically be adjusted based on the periodic adjustment of the Facilities Rent as stated in Schedule 1 of Schedule A to the EPSA;


made by Tenant as permitted herein or to recover any unpaid court judgment Tenant has against Landlord;

(iii) in advance by the first day of each month during the Lease term; and

(iv) to Landlord as set forth in Subsection 11.03 below, or as Landlord may hereafter

specify in writing to Tenant. If the Commencement Date is not on the first day of a month, and/or the Termination Date is not the last day of a month, the Base Rent for that partial month will be prorated based on the actual number of days in the month. SECTION 3 – AFFIRMATIVE OBLIGATIONS 3.01. Compliance With Laws.

3.01(a). Landlord’s Compliance. Landlord shall, on the Commencement Date and at all times thereafter throughout the Lease term (including any extension of the Lease term pursuant to the terms hereof), keep the structural components of the Building, all Common Areas, and all other areas of the Project in compliance with all current and future applicable laws, ordinances, rules, regulations, and guidelines of state, federal, municipal, and other governmental authorities, relating to the use, condition, and occupancy of the Project, including, without limitation, the Resource Conservation and Recovery Act, the Comprehensive Environmental Response Act, and the Americans with Disabilities Act (collectively “Applicable Laws”).

3.01(b). Tenant’s Compliance. Tenant shall comply with all Applicable Laws that relate to its use of the Leased Premises, other than structural issues with the Building or other items that Landlord is responsible for under Section 3.01(a) above.


3.02(a). Janitorial. Landlord shall provide and pay the cost of all janitorial services with respect to the Leased Premises that Tenant occupies during the Lease term. 3.02(b). Utility Services. Landlord shall provide and pay the cost of all utility services with respect to the Leased Premises.

of 15

3.02(c). Access. Tenant, its employees, agents, and invitees shall have access to the Leased Premises during Tenant’s normal business hours which shall be agreed upon between the parties. Landlord shall have the right to lock the Building beyond Tenant’s normal business hours pursuant to its normal procedures.


3.03(a). Tenant’s Care of Leased Premises and Furnishings. Tenant shall keep the Leased Premises and all Furnishings in good, clean and sanitary condition. Notwithstanding anything to the contrary in Section 5 below, Tenant shall repair or replace (or pay to Landlord the reasonable cost of such repair or replacement), in Landlord’s sole discretion, any damage to the Furnishings caused by acts or omissions of Tenant or Tenant’s employees, agents, students, invitees, or contractors, normal wear and tear excepted, provided the total cost of any such damage, and related damage resulting from the same act or omission, falls below Landlord’s property insurance deductible or Landlord deems, in Landlord’s sole discretion, making a claim for such damage to Landlord’s property insurer would be unduly burdensome.

3.03(b). Landlord’s Care of Leased Premises, Building and Project. It is intended by the parties hereto that Tenant have no obligation to repair and maintain the Leased Premises, Building or Project. Landlord shall keep the Building and the Leased Premises maintained in good working order.

SECTION 4 – NEGATIVE OBLIGATIONS 4.01. Alterations. Tenant shall have no right to make any alterations to the Leased Premises.

4.02. Assignment and Subleasing. Tenant shall not transfer, mortgage, encumber, assign, or sublease all or part of the Leased Premises without Landlord’s advance written consent.


5.01(a). Insurance. Landlord shall keep the Building (including, without limitation, the Improvements) insured against damage and destruction by fire, hail, windstorm, vandalism, explosion, and other perils, including without limitation, earthquake coverage, in the amount of the full replacement value of such Building, as the value may exist from time to time. Landlord’s insurance carrier shall be licensed in the State of Texas. Upon written request from Tenant, Landlord shall provide Tenant with written evidence (certificate of insurance) of such insurance coverage. 5.01(b). Property Insurance. Each party shall keep its personal property (including, without limitation, any Furnishings) and trade fixtures in the Leased Premises insured in an amount equal to one hundred percent (100%) of the replacement cost of the property and fixtures.

of 15

5.01(c). Use. Tenant shall not use the Leased Premises in any way which would be hazardous or which would in any way increase the cost of or render void or voidable the insurance required above in Subsections 5.01(a) and (b). 5.01(d). Liability Insurance. Landlord and Tenant shall each maintain comprehensive general liability insurance, including public liability and property damage, with a minimum combined single limit of liability of two million dollars ($2,000,000) for personal injuries or deaths of persons occurring in or about the Project and Leased Premises. 5.01(e). Waiver of Subrogation. Because Landlord and Tenant waive and release all rights, claims, demands, and causes of action that either party may have against the other party on account of any loss or damage to real or personal property as more specifically set forth in Section 5.02(c) below, the assignment of any such claim by way of subrogation (or otherwise) to an insurance company (or any other person) will be precluded, and each party therefore agrees to immediately give its respective insurance company or companies written notice of the terms of such mutual waivers and to have their respective insurance policies properly endorsed, if necessary, to prevent the invalidation of such insurance coverages by reason of such waivers. Furthermore, upon request from the other party, each party agrees to provide evidence that notice has been given to their insurance company as set forth in this paragraph, including evidence of any necessary endorsement. 5.01(f). Insurance Criteria. Insurance policies required by this Lease shall:





(iv) be maintained during the entire Lease term (including any extension terms);

and


5.01(g). Evidence of Insurance. Tenant shall give certificates of insurance to the Landlord upon request. The certificate will specify amounts, types of coverage and the insurance criteria specified in this Subsection 5.01.


5.02(a). Tenant’s Indemnity. Tenant indemnifies, defends, and holds Landlord harmless from claims made by third parties for personal injury, death, or property damage occurring

of 15

in or about the Leased Premises, the Building, the Project or College Facilities that are caused by the negligence or willful misconduct of Tenant, its agents, employees, or invitees.

5.02(b). Landlord’s Indemnity. Landlord indemnifies, defends, and holds Tenant harmless from claims made by third parties for personal injury, death, or property damage occurring in or about the Leased Premises, the Building, the Project or College Facilities that are caused by the negligence or willful misconduct of Landlord, its agents, employees, or invitees. 5.02(c). Release of Claims. Landlord and Tenant intend that their respective insurers be solely responsible for making them whole with regard to their respective property losses, if any. Accordingly, notwithstanding Subsections 5.02(a) and (b) above, Landlord and Tenant waive and release all rights, claims, demands, and causes of action that either party (an “Injured Party”) may have against the other party and/or the other party’s shareholders, partners, members, officers, directors and/or employees on account of any loss or damage to real or personal property suffered by the Injured Party.

5.03. Transfer of Leased Premises. Landlord may transfer and assign, in whole or in part, its rights and obligations with respect to the Project and the Leased Premises. If the Project or Building in which the Leased Premises are located is sold or transferred (whether voluntarily or involuntarily), Landlord’s obligations and liabilities under this Lease which accrue after the transfer will be the sole responsibility of the new owner. SECTION 6 – LOSS OF PREMISES 6.01. Damages. 6.01(a). Definition. “Relevant Space” means:

(i) the Leased Premises as defined in Subsection 1.02 above; (ii) access to the Leased Premises;

(iii) any part of the Building in which the Leased Premises are located or the

Project that provides services to the Leased Premises; and


6.01(b). Repair of Damage. If the Relevant Space is damaged in part or whole from any insured cause and the Relevant Space can be substantially repaired and restored within two hundred ninety (290) days from the date of the damage using standard working methods and procedures, Landlord shall either designate other reasonably equivalent space as the Leased Premises or promptly and diligently repair and restore the Relevant Space to substantially the same condition as existed before the damage. If the Relevant Space is damaged in whole or in part by an uninsured cause, or if the proceeds of insurance plus the amount of any deductible obligation of Landlord are insufficient to pay for the repair of any damages to the Relevant Space, then Landlord will have the option to either repair the damage, designate other reasonably equivalent space as the Leased Premises or to cancel this Lease as of the

of 15

date of the cause by written notice to Tenant. If the Relevant space is to be repaired and restored, then the repair and restoration will be made within two hundred ninety (290) days from the date of the damage, unless the delay is due to causes beyond Landlord’s control. Nevertheless, if the Relevant Space is not repaired and restored within three hundred sixty-five (365) days from the date of the damage, then Tenant may cancel this Lease at any time thereafter by giving written notice to Landlord. Landlord shall provide written notice to Tenant within sixty (60) days after the date that the Relevant Space is damaged as to whether the Relevant Space can be repaired within the two hundred ninety (290) day period set forth above. If the Relevant Space cannot be repaired and restored within the two hundred ninety (290) day period and the damage to the Relevant Space has left the Leased Premises untenantable for the use intended by Tenant, then either party may cancel this Lease by giving written notice to the other party.

6.02. Condemnation.

6.02(a). Definitions. The terms “eminent domain,” “condemnation,” “taken,” and the like in this Subsection 6.02 include any takings, acquisitions or purchases for public or quasi-public use by any authority. 6.02(b). Entire Taking. If all of the (i) Leased Premises, (ii) Building in which the Leased Premises are located, (iii) Project, or (iv) Parking Spaces required for reasonable access to, or use of, the Leased Premises are taken by eminent domain, this Lease shall automatically terminate on the date title vests.

6.02(c). Partial Taking. If the taking of a part of the (i) Leased Premises, (ii) Building in which the Leased Premises are located, (iii) Project, or (iv) Parking Spaces prevents Tenant from continuing its business operations in substantially the same manner and space then Tenant may terminate this Lease on the date title vests. If there is a partial taking as to the usable square footage of the Building and this Lease continues, then the Lease shall end as to the part taken. 6.02(d). Repair. If in the event of a partial taking in which the Lease is not canceled as provided above in Subsection 6.02(c), then Landlord, at its expense, will promptly repair and restore the (i) Leased Premises, (ii) Building in which the Leased Premises are located, (iii) Project, and (iv) Parking Spaces, to the condition that existed immediately before the taking (except for the part taken). 6.02(e). Awards and Damages. Any award from the condemning authority shall belong to Landlord.

SECTION 7 – DEFAULT 7.01. Tenant Default. Each of the following constitutes a default by Tenant under this Lease (“Tenant Default”):

(i) A breach of any obligation of Tenant set forth in this Lease.

of 15

(ii) Tenant’s failure to vacate or stay any of the following within ninety (90) days after they occur:

(1) a petition in bankruptcy is filed by or against Tenant; (2) Tenant is adjudicated as bankrupt or insolvent;


Tenant’s property; or

(4) Tenant makes an assignment for the benefit of creditors.

(iii) Tenant commits any act resulting in a lien being filed against the Leased Premises, and Tenant fails to discharge the lien pursuant to Subsection 9.02(a) below within ten (10) days after Tenant receives written notice from Landlord that such a lien has been filed.

7.02. Landlord’s Remedies.

7.02(a). Remedies. If a Tenant Default arises, Landlord may immediately or at any time thereafter terminate this Lease upon Tenant’s receipt of written notice from Landlord of such termination. 7.02(b). Attorney’s Fees and Costs. Tenant shall also pay all reasonable attorney’s fees and other costs of suit (and appeal, if necessary) incurred by Landlord, if it becomes necessary for Landlord to employ an attorney or other agent to bring suit to (i) collect any amounts due by Tenant under this Lease, or (ii) enforce any provisions of this Lease. 7.02(c). Waiver of Tenant Default or Remedy. Failure of Landlord to notify Tenant of a Tenant Default immediately upon its occurrence or take any action in the event of such Tenant Default, shall not constitute a waiver of such Tenant Default. Landlord shall have the right to declare such Tenant Default at any time and take such action as is lawful or authorized under this Lease. Pursuit of any one or more of the remedies set forth above in Subsection 7.02(a) shall not preclude pursuit of any one or more of the other remedies provided therein or elsewhere in this Lease or by law or equity. 7.02(d). Mitigation. Landlord shall use its best efforts to mitigate its damages in the event of any Tenant Default.

7.03. Landlord Default. Landlord’s failure to perform or observe any of its Lease obligations within ten (10) days after Landlord receives written notice from Tenant that any such performance or observance is past due is a default under this Lease (each a “Landlord Default”). Any Landlord Default must be cured immediately or as soon as practical. If any Landlord Default cannot be cured within a reasonable period of time that would make it impossible for Tenant to use the Leased Premises for the Permitted Use, then either party shall have the right to terminate the Lease with no further obligation to the other. If Tenant brings suit against Landlord for any breach by Landlord of any of its obligations hereunder, and such a breach is determined to have occurred, Landlord shall

of 15

pay Tenant all costs and expenses incurred by Tenant with respect thereto, including, without limitation, all reasonable attorney’s fees. 7.04. Survival. The remedies of the parties after a Tenant Default or Landlord Default, the parties’ indemnities in Subsection 5.02 above, and Landlord’s obligation to mitigate damages in Subsection 7.02(d) above will survive the termination of this Lease. SECTION 8 – NONDISTURBANCE 8.01. Liens and Nondisturbance. Tenant accepts this Lease subject and subordinate to any mortgage, deed of trust, or other lien now or hereafter recorded or otherwise on the Leased Premises, but only if and upon the execution by each such lienholder of a Nondisturbance and Attornment Agreement. If the interest of Landlord under this Lease is transferred by reason of foreclosure or other proceedings for enforcement of any lien on the Leased Premises, this Lease shall continue and Tenant will attorn to and recognize the transferee (“Purchaser”) under the terms and conditions of this Lease for the balance of the remaining Lease term, including any extensions or renewals, with the same force and effect as if the Purchaser were Landlord under this Lease. Such attornment shall be effective upon Tenant’s and Purchaser’s execution of a Nondisturbance and Attornment Agreement. 8.02. Estoppel Certificate.


(i) Tenant is in possession of the Leased Premises; (ii) the condition of the Leased Premises is acceptable to the Answering Party;

(iii) the Lease is unmodified and in full effect or in full effect as modified, stating

the date and nature of the modification;

(iv) whether to the Answering Party’s knowledge the Asking Party is in default under this Lease or whether the Answering Party has any claims or demands against the Asking Party and, if so, specifying such default, claim, or demand;



(vi) to other correct and reasonably ascertainable facts that are covered by the Lease terms.

8.02(b). Remedy. The Answering Party’s failure to comply with its obligation in Subsection 8.02(a) above shall be a default under this Lease by the Answering Party.

of 15

8.03. Quiet Enjoyment. If there is no Tenant Default, Landlord warrants that Tenant’s peaceable and quiet enjoyment of the Leased Premises shall not be disturbed by anyone at any time during the Lease term because of acts or omissions of Landlord subject to the rights of any lender pursuant to the Nondisturbance and Attornment Agreement described in Subsection 8.01 (including any extensions or renewal thereof). Notwithstanding the foregoing, Landlord and Tenant acknowledge and agree that Landlord shall continue to operate its technical college out of the Building and may continue to access all Common Areas and other spaces adjoining or adjacent to the Leased Premises within the Building during its normal business hours. SECTION 9 – LANDLORD’S RIGHTS 9.01. Rules. 9.01(a). Rules for the Building. Tenant, its employees, agents and invitees shall comply with the reasonable rules applicable to the Project (“Rules”) which are in effect and may be changed from time to time by Landlord.

9.01(b). Conflict with Lease. If a Rule conflicts with or is inconsistent with any Lease provision, the Lease provision controls. 9.01(c). Enforcement. Landlord shall not unreasonably enforce the Rules against Tenant, its employees, agents or invitees.


9.02(a). Discharge Lien. Tenant shall, within twenty (20) days after receiving notice of any mechanic’s lien for material or work claimed to have been furnished to the Leased Premises on Tenant’s behalf and at Tenant’s request, except for work contracted by Landlord (including, without limitation, the Improvements):

(i) discharge the lien; or (ii) post a bond equal to the amount of the disputed claim with companies

reasonably satisfactory to Landlord.

If Tenant posts a bond, it will contest the validity of the lien. Tenant shall indemnify, defend, and hold Landlord harmless from losses incurred as a result of such liens. 9.02(b). Landlord’s Discharge. If Tenant does not discharge such lien or post the bond within the twenty (20) day period, Landlord may pay any amounts, including interest and reasonable attorney’s fees, to discharge such lien. Tenant shall than be liable to Landlord for the amounts paid by Landlord and shall reimburse Landlord immediately upon written demand thereof.

9.03. Right to Enter. Landlord shall have the right, at all reasonable hours with reasonable prior notice, to enter the Leased Premises to clean, repair or inspect the Leased Premises, or to conduct any other activity that Landlord deems reasonably necessary.

of 15

9.04. Holdover. Tenant shall vacate immediately upon the Termination of this Lease. Tenant shall have no right to holdover. No month-to-month tenancy or any other tenancy shall be created in the event that Tenant does not vacate.

9.05. Permitted Signs. No sign, advertisement, or notice (collectively “Signs”) will be displayed, painted or affixed by Tenant on any part of the (I) Project or Building in which the Leased Premises are located, (II) parking facilities, or (III) other portion of the Leased Premises visible from outside of the Leased Premises, without Landlord’s prior written consent.

SECTION 10 – OMITTED SECTION 11 – MISCELLANEOUS 11.01. Broker’s Warranty. The parties warrant that no brokers were used in connection with this Lease and that no commissions shall be due to any broker or any other party with respect to this Lease. The party who breaches this warranty shall defend, hold harmless and indemnify the nonbreaching party from all costs, expenses, and/or liability arising from the breach. 11.02. Notices. All notices required or permitted to be given under any provision of this Lease shall be in writing (unless otherwise specified) and shall be deemed duly given, if sent by certified mail, registered mail, or nationwide overnight delivery service, postage prepaid, and, pending written notice to the other of a different address, addressed as follows:

(i) If to Landlord:


(ii) If to ECA:

Early Career Academy, Inc. c/o ________________ 1001 Magnolia Avenue HOUSTON, TX 77090

(iii) If to ESISC:

ESI Service Corp. c/o General Counsel 13000 North Meridian Street

Any notice required or permitted to be given under any provision of this Lease received severally from either ECA or ESISC by Landlord or received by either ECA or ESISC severally from Landlord shall be deemed to have been received by all parties to this Lease jointly.

of 15

11.03. Place of Payment. All payments required hereunder to be made by Tenant to Landlord shall be sent to Landlord at the address set forth above, electronically by ACH transfer to a bank account designated by Landlord in writing, or to any other address Landlord may specify from time to time by prior written notice delivered to Tenant. All payments required hereunder to be made by Landlord to Tenant shall be sent to Tenant at the address set forth above, or at any other address Tenant may specify from time to time by prior written notice delivered to Landlord. 11.04. Partial Invalidity. If any Lease provision or its application is invalid or unenforceable, the remainder of this Lease shall not be impaired or affected and shall remain binding and enforceable. 11.05. Waiver. The failure of either party to exercise any of its rights hereunder is not a waiver of those rights. A party waives only those rights specified in writing and signed by the waiving party. 11.06. Binding on Successors. This Lease is binding on, and inures to the benefit of, the parties and their respective heirs, successors, representatives, and permitted assigns. 11.07. Governing Law. This Lease is governed by the laws of the State of Texas. 11.08. Effective Date. The date this Lease is signed by the last party to sign it (as indicated by the date associated with that party’s signature) will be deemed the date of this Lease (“Effective Date”). 11.09. Recording. Recording of this Lease is prohibited. 11.10. Survival of Remedies. The parties’ remedies will survive this Lease’s termination as set forth in Section 7.04 above. 11.11. Authority of Parties. Each party warrants that it is authorized to enter into this Lease, that the person signing on its behalf is duly authorized to execute this Lease, and that no other signatures are necessary. 11.12. Business Day. “Business Days” means Monday through Friday, inclusive, excluding holidays recognized by either Tenant or Landlord. Throughout the Lease, wherever “days” are used the term will refer to calendar days. Wherever the term “business days” is used, the term will refer to business days. Notwithstanding the forgoing, Tenant shall have the access to the Leased Premises as set forth in Section 3.02(c). 11.13. Captions. The captions inserted in this Lease are for convenience only and in no way define, limit, or otherwise describe the scope or intent of this Lease or any provision hereof. 11.14. Time. Time is of the essence in the performance of all obligations contained in this Lease. 11.15. Counterparts. This Lease may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original, but all such counterparts together will constitute only one instrument. 11.16. Entire Agreement. This Lease contains the entire agreement between the parties about the Leased Premises and Project, and there are no verbal representations, warranties, understandings, stipulations, agreements, or promises pertaining to this Lease that are not incorporated herein.

of 15

Except for the Covenants for which Subsection 9.01 controls, this Lease may be amended only by a writing signed by both parties. 11.17. Definition of Lease. This Lease consists of the following:



(iv) Exhibit A.


of 15

IN WITNESS WHEREOF, Tenant and Landlord, by their duly authorized representatives, have caused this Lease to be executed all as of the date set forth beneath their signature below. “Landlord” ITT EDUCATIONAL SERVICES, INC. A Delaware corporation By: __________________________________ Kevin M. Modany CEO Date: _________________________________ “Tenant”

EARLY CAREER ACADEMY, INC., a non-profit education corporation holding a charter from _____________________________


Attachment G1

501(c)(3) Determination Letter or Proof of Filing

Attachment G2

Articles of Incorporation and All Amendments

Attachment G3

Bylaws of the Sponsoring Entity and All Amendments

EDUCATION STRATEGY FOUNDATION

AMENDED AND RESTATED BYLAWS

TABLE OF CONTENTS

Article One: Name

1.01 Name 1.02 Seal 1.03 Assumed Name & Marks

Article Two: Charitable Purposes

Article Three: Members

Article Four: Board of Directors

4.01 Governing Body

4.02 Number of Directors 4.03 Term

4.04 Removal

4.05 Resignation

Article Five: Meetings & Records

5.01 Regular Meetings, Frequency, Place 5.02 Annual Meeting

5.03 Special Meetings

5.04 Charter School Meetings 5.04(a) Closed Meeting

5.04(b) Emergency Meeting

5.04(c) Video Conferencing

5.05 Notice for Charter School Meetings 5.05(a) Posting of Meeting

5.05(b) Emergency Notice

5.05(c) Internet Posting 5.05(d) Closed Meetings

5.06 Charter School Meeting Order of Business

5.07 Corporate Records 5.08 Quorum

5.09 Order of Business

5.10 Record of Board Action

5.11 Voting 5.12 Fundamental Actions

5.13 Compensation

5.14 Parliamentary Procedure

Article Six: Officers

6.01 Officers of the Board

EDUCATION STRATEGY FOUNDATION AMENDED AND RESTATED BYLAWS PAGE 2 of 14

6.02 Term, Nominations, Elections

6.03 Vacancy 6.04 Chairperson

6.05 Vice Chairperson

6.06 Secretary

6.07 Treasurer 6.08 Compensation

6.09 Employed Corporate Officers

6.10 Other Employed Officer 6.11 Compensation of Employed Corporate Officers

Article Seven: Committees

7.01 Committees

7.02 Notice of Committee Meetings

Article Eight: Indemnification of Directors and Officers

8.01 No Bond or Surety 8.02 Indemnification

8.03 Insurance

Article Nine: Corporate Finances and Accounting

9.01 Depository Institutions

9.02 Financial Transactions 9.03 Loans and Indebtedness

9.04 No Insider Dealing

9.05 No Insider Loans 9.06 Fiscal Year

9.07 Annual Audit

Article Ten: Amendments to Bylaws

Article Eleven: Miscellaneous

11.01 Construction

11.02 Controlling Authority


AMENDED AND RESTATED BYLAWS

OF


WHEREAS, the Initial Board of Directors of the EDUCATION STRATEGY FOUNDATION

caused to be filed with the Texas Secretary of State a Certificate of Formation; and

WHEREAS, the Certificate of Formation permits the Board of Directors to adopt bylaws to

govern the affairs of the Corporation;

NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of Education Strategy

Foundation, that these bylaws shall govern the affairs in pursuit of the Corporation’s declared

purposes to wit:

ARTICLE ONE

NAME

1.01 Name. The name of the Corporation is Education Strategy Foundation (the

“Corporation”).

1.02 Seal. The Corporation shall not have a seal.

1.02 Assumed Names & Marks. The Corporation may by action of the Board of

Directors, change its name or adopt such assumed names and trade or service marks as it deems

appropriate.

ARTICLE TWO

PURPOSES

Charitable Purposes. This Corporation has been organized for any lawful purpose

permitted under state and federal law and in accordance with Internal Revenue Code Section

501(c)(3) as amended. The Corporation will not engage in any activities or exercise any powers

that are not in furtherance of the charitable purposes described in the Certificate of Formation or

authorized by applicable law.

The Corporation shall seek to own and operate an Open-Enrollment Charter School (the

“School”) as provided under the Texas Education Code for the benefit of students in Texas,

providing educational opportunities, programs and such other functions as it deems appropriate

in furtherance of the purposes as provided in the Certificate of Formation. This Corporation is

formed for charitable and educational purposes, and it will be nonprofit and nonpartisan. No

substantial part of the activities of the Corporation will consist of the publication or

dissemination of materials or statements with the purpose of attempting to influence legislation,

and the Corporation will not participate or intervene in any political campaign on behalf of or in

opposition to, any candidate for public office. The Corporation will not engage in any activities

or exercise any powers that are not in furtherance of the charitable and educational purposes

described in the Certificate of Formation. The Corporation will not engage in any impermissible


non-secular or religious activities. It will at all times comply with Texas and United states

Constitutional requirements for separation of church and state.

The properties and assets of the Corporation are irrevocable dedicated to charitable and

educational purposes. No part of the net earnings, properties or assets of this corporation, on

dissolution or otherwise, shall inure to the benefit of any private person, or any director or officer

of this Corporation. On liquidation or dissolution, all properties, assets and obligations will be

distributed or paid over to an organization dedicated to charitable and educational purposes that

is tax-exempt pursuant to Internal Revenue Code Section 501(c)(3) as amended or as otherwise

required by state and federal law.

The Corporation, in all its activities and programs, shall not discriminate on the basis of

sex, national origin, ethnicity, religion, disability or with respect to students on the basis of

artistic, academic, athletic ability or as to the school district the student would otherwise attend,

or any other prohibited manner.

ARTICLE THREE

MEMBERS

Members. The Corporation will have no members.

ARTICLE FOUR

BOARD OF DIRECTORS

4.01 Governing Body. The Board of Directors of the Corporation shall constitute its

governing body and shall, acting as a body corporate, have such powers and authority conferred

upon the Directors by Corporation’s Certificate of Formation, these amended and restated

bylaws, and the general laws of the State of Texas. More specifically, the Board of Directors of

the Corporation (the “Board”) will be responsible for adoption and implementation of policy for

the Corporation and for the management, operation and accountability of its charter schools, and

other related nonprofit activities. Without limiting the Board’s authority, upon award and

execution of a contract for charter from the Texas Education Agency, the following powers and

duties must generally be exercised by the Board, acting as a body corporate in meetings posted in

compliance with Texas Government Code, Chapter 551:

(a) Final authority to hear or decide employee grievances, citizen complaints,

or parental concerns;

(b) Final authority to adopt or amend the budget of the charter holder or the

charter school;

(c) Final authority to authorize the expenditure or obligation of state funds or

the use of public property;

(d) Final authority to direct the disposition or safekeeping of public records;

(e) Final authority to adopt policies governing charter school operations;


(f) Final authority to approve audit reports; and

(g) Initial or final authority to select, employ, direct, evaluate, renew, non-

renew, terminate, or set compensation for any chief executive officer(s).

4.02 Number of Directors. The Board of Directors shall consist of at least three (3)

directors, but may be increased to nine (9) directors at the Board’s discretion. Any vacancy

occurring on the Board of the Directors shall be filled by a majority vote of the remaining

directors. Each Director elected to fill a vacancy on the Board of Directors shall hold office for

the remainder of the term being filled or until he resigns, passes or is removed in accord with the

provisions in these Bylaws. At all times at least a majority of the Board shall be residents of

Texas and qualified voters.

4.03 Term. Each director shall commit to serving a three-year term and optional

successive three year terms.

4.04 Removal. Any Director may be removed from service as a director with prior

written notice provided at least five-days prior to a meeting of the Board, with or without cause,

as determined by the Board of Directors by affirmative vote of the majority of directors then

serving on the board and as determined to be in the best interest in the Corporation.

4.05 Resignation. Any director or officer may resign from the Corporation by delivering

a written letter of resignation to the Chairman or Secretary of the Board. The resignation shall

take effect at any time specified therein, and if no time is specified, at the time of its receipt. The

acceptance of a resignation by the Chairman or Secretary shall not be necessary to make it

effective. No director may resign if the Corporation would then be left without a sufficient

numbers of duly elected director or directors in charge of its affairs as required by law.

ARTICLE FIVE

MEETINGS & RECORDS

5.01 Regular Meetings, Frequency and Place. Regular meetings of the Board of

Directors shall be held on at least a quarterly basis or more frequently at such places and at such

times as the Board may determine.

5.02 Annual Meeting. The Annual Meeting of the Board of Directors shall be held on the

occasion of its First (1st) Quarterly meeting each and every fiscal year or as otherwise scheduled

by the Board.

5.03 Special Meetings. Special meetings of the Board of Directors may be called by the

Chairman, Secretary, or by any one or more Board members with the consent of the Chairman or

Secretary, which consent will not be unreasonably withheld, for any purpose not otherwise

proscribed by law, grant or loan condition on the Certificate of Formation, to transact any

business described in the call for the special meetings.


MEETINGS RELATING TO CHARTER SCHOOLS

5.04 Charter School Meetings. When conducting business in any way relating to the

operations or affairs of any of the Corporation’s open-enrollment charter schools, meetings of the

Board or any Board Committee shall be conducted in accordance with provisions of the Texas

Education Code and Chapter 551 of the Texas Government Code, and the Board of Directors

shall be subject to the requirements of the Texas Open Meetings Act, including the following

provisions: At no time shall a quorum of the full board meet to deliberate any issue or business

of the Corporation without posting notice of a meeting as set forth below. Directors shall

normally attend all meetings in person, but may attend by alternate means only if circumstances

warrant and in accordance with the requirements of the Texas Open Meetings Act.

(a) Closed Meetings: The Board may meet in a meeting closed to the public to deliberate

on those matters specified in the Texas Open Meetings Act as proper for closed meetings,

including but not limited to consultation with attorney, real estate, prospective gifts or

donations, personnel matters, security personnel or devices, discipline of a student and

complaints against an employee unless the student or employee respectively requests an

open meeting.

(b) Emergency Meetings: In the event of an emergency as defined in the Texas Open

Meetings Act, a meeting may be conducted by telephone conference call. If a meeting

involves telephonic participation, the telephonic participation must be by conference call

in which all persons participating can be heard by all other participants and the public.

(c) Video Conferencing: Meetings may also be conducted by videoconference call,

where both audio and video is simultaneously available to the participants and the public,

and all other prerequisites and requirements of the Texas Open Meetings Act are

satisfied.

5.05 Notice for Charter School Meetings. When conducting business related to the

operations or affairs of the Corporation’s open-enrollment charter schools, the following shall

apply: Notice of all meetings of the Board of Directors, except as otherwise provided by state

law, regulation, will be delivered by mail postmarked, electronic facsimile or e-mail transmission

to each Director at least 72 hours before the time of the meeting.

(a) Posting of Notice: In addition, notice to the public of any meeting shall be posted at

the administrative offices of the Corporation in a location convenient to the public at least

72 hours before the time of such meeting.

(b) Emergency Notice: Emergency meetings as allowed under the Texas Open Meetings

Act may be posted up to two hours before such meeting and subject to other prerequisites

under the Act.

(c) Internet Posting: Notice and the agenda of all meetings of the Board of Directors

shall also be posted on the Corporation’s Internet website for the charter schools, if any,


concurrently with the notice posted at the administrative offices, or as otherwise required

and authorized by the Texas Open Meetings Act.

(d) Closed Meetings: The agenda shall clearly state whether the Board intends to

convene in a closed meeting and shall identify separately each matter to be deliberated by

the Board in the closed meeting and whether the Board may take action on any such

matter upon returning to the open meeting. The Secretary shall note the times in the open

meeting that the Board convenes to and adjourns from the closed meeting.

5.06 Charter School Meeting Order of Business. When conducting business related to

the operations or affairs of the Corporation’s open-enrollment charter schools, the following

shall apply: At regular meetings of the Board, the order of business shall be established in an

Agenda approved by the Chairman and as presented in the notice of the meetings. However, the

Chairman may modify the order of business. The agenda shall identify all matters to be

presented to and considered by the Board. Matters not disclosed in the agenda and meeting

notice available to the public shall not be deliberated or be considered by the Board, except as

permitted by the Texas Open Meetings Act.

MEETINGS & RECORDS GENERALLY

5.07 Corporate Records. The Corporation will maintain at its principal office all

financial books and records of account, all minutes of the Board meetings and committee

meetings, the list of Directors, and copies of all other material Corporate records, books,

documents and contracts as required by Texas law. All such records will be made available for

inspection at any reasonable time during usual business hours for any lawful purpose to any

officer, Director, or person authorized by law or the Board to inspect such records, and the

Corporation’s records will also be available to the extent required by the Texas Public

Information Act where applicable for public inspection and copying as promptly as possible as

required by such act. Upon leaving office, each Director, officer or agent of the Corporation will

turn over to the Chairman in good order any Corporation monies, books, records, minutes, lists,

documents, contracts or other property of the Corporation in his or her custody or control.

5.08 Quorum. The presence of a majority of the members shall constitute a quorum and

shall be necessary to conduct the business of the Corporation except as otherwise provided in

Article Five, Section 5.12, below. Any Board vacancies shall not be counted in determining a

majority called for by these Bylaws.

5.09 Order of Business. Board meetings shall generally proceed with the following order

of business:

Roll Call and Establishment of a Quorum Public Comments

Reading and Approval of Minutes of Preceding Meeting(s)

Reports of Committees

Reports of Officers

Old and Unfinished Business


New Business

Adjournments

The Board of Directors may, by majority vote, adopt a different agenda order.

5.10 Record of Board Action. All motions and resolutions of the Board will be written or

recorded in the minutes of the Board and certified copies will be placed in a journal of

proceedings of the Board. Such records shall be maintained in accordance with state law and

Article 5.08 herein.

5.11 Voting. All matters at any meeting of the Board of Directors or any of its

designated committees, except as otherwise provided in these Bylaws, the Certificate of

Formation, or as permitted by law, will be decided by a vote of a majority of the Directors

present at or lawfully participating in the meeting as permitted by the Texas Open Meetings Act.

If a quorum of the Board is present or lawfully participating in the meeting, the affirmative vote

of a majority of the Board of Directors will be the act of the body corporate, unless the vote of a

greater number is required by statute, regulation, the Certificate of Formation, or these Bylaws.

Any Director may request a roll call vote on any motion or resolution. Directors may not vote by

proxy or secret ballot.

5.12 Fundamental Actions. In accordance with Section 22.164 of the Texas Business

Organization Code, the following actions of the Board of Directors are fundamental actions that

shall require the affirmative vote of the majority of directors then serving on the Board:

(a) Amendment of a certificate of formation [or Certificate of Formation];

(b) Voluntary winding up under Chapter 11;

(c) A revocation of a voluntary decision to wind up under Chapter 11;

(d) A cancellation of an event requiring winding up under Chapter 11;

(e) A reinstatement under Section 11.202;

(f) A distribution plan under Section 22.305;

(g) A plan of merger under Subchapter F;

(h) A sale of all or substantially all of the assets of the Corporation;

(i) A plan of conversion under Subchapter F; or

(j) A plan of exchange under Subchapter F

5.13 Compensation. Except as provided in this section, no Director will receive directly

or indirectly any salary, compensation or gift from the Corporation, except as authorized by state

law. The Directors of the Corporation will serve as such without salary. No Director will be

entitled to any dividend or any part of the income or principal of the Corporation, or to share in

the distribution of the assets upon dissolution of the Corporation. The Board of Directors may

authorize the payment by the Corporation of the reasonable, documented and allowable expenses

incurred by a Director in performance of his or her duties in accordance with state and federal

law.


5.14 Parliamentary Procedure. For all matters of parliamentary procedures, the Board

and any Committees established by the Board, shall be guided by Robert's Rules of Order Newly

Revised, 11th ed. (Cambridge, Mass.: Perseus Publishing, 2011).

ARTICLE SIX

OFFICERS

6.01 Officers of the Board. The officers of the Board of Directors will consist of the

Chairperson, the Vice-Chairperson, the Secretary, the Treasurer, and such other officers as the

Board may determine from time to time. Any person may hold more than one office provided

that the duties thereof can be consistently performed by the same person, provided, however, that

no one person shall at the same time hold the two offices of Chairperson and Vice Chairperson

or the two offices of Chairperson and Secretary.

6.02 Terms, Nominations and Election. Elections shall ordinarily occur at the Board’s

Annual meeting. The officers shall be elected for terms not exceeding two (2) years. In

accordance with Robert’s Rules of Order, the Board of Directors shall first receive nominations

for any expiring term(s) of office from the floor, and shall, if nominees are willing to so serve,

elect such officer(s) to fill any expiring term(s) by majority vote in accordance with the Rules of

Order at Annual Meeting preceding the expiration of the term of office.

6.03 Vacancy. If any such office prescribed in 6.01 shall become vacant by reason of

death, resignation, removal, or otherwise, the Board of Directors shall appoint a successor or

successors for the unexpired term or terms.

6.04 Chairperson. The Chairperson shall preside at all meetings of the Board of Directors.

The Chairperson shall present or cause to be presented at each annual meeting of the Board, an

annual report of the work of the Corporation. The Chairperson shall have the authority to sign

checks or drafts of the Corporation. The Chairperson shall appoint all committees, temporary or

permanent, except for the Executive Committee, which shall consist of the officers of the

Corporation. The Chairperson shall be an ex-officio member of all committees where the

Chairperson is not an officer as otherwise provided herein.

6.05 Vice Chairperson. The Vice Chairperson shall, in the event of the absence or

inability of the Chairperson to exercise his office, become acting Chairperson of the Corporation

with all the rights, privileges and powers as if he or she had been duly elected Chairperson.

6.06 Secretary. The Secretary shall keep the minutes and records of the Corporation in

appropriate books and shall be the official custodian of the records of the Board and

Corporation, subject to delegation to the Corporation’s Executive Director and/or

Superintendent/CEO of the charter schools.

The Secretary shall give and serve all notices to members of the Boards

The Secretary shall present to the Board any communication addressed to him or her as

Secretary of the Corporation


The Secretary shall perform all duties incident to the office of Secretary, and such other

duties as from time to time may be assigned to him or her by the Board of Directors.

6.07 Treasurer. The Treasurer shall have the care and custody of all monies belonging to

the Corporation and shall be responsible to the Board for such monies and securities of the

Corporation. For this purpose the Treasurer shall have available the support and assistance of

staff and an external auditor.

The Treasurer shall be authorized to sign checks or drafts of the Corporation and no

special fund may be set aside that shall make it unnecessary for the Treasurer to sign the

checks issued upon it.

The Treasurer shall render or cause to be rendered at meetings as the Board shall

determine, a written account of the finances of the organization and such report shall be

physically affixed to the minutes of the Board of Directors of such meeting.

The Treasurer shall perform all duties incident to the office of Treasurer, and such other

duties as from time to time may be assigned to him or her by the Board of Directors.

6.08 Compensation. No Board officer shall for reason of his or her office be entitled to

receive any salary or compensation, but nothing herein shall be construed to prevent an officer or

director from receiving any compensation from the Corporation for duties other than as a director

or officer of the Board.

6.09 Employed Corporate Officers. The Board of Directors shall employ a

Superintendent/Chief Executive Officer for and to be employed by the Charter Schools and to

oversee the Corporation’s charter school operations and affairs. Both the Executive Director and

the Superintendent/Chief Executive Officer shall report directly to the Board of Directors of the

Corporation and shall serve under such terms and conditions as the Board determines to be in the

best interest of the Corporation. The Superintendent/Chief Executive Officer shall perform such

duties as delegated and assigned by the Corporation’s Board or as required by state law and rules

promulgated by the Texas Commissioner of Education.

6.10 Other Employed Officers. The Board of Directors, at its discretion, may hire or

appoint or authorize the Superintendent/CEO to hire such other executive staff as determined

necessary by the Board to carry out the day to day functions and the mission of the Corporation

and the operation of its charter schools.

6.11 Compensation of Employed Corporate Officers. Officers who have been employed

by the Board of Directors may receive fair and reasonable compensation for performance of their

duties to the Corporation as determined by the Board and based on appropriate documentation

complying with TEA rules and IRS Guidelines.

ARTICLE SEVEN

COMMITTEES

7.01 Committees. Committees may be established by the Board of Directors to perform

the duties and functions assigned or delegated in furtherance of Board objectives and needs of


the Corporation. Any committee may include one or more Directors from the Board. The

Chairman of the Board or its designee will appoint the members, officers, or others to committee

positions. The rules of procedure of any committee may be established by the Board. Any

committee may be abolished or any committee member removed, for any reason and at any time,

by majority vote of the Board of Directors of the Corporation.

7.02 Notice of Committee Meetings: Written notice of the time, place and agenda of all

committee meetings will be given by the committee chair in the same manner as notices given

for regular Board meetings and in accordance with the Texas Open Meetings Act. Each

committee will keep and deliver a copy of minutes of its proceedings to the Secretary of the

Board and will report briefly on its activities as requested by the Board.

ARTICLE EIGHT

INDEMNIFICATION OF DIRECTORS AND OFFICERS

8.01 No Bond or Surety. A Director or committee member will not be required to furnish

any bond or surety for his services as a Director or committee member, and will not be liable for

the act or omission of any other Director.

8.02 Indemnification. To the greatest extent then permitted by Chapter 8 of the Texas

Business Organization Code (“TBOC”), including without limitation its provisions for

permissive indemnification (including the advancement of expenses under Section 8.104 of the

TBOC), any person made or threatened to be made a party to any action in court or other

proceeding because he is or was a Director or committee member will be indemnified by the

Corporation against any and all liability and the reasonable expenses, including attorney’s fees,

incurred in connection with the defense or settlement of the action, except where it is adjudged

that the Director or committee member is liable for gross negligence, bad faith or willful

misconduct in performing his duties. The right of indemnification will not exclude any other

right of the Director or committee member. INDEMNIFICATION UNDER THIS SECTION IS

SUBJECT TO ANY AND ALL PROHIBITIONS, RESTRICTIONS AND LIMITATIONS

IMPOSED BY LAW. The above indemnification shall not be exclusive of an other rights to

which a person who held a position described above may be entitled to by law, agreement, vote

of disinterested Directors, or otherwise.

8.03 Insurance. The Corporation may purchase and maintain insurance on behalf of any

person (or may reimburse any such person for the reasonable and necessary cost of obtaining and

maintaining personal insurance) against any liability which may be incurred by him or by her

arising out of his or her status as a Director, officer, committee member, employee, delegate, or

governing person of the Corporation, whether or not the Corporation would have the power to

indemnify him or her against any such liability in Section 8.02.


ARTICLE NINE

CORPORATE FINANCES AND ACCOUNTING

9.01 Depository Institutions. All funds of the Corporation not otherwise employed will be

deposited in banks or other depositories designated by the Board of Directors and in accordance

with Texas law.

9.02 Financial Transactions. All checks, drafts, endorsements, notes and evidences of

indebtedness of the Corporation will be signed by such officers or agents as designated by the

Board of Directors and all endorsements for deposits to the credit of the Corporation will be

made as authorized by the Board of Directors.

9.03 Loans and Indebtedness. No loans or advances will be contracted on behalf of the

Corporation, and no note or other evidence of indebtedness will be issued in its name, except as

authorized by the Board.

9.04 No Insider Dealing. Subject to any applicable law, regulation, or requirement of the

Texas Nonprofit Corporation Act or Internal Revenue Code, no Director, officer or committee

member will be interested directly or indirectly in any contract or program involving Corporation

assets, relating to the operation conducted by it or in any contract for furnishing services or

supplies to it, unless (a) the contract is authorized by a majority of Directors present at a meeting

in which there is a quorum and vote without the interested Director’s presence; (b) the facts and

nature of the Director’s interest is fully disclosed to the whole Board of Directors before the

meeting in which the contract will be considered and all legally required disclosure forms and

affidavits are received; (c) the Corporation could not have obtained a more advantageous

arrangement with reasonable effort under the circumstances and (d) the Board has received and

relied on adequate supporting documentation in accordance with legal guidelines and such is

recorded in the financial records of the Corporation as required by Texas law.

9.05 No Insider Loans. The Corporation will make no loans or grants to its Directors,

officers, employees, committee members or other persons prohibited by law. Directors who vote

for, and any officer who participates in, the making of a loan to a Director, officer, employee or

other person will be jointly and severally liable to the Corporation for the amount of the loan

until it is repaid.

9.06 Fiscal Year. The fiscal year of the Corporation will begin on September 1 of each

year and will end on August 31 of the next year.

9.07 Annual Audit. In addition to such other reports and information as may be required

by the Texas Education Code and its implementing regulations, the Board shall have the

financial and programmatic operations of the Charter Schools audited annually by a certified

public accountant licensed by the Texas State Board of Public Accountancy and registered as a

provider of public accounting services, and the Board shall review, approve and file a copy of the

annual audit report with the Texas Education Agency (TEA) no later than 150 days after the end

of the fiscal year for which the audit is made or by any other deadline required by TEA rule.


ARTICLE TEN

AMENDMENTS TO BYLAWS

Amendments. These bylaws may be altered, amended, repealed or added to by an

affirmative vote of not less than the majority of members at a duly scheduled and noticed

meeting. Any amendment to these bylaws must also be accompanied by a charter amendment

submitted to the Texas Education Agency for approval as required by law.

ARTICLE ELEVEN

MISCELLANOUS

11.01 Construction. Whenever the context requires, the masculine will include the

feminine and neuter, and the singular will include the plural, and vice versa. If any portion of

these Bylaws is declared invalid or inoperative, then so far as is reasonable the remainder of

these Bylaws will be considered valid and operative and effect will be given to the intent

manifested by the portion held invalid or inoperative.

11.02 Controlling Authority. These Bylaws are subject to and governed by, and should

be read to comply with, any applicable federal or state laws and regulations, including the Texas

Education Code and its implementing regulations, pertinent local ordinances and the Certificate

of Formation.

As approved by Unanimous Consent of the Board of Directors ____________, 2014.

UNANIMOUS WRITTEN CONSENT OF DIRECTORS IN LIEU MEETING OF THE BOARD OF DIRECTORS OF EDUCATION STRATEGY FOUNDATION PAGE 1

UNANIMOUS WRITTEN CONSENT OF DIRECTORS IN LIEU OF MEETING OF THE BOARD OF DIRECTORS

OF EDUCATION STRATEGY FOUNDATION

December 30, 2014 Pursuant to Section 22.220 of the Texas Business Organizations Code (the “TBOC”), the undersigned, being the Directors of Education Strategy Foundation, a Texas non-profit corporation (the "Corporation"), and in lieu of a meeting of the Board of Directors, the call of which is hereby expressly waived, do hereby consent to the adoption of the following resolutions:

I. AMENDED AND RESTATED BYLAWS

RESOLVED, that the Bylaws appearing in that certain document entitled "Amended and Restated Bylaws of Education Strategy Foundation" are hereby adopted as the Bylaws of this Corporation. RESOLVED FURTHER, that the Secretary of the Corporation is authorized and directed to certify a copy of such Bylaws and maintain them in the principal office of the Corporation for the transaction of its business, open for inspection by the directors at all reasonable times during office hours, and that in certifying such Bylaws, the Secretary shall state in his certificate that the Bylaws were adopted by the unanimous written consent of the directors without a meeting as authorized by the TBOC.

II. CONFLICT OF INTEREST POLICY

RESOLVED, that the certain document entitled "Ethics, Conflict of Interest & Nepotism Policy" is hereby adopted as the policy of this Corporation. This Consent may be executed in one or more counterparts, all of which together constitute the same instrument.

Directors’ Signature Page Follows

Attachment G4

Notarized Biographical Affidavits

Attachment G5

Code of Ethics and Conflict of Interest Policy

ETHICS, CONFLICTS OF INTEREST, & NEPOTISM POLICY


Preamble

This Policy is adopted by the Board of Directors (collectively, the “Board” or the “Directors”

and individually a “Director”) of Education Strategy Foundation (the “Corporation”). The Board

is committed to maintaining the highest legal and ethical standards in the conduct of the business

of the Corporation, and to protecting the integrity and reputation of the Corporation, the Board

and all the employees, volunteers and programs of the Corporation.

Under established principles of law and sound business ethics, the Directors and Officers (as

defined below) of the Corporation are responsible for exercising their duties honestly, in good

faith, and with a high standard of diligence and care. Accordingly, the Directors and Officers

have an obligation to keep the welfare of the Corporation at all times paramount in order to

ensure that they 1) do not compromise their independence of judgment, 2) preserve confidence

and trust in the organization and the Board, and 3) protect and fulfill the mission of the

Corporation. Every Director and Officer of the Corporation has a duty of loyalty to the

Corporation. Therefore, activities and financial interests must be arranged so as not to interfere

with the primacy of that commitment. This Policy will assist Directors and Officers as they

identify actual or potential conflicts of interest and will provide the Board with a procedure to

address any conflicts. This Policy is intended to supplement but not replace any applicable

federal, state or local laws governing conflicts of interest applicable to charter schools and

charitable organizations.

I. Ethical Principles

A. Personal and Professional Integrity. Directors and Officers, as well as employees,

volunteers, and advisors of the Corporation, must conduct themselves in an honest and ethical

manner, including the ethical handling of actual or apparent conflicts of interest, as set forth

below.

B. Financial Stewardship. The Corporation manages its funds responsibly and prudently. It

oversees the funds entrusted to it consistent with state and federal law and consistent with donor

intent to support the purpose and mission of the Corporation and the students and community in

which it operates. It ensures that all spending practices and policies are reasonable and

appropriate and all financial reports are factually accurate and complete in all material respects.

As a tax-exempt public charity, the Corporation uses and expends its funds in a manner that

advances the charitable and educational mission and objectives of the Corporation and not the

private interests of Directors or Officers.

C. Public Accountability. The Corporation provides comprehensive and timely information in

accordance with applicable state and federal law and is responsive to reasonable requests for

information about its activities. Basic informational data about the Corporation such as the IRS

Form 990, audited financial statements and Annual Financial and Compliance Report shall be

made available to the public in accordance with applicable state and federal law.

ETHICS, CONFLICT OF INTEREST & NEPOTISM POLICY


PAGE 2

D. Accuracy and Retention of Records. The Corporation will create and maintain records that

satisfy operational and legal requirements including federal, state and local laws.

E. Political Activities. As a 501(c)(3) tax-exempt public charity, the Corporation is prohibited

from engaging in political activities and its tax-exempt status is in part dependent upon whether

it conducts political activities. Anyone serving as a Director, Officer, employee, volunteer,

vendor or contractor must not use their relationship with the Corporation to promote or oppose

candidates or parties or to create the appearance that the Corporation endorses or opposes a

candidate or party for elected office.

F. Endorsements and Use of the Corporate Name and Affiliation. The Corporation’s name,

logo, letterhead or other intellectual property may not be used by any person to endorse or gain

support for a cause without prior authorization in writing from the Corporation’s Board.

G. Questions, Concerns or Reports of Violations. Questions or concerns should be directed to

one or more of the following: the Chairman of the Board of Directors or the Chief Executive

Officer. If a Director, Officer, employee, volunteer or contractor believes a colleague is

violating the obligations or expectations of this Policy, or is otherwise acting in an illegal or

unethical manner, it is his/her duty to report it. Doing so is not an act of disloyalty, but of loyalty

to the Corporation and the principles that it intends to uphold and the type of community it seeks

to foster. A report also safeguards the reputation and assets of the Corporation, and can

safeguard an individual from criminal, civil or disciplinary action for failure to report a crime or

ethical lapse.

H. Staff Obligations. In addition to this Policy, staff members shall also be obliged to conduct

themselves in accordance with, among other things, the employee policies of the Corporation.

II. Conflicts of Interest

A. Statement on State Law. The Corporation and its Officers and Directors shall comply with

state law governing conflicts of interest among charter school and charter holder board members

and officers, as described in Chapter 12 of the Texas Education Code and 19 T.A.C. §§ 100.1131

- 100.1135, including but not limited to the following:

i. Employees Serving on the Board.

(1) A member of the governing body of a charter holder, a member of the governing body

of a charter school, and an officer of a charter school shall comply with Local

Government Code, Chapter 171, in the manner provided by the conflict of interest

provisions described in 19 T.A.C. §§100.1131 - 100.1135.

(2) Except as otherwise provided by Texas law, a person who receives “compensation or

remuneration” (as defined by law) from a nonprofit corporation holding an open-

enrollment charter may not serve on the governing body of the charter holder.



PAGE 3

ii. Conflicts Requiring an Affidavit and Abstention from Voting. The following

circumstances shall be deemed a Conflict of Interest (as defined below) and the Director or

Officer shall, in addition to the procedures set forth in Section C, take action as described

below:

(1) If a Director or Officer has a substantial interest in a business entity or in real

property, the official shall file, before a vote, decision, or other action on any matter

involving the business entity or the real property, an affidavit stating the nature and

extent of the interest (Exhibit A, attached) and shall abstain from further participation in

the matter if:

(a) In the case of a substantial interest in a business entity, the vote, decision, or

other action on the matter will have a special economic effect on the business

entity that is distinguishable from the effect on the public; or

(b) In the case of a substantial interest in real property, it is reasonably foreseeable

that a vote, decision, or other action on the matter will have a special economic

effect on the value of the property, distinguishable from its effect on the public.

(2) The affidavit described above (Exhibit A) must be filed with the official record keeper

of the charter holder. For the Corporation, the affidavit should be filed with the Board

Secretary.

(3) If a Director or Officer is required to file and does file an affidavit as required above,

the Director or Officer is not required to abstain from further participation in the matter

requiring the affidavit if:

(a) The Director or Officer is a member of the governing body of the charter

holder or the charter school, and

(b) A majority of the members of the governing body of which the Director or

Officer is a member is composed of persons who are likewise required to file and

who do file affidavits of similar interests on the same official action.

iii. Separate Vote on Budget Item. The Board of Directors shall take a separate vote on any

budget item specifically dedicated to a contract with a business entity in which a member of

the governing body of the charter holder has a substantial interest. Abstention is required

except as provided above and in 19 T.A.C. § 100.1133(c), otherwise the affected Director

may not participate in that separate vote. The affected Director may vote on a final budget if:

(a) the affected Director has complied with this chapter; and (b) the matter in which the

affected Director is concerned has been resolved.

iv. Conflict Disclosure Statement. For purposes of Local Government Code chapter 176, a local government officer includes the Corporation’s Superintendent/CEO and Directors of the Board. The law proscribes that local government officers shall file the required conflicts disclosure statement (Exhibit B, attached), as adopted by the Texas Ethics Commission, with



PAGE 4

respect to an applicable vendor if the vendor enters into a contract with the Corporation or if the Corporation is considering entering into a contract with the vendor, and the vendor:

(1) Has an employment or other business relationship with the local government officer or a family member of the officer that results in the officer or family member receiving taxable income, other than investment income, that exceeds $2,500 during the 12-month period preceding the date that the officer becomes aware that a contract has been executed or the Corporation is considering entering into a contract with the person; or

(2) Has given to the local government officer or a family member of the officer one or more gifts that have an aggregate value of more than $250 in the 12-month period preceding the date the officer becomes aware that such a contract has been executed or the Corporation is considering entering into a contract with the vendor.

A local government officer is not required to file a conflicts disclosure statement in relation to a gift accepted by the officer or a family member of the officer if the gift is:

Given by a family member of the person accepting the gift;

A political contribution as defined by Title 15, Election Code; or

Food, lodging, transportation, or entertainment accepted as a guest.

A local government officer shall file the conflicts disclosure statement (Exhibit B) with the records administrator (Superintendent/CEO or designee) of the Corporation not later than 5:00 p.m. on the seventh business day after the date on which the officer becomes aware of the facts that require the filing of the statement.

A local government officer commits a Class C misdemeanor if the officer knowingly

violates this law. It is an exception to the application of the penalty that the local

government officer filed the required conflicts disclosure statement not later than the

seventh business day after receiving notice from the Corporation of the alleged violation.

The Corporation must also provide access on its website to the conflicts disclosure

statements and questionnaires (from vendors) required to be filed with the records

administrator.

B. Statement on Federal Law. In addition to state laws described herein, the Corporation and

its Officers and Directors shall comply with the federal regulations regarding private benefit and

excess benefit transactions as described in Section §4958 of the Internal Revenue Code and 26

CFR 53.4958 (the “federal tax rules”) when it is contemplating entering into a transaction or

arrangement that might benefit the private interest of a Director or Officer or other individual

deemed to be a disqualified person under the federal tax rules. A “disqualified person” includes

Directors and Officers and any person who is in a position to exercise substantial influence over

the affairs of the organization. A “disqualified person” includes Family (as defined below) of the

disqualified person. For compliance purpose, where state and federal regulations concerning

conflicts of interest vary, the Corporation and its Officer and Directors shall comply with the

most restrictive requirement.



PAGE 5

i. Interested Person. Any Director or Officer, employee, or member of a committee with

powers delegated by the Board who has a direct or indirect Interest, as defined below, is an

“Interested Person.”

(1) A person has an “Interest” if the person has, directly or indirectly, through business,

investment, or Family:

(a) an ownership or investment interest, directly or indirectly, in any entity with

which the Corporation has a transaction or arrangement,

(b) a compensation arrangement with the Corporation or with any entity or

individual with which the School has a transaction or arrangement, or

(c) a potential ownership or investment interest in, or compensation arrangement

with, any entity or individual with which the School is negotiating a transaction or

arrangement.

(2) “Compensation” is defined to include direct and indirect remuneration as well as gifts

or favors that are not insubstantial.

(3) A person has an “Interest” if the person has a substantial interest in a business entity

or a substantial interest in real property as described in Section II.A(ii) above.

ii. Interested Person with Conflict of Interest. An Interested Person shall have a Conflict

of Interest (as defined below) only if the Board or the appropriate committee determines that

a Conflict of Interest exists in accordance with the procedures set forth below.

C. Conflict of Interest Procedures

i. Duty of Prior Disclosure. In connection with any actual or potential conflict of interest, an

Interested Person shall disclose the existence of the Interest in writing to the Board as soon as

he or she has knowledge of it and the Board shall give such Interested Person the opportunity

to disclose all material facts related thereto to the Board or designated committee considering

the proposed transaction or arrangement. Such written disclosure shall be made part of and

set forth in the Board minutes. In any event, the disclosure of any actual or potential conflict

of interest by an Interested Person should occur prior to any consideration of the proposed

transaction by the Board.

(1) Transaction Not Subject to Board Action. An Interested Person with any actual or

potential conflict of interest with respect to a transaction or arrangement that is not the

subject of Board action shall disclose to the Chief Executive Officer/Superintendent or

designee. Such disclosure shall be made as soon as the Interest is known to the Interested

Person.

(2) Untimely Disclosure. If an Interested Person fails to disclose the Interest before the

Board acts on a transaction as to which a Director has an Interest, then the Interested

Person shall promptly submit a written statement to the Board setting forth all material



PAGE 6

facts regarding the Interest, along with an explanation concerning the untimely nature of

the notice.

(3) Failure to Disclose. If the Board has reasonable cause to believe that an Interested

Person failed to disclose an Interest, the Board shall inform the Interested Person of the

basis for such belief and afford the Interested Person an opportunity to explain the alleged

failure to disclose. After hearing the Interested Person’s explanation and conducting such

investigation as may be warranted under the circumstances, the Board may determine that

the Interested Person failed to disclose an actual Conflict of Interest. In such event, the

Board shall vote on the appropriate corrective action.

ii. Determining Whether a Conflict of Interest Exists. After disclosure of the Interest and

all material facts related thereto, the Interested Person shall leave the meeting of the Board or

designated committee while a determination is made by disinterested Directors as to whether

a conflict of interest (“Conflict of Interest”) exists. No Director shall vote on any matter in

which he or she has a Conflict of Interest.

iii. Vote by Disinterested Directors

(1) Nonparticipation of Directors with Conflict. A Director who has a Conflict of

Interest shall neither vote nor participate in, nor be permitted to hear the Board’s

discussion of the matter, except to disclose material facts and to respond to questions.

Such Director shall not attempt to exert his or her influence with respect to the matter,

either before, during or outside of the Board meeting.

(2) Action by Disinterested Directors. If the Board concludes that a Conflict of Interest

exists, the Board shall determine by voting whether the transaction should be authorized,

approved or ratified. The vote shall be conducted as follows:

(a) Except as otherwise permitted by law, Directors with a Conflict of Interest

shall leave the room in which the meeting is conducted.

(b) Except as otherwise allowed by law and as set forth in Section A(ii)(3), a

majority of the disinterested Directors, without regard to any quorum requirement,

must vote affirmatively for the transaction to be authorized, approved or ratified.

However, a transaction cannot be authorized, approved or ratified by a single

Director.

(3) Vote Not Disallowed by Presence of Directors with a Conflict. The presence of, or

a vote cast by, a Director with a Conflict of Interest in a transaction does not affect the

validity of a vote regarding the transaction if the transaction is otherwise authorized,

approved or ratified as prescribed herein.

(4) Circumstances in which Comparability Data is Necessary. If the transaction

involves compensation for services of a Director, an Officer, or other individual deemed

to be a disqualified person (as defined above) under the federal tax rules, or if the



PAGE 7

transaction involves the transfer of property or other benefit to a Director, Officer, or

other individual deemed to be a disqualified person under the federal tax rules, the

disinterested Directors or committee must determine that the value of the economic

benefit provided by the Corporation to the Interested Person or persons does not exceed

the value of the consideration received in exchange by obtaining and reviewing

appropriate comparable data (“Comparability Data”).

(a) When considering the comparability of compensation for example, the

relevant data which the Board or committee may consider includes, but is not

limited to, the following: (1) compensation levels paid by similarly situated

schools; (2) the availability of similar services within the same geographic area;

(3) current compensation surveys compiled by independent firms; and (4) written

offers from similar institutions competing for the same person’s services, size of

school, individual's education, prior salary history, job duties actually performed,

and what a typical person with similar skills, experience, and job duties would

earn. When the transaction involves the transfer of real property as compensation,

the relevant factors include, but are not limited to, (1) current independent

appraisals of the property and (2) offers received in a competitive bidding

process.

(b) Based on the Comparability Data, the Board or committee shall determine by

a majority vote of the disinterested Directors or committee members whether the

transaction or arrangement is fair and reasonable to the Corporation. In

conformity with the above determination, it shall make its decision as to whether

to enter into the transaction or arrangement.

(c) If such transaction or arrangement is approved by the Board or committee, the

Comparability Data and the approval shall be made part of the Board minutes in

accordance with Section (iv) below.

iv. Documentation. The Board Secretary shall keep accurate minutes reporting:

(1) Interest Disclosed; Determination of Conflict of Interest. That the Interested

Person(s) disclosed the Interest and the Board determined whether a Conflict of Interest

exists. The minutes should include:

(a) The name(s) of the person(s) who disclosed or otherwise were found to have

an Interest in connection with an actual or possible conflict of interest, the nature

of the Interest, any action taken to determine whether a Conflict of Interest was

present, and the Board’s or committee’s decision as to whether a Conflict of

Interest in fact existed.

(b) The names of the persons who were present for discussions and votes relating

to the Conflict of Interest, the content of the discussion including any alternatives

to the proposed transaction or arrangement, and a record of any votes taken in

connection with the proceedings.



PAGE 8

(2) Nonparticipation of Directors with Conflict. That the Director or Directors with an

Interest or a Conflict of Interest left the room and did not participate in the determination

of whether a Conflict of Interest exists or the vote regarding the transaction or

arrangement;

(3) Comparability Data. The Comparability Data considered and relied upon by the

Board in its consideration of the transaction or arrangement; and

(4) Vote of Disinterested Directors. That the remaining disinterested Directors reviewed

the Transaction and voted upon it, and the result of their vote.

D. Compensation. A Director who receives compensation, directly or indirectly, from the

Corporation for services is precluded from voting on matters pertaining to that Director’s

compensation.

i. A voting member of any committee whose jurisdiction includes compensation matters

and who receives compensation, directly or indirectly, from the Corporation for services

is precluded from voting on matters pertaining to that member’s compensation.

ii. No voting member of the Board or any committee whose jurisdiction includes

compensation matters and who receives compensation, directly or indirectly, from the

Corporation, either individually or collectively, is prohibited from providing information

to any committee regarding compensation.

iii. Except with respect to Board decisions regarding a bona fide class or category of

employees pursuant to Local Government Code 573.062(b), a voting member of the

Board or any committee whose jurisdiction includes compensation matters is precluded

from voting on personnel matters (including matters related to compensation) concerning

a person related within the third degree by consanguinity or within the second degree by

affinity (as defined below and as specified by Section 573.002 of the Local Government

Code).

E. Definitions. The following terms shall have the following meaning:

i. Director or Officer. A member of the governing body of a charter holder, a member

of the governing body of a charter school, or an officer of a charter school. An officer

means a person charged with the duties of, or acting as, a chief executive officer, a

central administration officer, a campus administration officer, or a business manager,

regardless of whether the person is an employee or contractor of a charter holder, charter

school, management company, or any other person; or a volunteer working under the

direction of a charter holder, charter school, or management company. A charter holder

employee or independent contractor engaged solely in non-charter activities for the

charter holder is not an "officer of a charter school." 19 TAC 100.1.011(16).



PAGE 9

ii. Business entity. A sole proprietorship, partnership, firm, corporation, holding

company, joint-stock company, receivership, trust, agency, political subdivision, or any

other entity recognized by law.

iii. Substantial interest in business entity. A person has a substantial interest in a

business entity if: (1) the person owns 10% or more of the voting stock or shares of the

business entity or owns either 10% or more or $15,000 or more of the fair market value

of the business entity; or (2) funds received by the person from the business entity exceed

10% of the person's gross income for the previous year.

iv. Substantial interest in real estate. A person has a substantial interest in real estate if

the interest is an equitable or legal ownership with a fair market value of $2,500 or more.

v. Substantial interest through a relative or family member. A Director or Officer is

considered to have a substantial interest under this section if a person related to the

Director or Officer within the third degree by consanguinity or the second degree by

affinity, (as defined below) has a substantial interest under this section.

vi. Family. Family means a disqualified person’s spouse, siblings, spouses of siblings,

ancestors, children, grandchildren, great grandchildren, and spouses of children,

grandchildren, and great grandchildren.

III. Nepotism

A. Nepotism Prohibited. A Director may not hire, select, appoint, confirm the appointment of,

or vote for the hiring, selection, appointment, or confirmation of an individual that is to be

directly or indirectly compensated from public funds or fees of office, if:

i. The person is related to the Director by consanguinity (blood) within the third degree or

by affinity (marriage) within the second degree (as defined below); or

ii. The Director holds the appointment or confirmation authority as a member of a local

board and the person is related to another member of the board by blood or marriage

within a prohibited degree. Local Gov’t Code 573.002, 573.041.

B. Independent Contractors. The nepotism law governs the hiring of an individual, whether the

individual is hired as an employee or as an independent contractor.

C. Payment to Prohibited Person. A Director or Officer may not approve an account or draw

or authorize the drawing of a warrant or order to pay the compensation of an ineligible person if

the Director or Officer knows the person is ineligible. Local Gov’t Code 573.083;19 T.A.C. §

100.1116.

D. Relation by Consanguinity. Two persons are related to each other by consanguinity (blood)

if one is a descendant of the other or if they share a common ancestor. An adopted child is

considered to be a child of the adoptive parents for this purpose. Local Gov’t Code 573.022.



PAGE 10

E. Third Degree of Consanguinity. An individual’s relatives within the third degree by

consanguinity are the individual’s:

i. Parent or child (first degree);

ii. Brother, sister, grandparent, or grandchild (second degree); and

iii. Great-grandparent, great-grandchild, aunt or uncle (who is asibling of a parent of the

person), nephew or niece (who is achild of a brother or sister of the person) (third

degree). Local Gov’t Code 573.023.

Note: There is no distinction under the nepotism statute between half-blood and full-

blood relations. Thus, half-blood relationships fallwithin the same degree as those of the

full blood.

F. Relation by Affinity. Two persons are related to each other by affinity (marriage) if they are

married to each other or if the spouse of one of the persons is related by consanguinity to the

other person. The ending of a marriage by divorce or the death of a spouse ends relationships by

affinity created by that marriage unless a child of the marriage is living, in which case the

marriage is considered to continue as long as a child of that marriage lives. This provision

applies to a Board member or Officer only until the youngest child of the marriage reaches the

age of 21 years. Local Gov’t Code 573.024.

G. First Degree of Affinity. A husband and wife are related to each other in the first degree by

affinity. For other relationships, the degree of affinity is the same as the degree of the underlying

relationship by consanguinity. For example, if two persons are related to each other in the

second degree by consanguinity, the spouse of one of the persons is related to the other person in

the second degree by affinity.

H. Second Degree of Affinity. A person’s relatives within the second degree by affinity are:

i. The person’s spouse;

ii. Anyone related by consanguinity to the person’s spouse within the first or second

degree; and

iii. The spouse of anyone related to the person by consanguinity within the first or second

degree. Local Gov’t Code 573.025.

I. Existing Employees/Continuous Employment. The nepotism prohibitions do not apply to

the appointment of a person to a position if the person is employed in the position immediately

before the election or appointment of the Director or Officer to whom the person is related in a

prohibited degree and that prior employment is continuous for at least:

i. Thirty days, if the Director or Officer is appointed; or

ii. Six months, if the Director or Officer is elected. Local Gov’t Code 573.062(a).

J. Retired Teachers. A teacher who has retired from a full-time, certified teacher position has

broken his or her employment with the Corporation and does not qualify for the continuous-

employment exception to the nepotism laws. Atty. Gen. Op. JC-442 (2001).



PAGE 11

K. Continuous Employment Exception. For purposes of calculating the appropriate date for

the applicability of the continuous-employment exception, a superintendent with final authority

to select personnel is an appointed Director or Officer. Atty. Gen. Op. GA-177 (2004). If an

employee continues in a position under this exception, the Director or Officer to whom the

employee is related in a prohibited degree may not participate in any deliberation or voting on

the appointment, reappointment, employment, reemployment, change in status, compensation, or

dismissal of the employee, if the action applies only to the employee and is not taken regarding a

bona fide class or category of employees. Local Gov’t Code 573.062(b). A “change in status”

includes a reassignment within an organization, whether or not a change in salary level

accompanies the reassignment. Atty. Gen. Op. JC-193 (2000). For an action to be “taken with

respect to a bona fide category of employees,” the officeholder’s action must be based on

objective criteria, which do not allow for the preference or discretion of the officeholder. Atty.

Gen. Op. DM-46 (1991). The nepotism prohibitions do not apply to appointment or employment

of a substitute teacher. Local Gov’t Code 573.061.

L. Trading Prohibited. A Director or Officer may not hire, select, appoint, confirm the

appointment of, or vote for the hiring, selection, appointment, or confirmation of an individual to

a charter position in which the individual's services are under the Director or Officer’s direction

or control if:

i. The person is related to another Director or Officer within the prohibited degree; and

ii. The appointment would be carried out in whole or in partial consideration for the other

Director or Officer’s hiring, selecting, appointing, confirming, or voting for an individual

who is related to the first Director or Officer within a prohibited degree. Local Gov’t

Code 573.044.

M. Source of Funding Irrelevant. The rules against nepotism apply to employees paid with

public funds, regardless of the source of those funds. Thus, the rules apply in the case of a

teacher paid with funds from a federal grant. Atty. Gen. L.A. No. 80 (1974).

N. Enforcement of Nepotism Prohibitions. In accordance with state law, a Director of Officer

who violates the nepotism regulations shall be removed from office by the Board of Directors of

the Corporation. A failure to thus remove is a material charter violation.

i. Removal must be in accordance with the Articles and Bylaws of the Corporation and in

accordance with the terms of the charter and other state and federal law.

ii. A Director or Officer violating the nepotism laws may also be removed by the

Attorney General and may be subject to criminal and other penalties.

IV. Confidentiality

A. No Improper Disclosure. A Director and Officer shall exercise care not to disclose

Confidential Information. Confidential Information is information deemed confidential by law,

and any information not generally known or publicly available or that the Corporation maintains



PAGE 12

as confidential, proprietary, restricted, or otherwise as not to be disclosed generally and any

information that the Board or the Corporation otherwise determines or deems as Confidential

Information.

B. No Use of Information for Personal Benefit. A Director shall not use the Corporation’s

property, Confidential Information or the status of his or her position to solicit business for

others or in any other manner obtain a private financial, social or political benefit.

V. Disclosure and Annual Review

A. New Directors and Officers. Each new Director and Officer shall review a copy of this

Policy and shall complete the Annual Statement of Disclosure and Compliance attached hereto.

B. Periodic Review. To ensure that the Corporation operates in a manner consistent with

charitable purposes and does not engage in activities that could jeopardize its tax-exempt status,

periodic reviews shall be conducted. The periodic reviews shall, at a minimum, include the

following subjects: (a) whether compensation arrangements and benefits are reasonable based on

competent survey information, and are the result of arm’s length bargaining; (b) whether

partnerships, joint ventures, and arrangements with management organizations conform to the

Corporation’s written policies, are properly recorded, reflect reasonable investment or payments

for goods and services, further charitable purposes and do not result in inurement, impermissible

private benefit or in an excess benefit transaction.

C. Annual Review. Each Director and Officer shall annually complete the Annual Statement of

Disclosure and Compliance. The Board shall treat completed Annual Statements of Disclosure

and Compliance as Confidential Information to the extent permitted by law.

As approved by Unanimous Consent of the Board of Directors ______________, 2014.

Adopted the _______ day of _____________, 2014

__________________________ _________________________________

__________________________ _________________________________

__________________________ _________________________________

UNANIMOUS WRITTEN CONSENT OF DIRECTORS IN LIEU MEETING OF THE BOARD OF DIRECTORS OF EDUCATION STRATEGY FOUNDATION PAGE 1

UNANIMOUS WRITTEN CONSENT OF DIRECTORS IN LIEU OF MEETING OF THE BOARD OF DIRECTORS

OF EDUCATION STRATEGY FOUNDATION

December 30, 2014 Pursuant to Section 22.220 of the Texas Business Organizations Code (the “TBOC”), the undersigned, being the Directors of Education Strategy Foundation, a Texas non-profit corporation (the "Corporation"), and in lieu of a meeting of the Board of Directors, the call of which is hereby expressly waived, do hereby consent to the adoption of the following resolutions:

I. AMENDED AND RESTATED BYLAWS

RESOLVED, that the Bylaws appearing in that certain document entitled "Amended and Restated Bylaws of Education Strategy Foundation" are hereby adopted as the Bylaws of this Corporation. RESOLVED FURTHER, that the Secretary of the Corporation is authorized and directed to certify a copy of such Bylaws and maintain them in the principal office of the Corporation for the transaction of its business, open for inspection by the directors at all reasonable times during office hours, and that in certifying such Bylaws, the Secretary shall state in his certificate that the Bylaws were adopted by the unanimous written consent of the directors without a meeting as authorized by the TBOC.

II. CONFLICT OF INTEREST POLICY

RESOLVED, that the certain document entitled "Ethics, Conflict of Interest & Nepotism Policy" is hereby adopted as the policy of this Corporation. This Consent may be executed in one or more counterparts, all of which together constitute the same instrument.

Directors’ Signature Page Follows

Annual Statement of Disclosure and Compliance Name: _______________________________________________________

Position: ______________________________________________________

Please describe below any relationships, positions, or circumstances in which you are involved that you believe could be considered an Interest or that might be perceived as an

actual or possible Conflict of Interest as defined in the Corporation’s Ethics, Conflict of

Interest and Nepotism Policy. Please also describe any familial relationships that would

qualify as relationships within the prohibited degree as defined in the Corporation’s Ethics,

Conflict of Interest and Nepotism Policy. ________________________________________________________________________

________________________________________________________________________

________________________________________________________________________

________________________________________________________________________

________________________________________________________________________

I am involved in no activity, relationship, position or circumstance that could be considered an

Interest or might be perceived as an actual or possible Conflict of Interest as defined in the

Corporation’s Ethics, Conflict of Interest and Nepotism Policy. I do not have any familial

relationships that would qualify as relationships within the prohibited degree as defined in the

Corporation’s Ethics, Conflict of Interest, and Nepotism Policy.

I hereby certify that the information as set forth above is true and complete to the best of my

knowledge. I have reviewed and agree to abide by the Ethics, Conflict of Interest and Nepotism

Policy of the Corporation that is currently in effect. Signature: _______________________________________

Date:_________________________

The following pages contain forms that may be used for compliance with disclosure requirements discussed above.

Exhibit A: Affidavit Disclosing Substantial Interest in a Business Entity or Real Property, as defined in Local Government Code 171.002 and Affidavit of Abstention — 2 pages

Exhibit B: ADDITIONAL DISCLOSURE: The conflicts disclosure statement required of

members of the Board and the Superintendent by Local Government Code 176.003–.004 is attached and available on the Texas Ethics Commission Web site at: http://www.ethics.state.tx.us/whatsnew/conflict_forms.htm

http://www.ethics.state.tx.us/whatsnew/conflict_forms.htm

EXHIBIT A

AFFIDAVIT DISCLOSING SUBSTANTIAL INTEREST

IN A BUSINESS ENTITY OR REAL PROPERTY

& AFFIDAVIT OF ABSTENTION

STATE OF TEXAS

COUNTY OF [________________]

I, ________________________________________ (name), as a local public official of

[Corporation], make this affidavit and hereby on oath state the following: I, or a person(s)

related to me in the first degree, have a substantial interest in:

a business entity, as those terms are defined in Local Government Code Sections

171.001–171.002, that would experience a special economic effect distinguishable from its

effect on the public by a vote or decision of the Board.

or

real property for which it is reasonably foreseeable that the Board’s action or my action will

have a special economic effect on the value of the property distinguishable from its effect

on the public.

The business entity or real property is (name/address of business or description of property):

_____________________________________________________________________.

_________________________ (“I” or name of relative and relationship) (have)(has) a

substantial interest in this business entity or real property as follows: (check all that apply)

Ownership of ten percent or more of the voting stock or shares of the business entity.

Ownership of ten percent or more of the fair market value of the business entity.

Ownership of $15,000 or more of the fair market value of the business entity.

Funds received from the business entity exceed ten percent of _______ (my, her, his)

gross income for the previous year.

Real property is involved and _______ (I, she, he) (have)(has) an equitable or legal

ownership with a fair market value of at least $2,500.

The statements contained herein are based on my personal knowledge and are true and

correct.

Abstention. Upon the filing of this affidavit with the Board’s Secretary, I affirm that I shall

abstain from participation in any decision involving this business entity or real property, unless

permitted according to Local Government Code 171.004(c).

Signed this ______ day of ____________________ (month), __________ (year).

Signature of official ________________________________________

Title ________________________________________

ACKNOWLEDGEMENT

STATE OF TEXAS

COUNTY OF [______________]

Sworn to and subscribed before me on this ______ day of ____________________ (month),

__________ (year).

___________________________________, Notary Public in and for the State of Texas

5

EXHIBIT B

Attachment O1

Organization Charts

The staffing counts for Teachers and Career Academy Counselors reflect the personnel at each campus. *Support will be provided through the CMO from central headquarters and locally by each college campus’ staff (see Attachment MO.2).

Executive Director

Teachers

Year 1: 5 FTE

Capacity: 9 FTE Career Academy

Counselors

Year 1: 1 FTE

Capacity: 2 FTE

Administrative Assistant

Governing Board

CEO/Superintendent

Parent/Teacher Committee

CMO*

Program Advisory Committee

Attachment O2

Staffing Chart

Generation 20 Open-Enrollment Charter Application

Attachment O2 - Staffing Chart

Page 1 of 2 Page _____

Name of sponsoring entity: Education Strategy Foundation

Name of proposed charter school: Early Career Academy

Staff Year 1 Year 2 Year 3 Year 4 Year 5

Elementary Campus Staff

Principal 0 0 0 0 0

Assistant Principal 0 0 0 0 0

Add'l Campus Leadership Position 1 (specify) 0 0 0 0 0



Classroom Teachers (Core Subjects) 0 0 0 0 0

Classroom Teachers (Specials) 0 0 0 0 0

Student Support Position 1 [e.g., Social Worker] 0 0 0 0 0

Student Support Position 2 [specify] 0 0 0 0 0

Specialized Campus Staff 1 [specify] 0 0 0 0 0


Teacher Aides and Assistants 0 0 0 0 0

Campus Operations Support Staff 0 0 0 0 0

Total FTEs at elementary campus(es) 0 0 0 0 0

Middle School Campus Staff

Principal 0 0 0 0 0

Assistant Principal(s) 0 0 0 0 0












Total FTEs at middle school campus(es) 0 0 0 0 0

Generation 20 Open-Enrollment Charter Application

Attachment O2 - Staffing Chart


Name of sponsoring entity: Education Strategy Foundation

Name of proposed charter school: Early Career Academy

Staff Year 1 Year 2 Year 3 Year 4 Year 5

High School Campus Staff

Principal 2 2 3 3 3

Assistant Principal(s) 0 0 0 0 0

Deans 0 0 0 0 0












Total FTEs at high school campus(es) 16 26 34 39 39

Total organization FTEs 16 26 34 39 39

Attachment O3

Supplemental Human Resources Information Form

Generation 20 Open-Enrollment Charter Application Attachment O3 - Supplemental Human Resources Information Form


Salary Range:

Proposed Location (City and County):

Number of Students anticipated in year one: In year five:

Minimum Qualifications Required:

Education Required:

Experience Required:

Certification Required:

Complete the following using information gathered from three different traditional districts comparable in size, student make-up, and location. A traditional district is identified by the abbreviation ISD or CISD. County district numbers may be accessed on line through the Texas Education Directory found at http://mansfield.tea.state.tx.us/TEA.AskTED.Web/Forms/Home.aspx. Additionally, traditional districts will not have an eight as the fourth digit in the county district number (CDN).

List any other potential form of remuneration (i.e., car allowance, cell phone, memberships, travel or housing allowance, etc...) to be given to the individual in this position. In none, please state N/A.

Position: Reports to:

Name of District Located in (City)# of Students Served Salary RangeCDN

Name of sponsoring entity:

Name of proposed charter school:

$72,000 - $105,000

Houston/Webster, TX - Harris County

120 240

Masters degree in education, management, finance, or related field. Doctorate preferred.

Combination of at least 10 years of successful experience as an educator or educational supervisor or executive management role. Experience as an administrator, principal, and/or business or financial executive manager. Demonstrated management and leadership qualities.

Meet professional development requirements/certification prescribed by rule promulgated by Texas.

N/A

CEO/Superintendent Charter Holder Board of Directors

Stafford MSD

Spring ISD

421La Marque, TXLa Marque

Stafford, TX

Houston, TX

580

5,212

$166,962

$242,208

$114,691

079910

101919

084904

Education Strategy Foundation




Job Duties: List up to 10 key duties this individual will perform.

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

If a charter is awarded, this document becomes part of the original application. Changes to this information must be documented in the minutes of an open meeting of the charter holder board.




Inform the development of the strategic plan and assist with its implementation.

Conduct community related events that promote the school with students, parents, employers and community.

Assist the Executive Director with various initiatives as needed to facilitate the schools success.

Review school operations and performance against the plan.

Review budgeted expenses against actual to optimize resource allocation.

Review various compliance requirements with State and Federal regulations.

Identify and help procure all forms of grants including private, non-profit, and Federal.

Provides data analysis and reports to board in a timely manner to inform decisions.

Uphold Early Career Academy philosophy that values continuous learning and other ECA goals.

Identify appropriate professional development leading to increased educational achievement.

CEO/Superintendent Charter Holder Board of Directors








Education Required:







Salary Range:




120 240

Masters degree in education, management, or related field.

A minimum of 5 to 10 years or more demonstrated work experience as a Principal, Assistant Principal, or related professional field.

Meet professional development requirements/certification prescribed by rule promulgated by Texas.

N/A

Executive Director CEO

Stafford MSD

Spring ISD


Stafford, TX

Houston, TX

580

5,212

$71,556 - $104,556

$93,902

$70,657

079910

101919

084904

$76,000 - $92,000






1.

2.

3.

4.

5.

6.

7.

8.

9.

10.





Create an Academy culture that focuses on student learning and professional growth.

Set high academic expectations and standards for all students and staff

Provide ongoing feedback to staff for the purpose of continuous improvement.

Use multiple sources of data collection to assess and identify barriers to achievement and find improvements.

Uphold Early Career Academy philosophy that values continuous learning and other ECA goals.

Oversee the instructional program and learning environment operations.

Demand commitment to content and instruction that ensures student achievement of academic standards.

Actively engage the community to create shared responsibility for student and Academy success.

Ensure development of the school improvement plan that meets/exceeds state and Federal guidelines.

Oversee evaluation and assessment requirements for the school.

Executive Director CEO








Education Required:







Salary Range:




120 240

Masters degree in education or related discipline (i.e., social science, humanities).

Must demonstrate competency in all areas of content responsibility and be computer literate.

Must have appropriate credentials as designated by the Texas State Department of Education.

N/A

Teacher Executive Director

Stafford MSD

Spring ISD


Stafford, TX

Houston, TX

580

5,212

$46,786 - $66,215

$48,500 - $61,582

$44,019

079910

101919

084904

$49,500 - $62,000






1.

2.

3.

4.

5.

6.

7.

8.

9.

10.





Motivate students to achieve at their highest level of ability and potential through instruction and activities.

Use creative instructional methods and procedures and adapt effectively to unusual situations.

Accept responsibility for the achievement of students.

Guide the learning process toward achievement of curriculum goals and implementation of IEPs of students.

Work cooperatively with parents and generate parents' confidence in the Teacher.

Provide a classroom atmosphere based on the principles of firm, fair, and consistent practices.

Use technology effectively for instruction, record keeping and other administrative tasks, and communications.

Identify and participate in professional development opportunities.

Conduct and document parent conferences.

Display personal qualities that reflect favorably upon the individual, the group, and the Academy.

Teacher Executive Director








Education Required:







Salary Range:




120 240

Bachelors or Masters degree in a discipline of Special Education (i.e., Learning Disabilities and Behavioral Disorders, and Multicultural Special Education), or degree in Education with concentrations in special education disciplines.

Must demonstrate competency in all areas of content responsibility and be computer literate.


N/A

Special Education Teacher Executive Director

Stafford MSD

Spring ISD


Stafford, TX

Houston, TX

580

5,212

$46,786 - $66,215

$48,500 - $61,582

$44,019

079910

101919

084904

$49,500 - $61,000






1.

2.

3.

4.

5.

6.

7.

8.

9.

10.





Assessing children who have learning difficulties and working with colleagues to create Individual Ed. Plans-IEPs.

Ensuring that all IEPs are updated and adhered to adapt conventional teaching methods to meet student needs.

Updating and maintaining records on students' progress including annual reviews or other related meetings.



Work cooperatively with parents and generate parents' confidence in the Teacher.



Guide the learning process toward achievement of curriculum goals and implementation of IEPs of students.


Special Education Teacher Executive Director








Education Required:







Salary Range:




120 240

College degree preferred.

Experience in education or related field (i.e., social science, humanities)


N/A

Career Academey Counselor Executive Director

Stafford MSD

Spring ISD


Stafford, TX

Houston, TX

580

5,212

$14,493 - $21,225

$15,325 - $20,746

$34,226

079910

101919

084904

$22,000 - $31,00






1.

2.

3.

4.

5.

6.

7.

8.

9.

10.





Support the classroom teacher in guiding the learning process toward achievement of curriculum goals.



Set high expectations and standards for the achievement of students and own personal performance.

Share a commitment to the success of the mission, goals, and objectives of the Academy.

Support and fully participate in a school culture that focuses on student and adult learning.



Support the use of multiple sources of data collection to analyze barriers to student achievement.


Career Academey Counselor Executive Director








Education Required:







Salary Range:




120 240

Associate degree in secretarial sciences, business, or related field, is required. High school diploma and two additional years experience may be substituted for the Associates degree requirement.

Three years experience in a secretarial and/or reception position in a high volume office setting is required. Experience in school office operations is preferred.


N/A

Office/Administrative Assistant Executive Director

Stafford MSD

Spring ISD


Stafford, TX

Houston, TX

580

5,212

$29,483 - $43,505

$31,348 - $41,994

$34,226

079910

101919

084904

$36,000 - $48,000






1.

2.

3.

4.

5.

6.

7.

8.

9.

10.





Share a commitment to the success of the mission, goals, and objectives of the Academy.

Support the Executive Director by offering organizational and technical assistance that ensures all compliance.

Collect information and prepare reports and correspondence as required by supervisor.

Track documentation as required for student files, parent contact, visitors, incident and accident reporting.

Track documentation as required for employee tardiness and absences.

Use technology with efficiency for record keeping, administrative tasks, and communications.

Promote good citizenship through actions as a role model.

Work effectively with parents and staff and generate parent's confidence in the Academy and the Principal.

Be familiar with and support Academy administration in the effective implementation of the Emergency Plan.

Work on multiple projects and respond to requests and deadlines in an accurate, timely manner.

Office/Administrative Assistant Executive Director



Attachment O4

Teacher Evaluation Tool(s)

04 Teacher Evaluation Tool Page ___

04 – Teacher Evaluation Tool Throughout the academic year teachers are evaluated on various criteria and these measurements are weighted to derive an annual performance rating. The process uses student data from the teacher’s actual students and a qualitative review of the teacher’s performance, conducted by the Executive Director. Additionally, teachers are evaluated on the various professional development activities conducted throughout the year. The process serves to support teachers by providing unambiguous, data-driven feedback combined with mentoring and coaching from the Executive Director. The feedback serves to inform the professional development activities, which the teacher is given credit for performing. The evaluation process is formal and results in prepared and performance driven teachers and a higher level of student learning. A teacher’s overall performance is measured by four performance factors, each with an assigned weight, as follows: 1) Engagement Rate, 2) Student Satisfaction, 3) Professional Growth, 4) Competencies: Integrity, Ethics, Organization, Planning, Persuasion, Influence, Problem Solving and Motivation of Others Each area is weighted and these weights are used in the calculation of a teacher’s overall performance rating during the year-end in accordance with the CMO’s performance management policy. Performance Factor #1- Engagement Rate A teacher’s performance with respect to student engagement is measured by the difference between the cumulative Engagement Rate for all course sections taught by the Teacher during the Plan Year and the cumulative total Target Engagement Rate for all course sections taught by the Teacher during the Plan Year (“Total Variance to Target”). The Total Variance to Target is converted to a performance rating for this performance factor. Performance Factor #2- Student Satisfaction A Teacher’s performance with respect to Student Satisfaction is measured by student responses to teacher-related questions on the school’s student course evaluation survey. The student course evaluation survey is administered to all students in every course section taught by the Teacher. A student’s response to each survey question is assigned a numeric score as follows: 5 – Very Satisfied; 4 – Satisfied; 3 – Somewhat Satisfied; 2 – Somewhat Dissatisfied; and 1 – Dissatisfied. A total student course evaluation survey score is determined for each course section taught by an Teacher by calculating an average of the numeric scores of the teacher-related survey questions. At the end of the Plan Year, the average of all of the teacher’s total student course evaluation survey scores is converted to a performance rating.


Performance Factor #3 – Professional Growth A teacher’s performance with respect to professional growth is measured by the number of different categories of professional growth activities conducted by the teacher in the Plan Year. The different categories of professional growth activities are set forth in the following table: Category and Professional Growth Activity

1. Conference attendance 2. Membership in professional organizations 3. Workshops and seminars related to the subject matter taught by the Teacher 4. Professional certifications 5. Professional bulletins (as defined in the Academic Affairs Manual) 6. Working concurrently in a position involving the subject matter taught by the Teacher 7. Educational research related to the subject matter taught by the Teacher 8. Continuing education courses closely related to the subject matter taught by the Teacher

At the end of the Plan Year, the number of different categories in which a Teacher provides acceptable documentation to evidence completion of at least one professional growth activity is converted to a performance rating based on the following chart: Professional Growth Performance Rating

1 2 3 4 5

Descriptive Rating Significantly

Exceeded Expectations


Met Expectations

Failed to Meet Expectations

Significantly Failed to Meet

Expectations

Number of different categories with at least one professional growth activity

7 – 8 5 – 6 2 – 4 1 0


Performance Factor #4 – Competencies: Integrity, Ethics, Organization, Planning, Persuasion, Influence, Problem Solving and Motivation of Others A teacher’s performance with respect to integrity, ethics, organization, planning, persuasion, influence, problem solving and motivation of others is measured through regular observations during the Plan Year by the Executive Director. The Executive Director evaluates the teacher’s demonstration of those competencies. At the end of the Plan Year, the teacher’s supervisor will mark an “X” in the box next to the one description in each row of the following Performance Factor #4 Competencies chart below that best describes the supervisor’s evaluation of the teacher’s demonstration of the competencies during the Performance Plan Year. There should be only one box marked in each of the nine rows.

Performance Factor #4 Competencies

1 2 3 4 5

Significantly Exceeded Expectations


Met Expectations Failed to Meet Expectations

Significantly Failed to Meet Expectations

Row 1

this person for guidance on the appropriate values and ethical principles.

adhered to ethical principles and expected others to follow suit.

principles on a consistent basis. Understands and values the importance of integrity and ethics.

principals most of the time.

ethical principles.

Row 2

multiple tasks under time constraints without difficulty.

tasks and time constraints with little difficulty.

time constraints.

within time constraints.

managing tasks under time constraints.

Row 3

order. Completed work ahead of deadlines, and assisted others in prioritizing their work.

Completed work ahead of deadlines.

arrived. Met all deadlines.

work

effectively. Rarely fell behind on work.

effectively and fell behind on work.

Row 4

needs and used that understanding to provide the best options and solutions to the students. Actively searched for ways to exceed expectations.

understand students’ needs. Used that information in guiding the students.

and used that information in providing suggestions to students.

when they expressed needs, but did not utilize the information in guiding the students.

necessary information to meet students’ needs.

Row 5

gaining support and buy-in from students by demonstrating the value of concepts and programs.

demonstrated value of concepts or programs and changed students’ points of view.

understand the value of a concept or program.

concept or program, so that the students could consider other points of view or options.

present the value of a concept or program.

Row 6

ahead of established time frames, and ensured

students ahead of established timelines.

students within established timelines.

all students on a regular basis.

with students.


students’ needs were met quickly and efficiently.

Row 7

feet to effectively solve problems without guidance.

unique or difficult problems with minimal guidance.

and completed tasks toward solving problems. Able to problem-solve in standard situations.

task when a problem was encountered. Able to problem-solve in standard situations with substantial guidance.

decision when a problem was encountered. Unable to solve standard problems.

The overall performance rating for the Competencies: Integrity, Ethics, Organization, Planning, Persuasion, Influence, Problem Solving and Motivation of Others performance factor is calculated by totaling the number of the column that contains the marked box in each of the nine rows of the Performance Factor #4 Competencies chart above and dividing that total by nine. That result is converted to a performance rating based on the following chart: Performance Rating 1 2 3 4 5

Descriptive Rating Significantly



Met Expectations

Failed to Meet Expectations

Significantly Failed to Meet

Expectations

Competencies: Integrity, Ethics, Organization, Planning, Persuasion, Influence, Problem Solving and Motivation of Others

< 1.50 1.50 – 2.49 2.50 – 3.49 3.50 – 4.49 > 4.49

These weights are used in the calculation of an teacher’s overall performance rating during the year-end review process in accordance with the CMO’s performance management policy.

Attachment O5

Principal Resume/Curriculum Vitae

Attachment O5 – Qualifications and Job Description of the Principal Page ___

Attachment O5 – Qualifications and Job Description of the Principal Upon charter approval, the CMO will begin the search for an Executive Director. The CMO will present candidates to the Board for review and approval with the final selection made in December 2015 with a January 2016 hire date. The following Executive Director characteristics are ideal for ECA. 1. Student focused

2. Experience running a small high school (less than 500 students); a hands‐on manager, not a

delegator

3. Experience in an urban school environment

4. Experience closing achievement gaps – students below grade level in math and reading

5. Must be able to select outstanding teachers and or identify potential that can be developed

6. Experience mentoring, couching, observing teachers and prescribing professional development

7. Curriculum experience – must oversee curriculum mapping

8. TX experience – must understand TX laws

9. Critical thinking, problem solver

10. Outer directed – comfortable in the hallways, in the classroom, engaging parents and in the

community

11. Must understand the leaders impact on the culture and use that to mold the culture

The job description including responsibilities and requirements are included below. The job description will be modified to reflect Texas requirements.

1/2/2015 Careers Center Charter School Executive Director

https://employeesitttech.icims.com/jobs/23596/charterschoolexecutivedirector/job 1/2

Tracking Code 201423596 Category Administration

Location USAZTempe Experience (Years) 5

Salary Grade 16

Charter School Executive Director

APPLY FOR THIS JOB

More information about this job

Apply for this job online

Share this job on your Social Network!| More

Overview

The Early Career Academy is a careerfocused charter high school for grades 11 and 12 in which students can earn a high schooldiploma while also earning a material portion of an Associate’s Degree from ITT Technical Institute (ITT Tech) in Network SystemsAdministration, Software Development or other degree programs that may be offered. The Early Career Academy is a public high school and operates inside of an ITT Tech campus where students will have access tothe substantial facilities and services available to ITT Tech’s college students. ITT Tech is one of the nation’s largest providers ofassociate degrees in career oriented fields and currently has over 60,000 students in over 140 campus locations around thecountry. The Executive Director executes the mission and vision of the Early Career Academy (“Academy”), leads and ensures excellence inteaching, student learning and student development; promotes community support and maintains efficient and effective operationsof the Academy.

Responsibilities

Establishes and ensures achievement of organizational goals while articulating the Academy’s mission, vision and goals toall stakeholders. Oversees and evaluates all programs, services, activities and staff to ensure goals are met.Develops the annual Academy business plan and operating budget and ensures all financial transactions are completed inaccordance with State policies and procedures. Manages budgeting/forecasting process, expense control, school funds,purchases, inventories, office operations and facilities. Develops the Emergency Response Plan, the Technology Plan and the School Improvement Plan and ensures effectiveimplementation by all staff and students. Oversees the evaluation and assessment requirements for the Academy bydeveloping and implementing assessment tools to include classroom evaluation, assessment and grading; grade reportingto students and parents; standardized assessments and surveys of all stakeholder groups.Collaborates with the College Director and assists in developing policy recommendations and setting priorities. PreparesAcademy financial reports and presents recommendations to the College Director for review and approval.Develops and maintains connections with various stakeholders to include parents/guardians, local educational servicesagencies, Principal associations, state’s Department of Education, etc. Work with staff to identify local resources,specifically those that impact parent to parent support, such as support groups, respite and child care services.Provides leadership, direction, motivation and supervision of direct reports. Coaches staff in the growth and improvementof skills through timely, specific and constructive feedback. Oversees the training and development needs of employees. Screens, interviews and hires employees.Guides employees and oversees their work to ensure compliance with policies and procedures, ethical practices, and allfederal and local laws, regulations and reporting requirements. Ensures timely submission of required reports with local,state, and federal education agencies, the Governing Board, and authorizer.

Requirements

Masters degree in education, management or related field from an institution accredited by an accrediting agencyrecognized by the US Department of Education. At least five (5) years leadership experience as a high school Principal, high school Assistant Principal or relatedprofessional field. Must possess 6 semester hours or 18 State Board Continuing Education Units (CEU’s),or any

1/2/2015 Careers Center Charter School Executive Director

https://employeesitttech.icims.com/jobs/23596/charterschoolexecutivedirector/job 2/2

professional field. Must possess 6 semester hours or 18 State Board Continuing Education Units (CEU’s),or anycombination thereof. Required to meet ongoing continuing education requirements within 5 years.Possess excellent interpersonal, influencing and collaboration skills. Able to present results to all levels of managementand public. Able to work with a variety of disciplines and levels inside and outside of the organization. Ability to respond effectively to the most sensitive inquiries or complaints in writing. Ability to organize and write reportsand presentations in original or innovative techniques or style on controversial or complex topics to top management.Skilled in recruiting, interviewing and hiring new employees. Experience in supervising employees with ability to assignwork, train employees, and conduct job performance reviews. Able to foster a positive and productive work environmentwith ability to lead, build teams and motivate staff.Efficiently utilize a personal computer and related software including Microsoft Office, departmental specific software andInternet proficiencies.Proven educational or administrative experience in solving complex problems for individuals. Experience with analyzingand identifying the strengths and weaknesses of options and exercising critical thinking, problem solving, and judgmentskills. Ability to analyze risks and identify ways to mitigate those risks. Proactively and proficiently able to diagnoseproblems and identify solutions.Strong creative project management skills with proven track record of successful project completions.Apply and maintain a broad knowledge of principles, practices, procedures, laws and regulations. Able to provide examplesof situations needing rule interpretation and application. Proven experience in performing inductive and deductivereasoning to combine pieces of information to form general rules or conclusions and then apply those rules to specificproblems to produce answers.Able to work independently with minimal supervision while maintaining high level, quality work and output. Proven abilityto work in a fastpaced, dynamic, resultsoriented environmentProven track record of project completions on time and within budget or other constraints. Past history of quality attentionto detail.Interacts in a cooperative and professional manner with others. Able to work effectively in a team environment. Pasthistory of developing constructive and cooperative working relationships with others and maintaining them over time.

At ITT Technical Institute, we are experiencing terrific growth and offer robust career development and advancement potential! Weoffer a competitive salary and 401(k).

Attachment O6

Superintendent Resume/Curriculum Vitae

O6 – Superintendent Page ___

Upon charter approval, the Board will approve the CEO/Superintendent job description. The search for the CEO/Superintendent will begin in September 2015. The position will be filled by April 2016. Upon charter approval, the Board President will function as the CEO/Superintendent until the position is filled. The CMO will lead the search on behalf of the Board for the CEO/Superintendent. The search will be initiated upon charter approval. The CMO has an HR Department that will assist with identifying appropriate candidates for presentation to the Board. The decision to hire rests with the Board. The CEO/Superintendent position reports directly to the Board and is the only position employed by the non-profit, charter holder. The job responsibilities of the CEO/Superintendent area as follows:

1. Inform the development of the strategic plan and assist with its implementation 2. Conduct community related events that promote the school with students, parents, employers

and community members 3. Assist the Executive Director with various initiatives as needed to facilitate the schools success 4. Review school operations and performance against the plan 5. Review budgeted expenses against actual to optimize resource allocation 6. Review various compliance requirements with State and Federal regulations 7. Identify and help procure all forms of grants including private, non-profit, and Federal 8. Provides data analysis and reports to board in a timely manner to inform decisions 9. Uphold Early Career Academy philosophy that values continuous learning and other ECA goals 10. Identify appropriate professional development leading to increased educational achievement

The candidate must possess a bachelor’s degree from a college or university accredited by an accrediting agency recognized by the Department of Education. A Graduate degree in education, management, finance, or related field is preferred. Combination of at least 10 years of successful experience as an educator or educational supervisor or management role. Experience as an administrator, principal, and/or business or financial manager in a small charter school environment is preferred. Demonstrated management and leadership qualities and an ability to execute initiatives are required. Must be outgoing and comfortable interfacing with the public. Must meet professional development requirements/certification prescribed by rule promulgated by Texas.

Page _____Charter Management Organization Addendum

Applicants Involving Charter Management Organizations

This addendum is required for any Generation Twenty Charter Applicant that involves a Charter Management Organization (CMO). A CMO is any third-party entity, whether nonprofit or for-profit, that provides comprehensive education management services to a school via contract with the school's governing board. Answer each item below as applicable to the CMO and sponsoring entity's relationship. If an applicant believes that a particular question in this addendum is not applicable to the application, the applicant should so state and explain why the particular question does not apply. Response to this addendum is limited to 15 pages and shall be ordered following Attachment O6. Ensure that the page numbering sequence continues from the end of Attachment O6 through to the end of this addendum.

Overview 1. CMO Vision and Mission. Provide the vision and mission of the management company. 2. Student Populations and Educational Need. Describe the portfolio in terms of the student populations and

educational needs of the schools currently serviced by the CMO.

TYPE YOUR RESPONSE IN THE NARRATIVE RESPONSE BOX BELOW. IT WILL EXPAND AFTER TABBING OUT OF THE FIELD.

The CMO is ITT Educational Services, Inc. (ESI) is a leading provider of career-oriented postsecondary degree programs in the United States based on revenue and student enrollment. The company provides accredited, technology-oriented undergraduate and graduate degree programs through its ITT Technical Institutes and Daniel Webster College to help students develop skills and knowledge they need to pursue career opportunities in a variety of fields. It owns and operates more than 130 ITT Technical Institutes and Daniel Webster College. ESI serves approximately 50,000 students at its campuses in 39 states and online. ESI has recently expanded its services to provide dual credit/dual enrollment programs for secondary school students in 11th and 12th grades, enabling high school students to earn an associates degree, college credit and, specifically, the highly desired skills and knowledge base to allow them to pursue opportunities career in information technology. This innovative program meets Texas’ objectives for college, career and workforce readiness. Much like a charter school, each ITT Tech campus serves the local community where it operates. The majority of the students attending the campus reside in a 10 to 15 mile radius around the facility. We anticipate the same for our charter school students. The average age of the traditional ITT Tech student is 30 and most have been in an unskilled position since high school. Students enroll to pursue a career oriented, technology related education that will lead to employment in their field of study. Each campus has a career services department that works with students to assist them in pursuing employment. Campus staff build and maintain relationships with employers likely to hire graduates. The ECA program will be separate from the ITT Tech “traditional” student operations. Charter School students will be educated separately and will not share classroom instructional time with non-charter school students, however, ECA students will have access to the same opportunities. Program offerings, leading primarily to associate and bachelor degrees, are designed with input from employers to help students prepare for career opportunities in various fields involving technology. Programs of study at the ITT Technical Institutes blend traditional academic content with applied learning concepts. Advisory committees, comprised of representatives of local businesses and employers, help each ITT Technical Institute periodically assess and update curricula, equipment and laboratory design. Charter school students will receive the same program offerings. ITT Tech programs of study are structured, and designed to help students complete their program quickly and efficiently. This is accomplished by offering year round courses using a quarter system where students take three courses per 13-week quarter. Most programs of study do not have electives, instead, prescribe all courses and keep students focused on completion. Since most students work during the day, classes are held in the evening, leaving he building available for the charter school during the day and makes the two separate programs compatible. The CMO Mission: The ITT Technical Institutes are institutions of higher learning that are committed to offering quality undergraduate, graduate and continuing education locally, nationally and worldwide to students of diverse backgrounds, interests and abilities. The institutions offer educational programs that integrate life-long learning with knowledge and skill to help students: -pursue their personal interests and objectives; -develop intellectual, analytical and critical thinking abilities, and -provide service to their communities. The programs employ traditional, applied and adult-learning pedagogies and are delivered through traditional, accelerated and


distance methodologies in a learner-centered environment of mutual respect. The CMO manages one charter high school in Troy, MI. The students attending that school come from the same neighborhoods where the ITT Tech students reside. The student population is diverse and contains students at various levels of academic preparedness including students with credit recovery needs, achievement gaps in math and reading and well prepared students ready for entry into 11th grade. The population of students who speak English as a Second Language are under 5% of the population.

CMO Selection 1. Explain the decision to contract with a CMO rather than operate the school directly. 2. Explain how and why this CMO was selected, including when and how the applicant learned of the CMO, which

other CMOs were considered, why the CMO was selected over other CMOs, and what due diligence was conducted.

If at some point, the charter holder plans to enter into an agreement with the management company, the contract for services must be approved by the commissioner of education at least 30 calendar days prior to any performance or payments under the contract. See 19 TAC, §100.1155.


To achieve its mission of providing an associate's degree in a career oriented, technology related field, ECA needed to partner with a post-secondary provider willing and demonstrably able to provide services to a school offering this type of highly desirable, applied technology associate's degree. ECA also requires access to a facilities and the appropriate infrastructure to deliver its curriculum. ITT Tech confirmed its willingness to expand its charter school program and support to Texas and to provide the facility, postsecondary curriculum, infrastructure and financial support to facilitate ECA's mission. The Education Strategy Foundation board members are all familiar with ITT Tech. When they understood that ITT Tech was willing to offer its facility, curriculum, infrastructure, management expertise and financial support, they pursued the opportunity to open the charter school. The board was aware of ITT Tech and it's reputation in Houston and nationally. One board member had been an employee of ITT Tech on several occasions since 1971 with her most recent previous employment from 2008 - 2013. This provided the board with the background and perspective necessary to select the ESI as the CMO. ECA's Board is not aware of any other CMO that can provide both the associate's degree and provide curriculum, infrastructure, financial support and facilities like ESI.

CMO Track Record 1. Explain the CMO's success in serving student populations similar to the target population of the school/campuses

proposed in this application. Describe the CMO's demonstrated academic track record as well as successful management of non-academic school functions (e.g., back-office services, school operations, extracurricular programs). Summarize information from reference checks conducted regarding the CMO, identifying each reference.

2. List and explain any contractual obligations that the proposed CMO failed to meet in the past five years.


ESI has substantial experience managing schools; ESI has been managing post-secondary institutions since 1969. ESI has a strong, positive, long-standing track record for both academic and non-academic functions. ESI manages over 130 campus locations in 39 states with over 50,000 students. ESI operates in a highly regulated environment which includes oversight from two different Institutional Accreditors, State Boards of Education in the 39 states where it operates, the U.S. Department of Education, and, as a publicly traded company, the U.S. Securities and Exchange Commission. The ITT Tech system is accredited by the Accrediting Council for Independent Colleges and Schools (ACICS). ACICS is recognized by the U.S. Department of Education and the Council for Higher Education Accreditation. The substantial, ongoing oversight requires ESI to maintain operating systems (academic, financial, compliance) that are robust and capable of allowing ongoing monitoring and reporting requirements. As a publicly traded company, ESI's financial statements and financial history are publicly available. ESI must continually update its financial statements quarterly to maintain its status as a public company, listed on the NYSE. ESI is new to operating charter schools. ESI is operating a charter school in Troy, MI and has a contract to manage schools in Indianapolis and Tampa, both opening in August 2015. The board's reference checks included a review of the company's operating results and specific knowledge of the company and its reputation in the eduction market and an understanding of ESI's recent expansion into charter schools in Michigan, Indiana and Florida.


As a CMO, ESI has never experienced any failed contractual obligations relating to charter schools in the past five years.

Legal Relationships NOTE: The governing body of an open-enrollment charter school accepts and may not delegate ultimate responsibility for the school, including the school's academic performance and financial and operational viability, and is responsible for overseeing any management company providing management services for the school and for holding the management company accountable for the school's performance. TEC §12.121, TAC §100.1033(c)(7)(C)(i-vi)

1. Provide evidence that the board is independent from the CMO and self-governing, including evidence of independent legal representation and arm's-length negotiating.

2. Describe any existing or potential conflicts of interest between the school's governing board, proposed school employees, the CMO, and any affiliated business entities.

3. List all subsidiaries or related entities that are affiliated or owned in whole or in part by the CMO, and identify the nature of those entities' business activities.

4. Explain whether the school has or will have any relationship with or receive any services from any of the entities listed in the previous question.

5. Explain the supervisory responsibilities of the CMO (if any), including which school employees the CMO will supervise, how the CMO will supervise these employees, and how the governing board will oversee the CMO's supervisory responsibilities. Additionally, explain how these employees will be reported in PEIMS.

6. If the school's governing board intends to enter into a lease with the CMO or any of its affiliates, provide evidence that such agreements are separately documented and not part of or incorporated in the school management contract. Any facility agreements must be consistent with Texas state statutes and the school governing board's authority and practical ability to terminate the management agreement and continue operation of the school.

TYPE YOUR RESPONSE IN THE NARRATIVE RESPONSE BOX BELOW. IT WILL EXPAND AFTER TABBING OUT OF THE FIELD.The board has separate independent Texas charter school/nonprofit legal counsel entirely independent from the CMO that will assist the board in negotiating the CMO agreement at arms-length and the separate facility lease. No Board members are employed or receive any compensation in any form from ESI. All charter school staff, except the CEO/Superintendent, are employed by the CMO. ECA does not use a vendor owned, operated or financially tied to the CMO. ECA or ESI are not aware of any prohibited conflicts of interest or prohibited management company issues under Texas law. ESI owns and operates ITT Tech and Daniel Webster College, both are post-secondary, degree granting institutions. The Center for Professional Development, a training company offering technology and leadership training courses and ESI Service Corp which functions as the Education Management Company for charter school management. The school will not receive any services directly from other entities or outside of the CMO agreement. To the extent permitted by law, the CMO will employ all charter school staff with the exception of the CEO/Superintendent who will be employed by and report directly to the board. The Executive Director (ED) is the school leader and functions as the Chief Academic Officer and is employed by the CMO. ED will hire and supervise all teachers and will implement the evaluation systems for teachers. The CMO will evaluate the ED based on the achievement of the schools goals as outlined in the charter application and/or other metrics as deemed necessary by the CMO. The board will oversee the staff directly employed by the school, which will be the CEO/Superintendent. Academic staff including the ED and teachers, will be reported in PEIMS to the extent permitted and as appropriate. A separate lease document for the facility operated by the CMO has been created and will not be predicated on the CMO agreement being in place. The CMO agreement can be terminated without any impact on the lease agreement.


Organizational Structure 1. Provide a detailed description of the roles and responsibilities of the CMO. 2. Describe the scope of services and costs of all resources to be provided by the CMO. 3. Describe the oversight and evaluation methods that the governing board will use to oversee the CMO. What are the

school-wide and student achievement results that the CMO must achieve? How often, and in what ways, will the board review and evaluate the CMO's progress toward achieving agreed-upon goals? Will there be an external evaluator to assess the CMO's performance? What are the conditions, standards, and procedures for board intervention, if performance is deemed unsatisfactory?

4. Describe the compensation structure and payment schedule, including clear identification of all fees, bonuses, and any other compensation to be paid to the CMO.

5. Describe the respective financial responsibilities of the governing board and the CMO. Which operating and capital expenditures will each party be responsible for? What types of spending decisions can the management organization make without obtaining board approval? What reports must the CMO submit to the board on financial performance, and on what schedule? How will the school governing board provide financial oversight?

6. What is the term of the management agreement? Explain the conditions and procedures (including time frames, notice, and decision-making procedures) for renewal and termination of the contract. How often will the management agreement be renewed? Describe the conditions that both the CMO and the school must satisfy for the management agreement to be renewed. On what grounds may the CMO or the school terminate the management agreement for cause, and without cause? List any indemnification provisions in the event of default or breach by either party.

7. Describe the plan for the operation of the school in the event of termination of the management agreement. 8. Provide as Attachment MO1 a term sheet and draft of the proposed management agreement with the CMO.


The CMO provides the resources required to operate the school: •Instructional materials, lesson content, lesson plans and other instructional materials including assessments. All staff including the Executive Director, teachers and administrative support and corresponding performance reviews and professional development, but not including CEO/Superintendent. •Support for special needs services delivered by certified teachers or contracted services as prescribed in IEPs. Financial and other reporting including treasury and accounting reports, as required by law, regulation, the Board or Charter. •Necessary hardware and software required to run the school and deliver the academic content outlined in the application. CMO will provide office supplies, office equipment, furniture, and office-related products. CMO will provide communication materials including a web site and conduct appropriate student recruiting activities. •Identify and engage third party needed to facilitate school operations including transportation, school meals, grant writers or any other service deemed necessary to assist the school, subject to budget approval by the Board. The following services and corresponding fees are paid to the CMO, subject to final negotiation between the Board and the CMO and approval of the authorizer. School Administration and Business Support Services (includes bullet list items below): 10% of Revenue from Per Student Allotment • Human Resources – Recruitment, Benefits Administration • Payroll Services • Student Information Systems • Management Reporting Services • Class Scheduling Student Technology Fee: $200 annually per student enrolled Curriculum Support: $60 per student per course The following expenses are reimbursed to the CMO at Cost: Employee Wages, Benefits, Taxes Office Supplies Office Postage Training / Professional Development Travel Expenses School Meals Textbooks Contract School Staff


Contracted Services – Special Education Administrative Office Equipment and Software Contracted Student Services (other than Special Education) Student Transportation Costs Marketing / Community Outreach Costs The following expenses are paid by the school directly: Administration Association Dues and Fees Board Expenses (including training, supplies, dues, and fees) Legal Services for Board Audit Services for Board Insurance Expenses for Charter Operations (including board D&O) Charter Sponsor Fees The Board has oversight of the CMO and will evaluate the CMO based on the schools achievement of its stated goals. The goals for the school are stated elsewhere in the application and as may be amended. The CMO has a series of ongoing reports demonstrating the school's progress towards the achievement of its goals. The Board is able to review and evaluate the CMO's progress using these reports. The Board can request and receive additional reports as needed. Report: Update on Hiring the Executive Director; Timeline: Update at each Board Meeting March - May Report: Staffing Update; Timeline: July – August Report: Curriculum Standards Alignment; Timeline: July-August, Review and update at end of each term Report: Roster Report with Student count; Timeline: August – September at beginning of each term Report: Diagnostic Testing Baseline Report; Timeline: August – September Report: Results of Summative, Formative and End of Course Assessments; Timeline: August – September at end of each term Report: Attendance and Retention; Timeline: End of each term Report: Special Programs; Timeline: August, End of each term Report: Credits Earned Report; Timeline: End of each term Report: Student Professional Experience; Timeline: End of each term as applicable Report: High School Graduation Rate; Timeline: End of 7th and 8th term Report: Associates Degree Rate; Timeline: End of 7th and 8th term Report: Employment to Graduate Ratio Report; Timeline End of 8th term and then on going Report: Budget update; Timeline: March – June, each board meeting as needed Report: Financial Statements; Timeline: Each board meeting, as needed Report: Financial Statements; Timeline: Quarterly Report: Annual Audited Financial Statement; Timeline: three months after fiscal year end Updates as needed from these areas: Regulatory Affairs, Operations, Marketing, Purchasing, Human Resources The Board may also request and receive additional reports as needed. The school does not plan on using an external evaluator to assess the CMO's performance. The Board will intervene in operations of the school if the CMO is unable to cure a performance deficiency after being given reasonable notice thereof specifying in detail the deficiency and the opportunity to cure any alleged deficiency in performance. The governing board is responsible to approve an annual budget. The CMO is responsible for creating a budget that will allow the school to achieve its annual goals and maintain compliance with necessary regulations, state and federal laws and the charter contract. All capital and operating expenditures are approved by the governing board. The governing board retains control over school funds by approving the reimbursement of expenses. No funds leave the schools account without prior approval. The CMO provides a turn-key facility and infrastructure including all necessary capital equipment required to deliver the curriculum. This arrangement eliminates capital spending on the schools part. The governing board provides financial oversight by approving the reimbursement of budgeted expenses. The CMO will submit an invoice to the governing board for reimbursement of expenses. Upon approval, the CMO is paid. Annual an audit is conducted by a third-party CPA firm. The management agreement runs coterminous with the charter agreement. Upon expiration of the initial term the agreement may be renewed for an additional, mutually agreed upon term unless either party provides the other with written intent not to renew no later than six months prior to the term expiration date. Early contract termination is an option if both parties mutually agree, or, by either party, if one part materially breaches the agreement and fails to cure the breach. Either party may terminate if the charter is terminated or the school is no longer authorized to operate. The governing board may terminate the agreement if the educational services provided by the CMO do not meet the requirements of the charter school as required by applicable laws and regulations and the CMO cannot cure the deficiency. The governing board may terminate the agreement if after a performance review the CMO is fails to perform and cannot cure the deficiency in performance. The governing board can if the agreement jeopardizes the charter school's tax exempt/non-profit status, or causes the school to violate any applicable laws. The CMO may terminate the agreement upon giving adequate prior written notice.


In the event of termination by either party, the CMO shall assist and cooperate with the charter school in the transition of the provision of educational services from the CMO to the charter school or any other service provider, to minimize disruption to the students. In the event of default or breach by either party, each party agrees to protect the others confidential information and to maintain the security, integrity and confidentiality of student's educational records. In the event of termination of the management agreement the governing board will decide if the school continues using a CMO or if another CMO is engaged. The CMO will work with the governing board to facilitate and transition of students. The CMO controls the facility in which the school operates, however, a separate lease agreement governs the schools use of the facility. Severing the CMO agreement does not sever the lease agreement and vice versa. Attachment MO1 a term sheet and draft of the proposed management agreement with the CMO.

Expansion Management 1. Explain any shared or centralized support services the organization will provide to the school/campuses in Texas.

Describe the structure, specific services to be provided, the cost of those services, how costs will be allocated among schools, and specific service goals. How will the organization measure successful delivery of these services? Using the table below, summarize CMO-level and school-level decision-making responsibilities as they relate to key functions, including curriculum, professional development, culture, staffing, etc.

Function CMO-Level Decision Making School-Level Decision Making

Performance GoalsThe charter application is specific to the schools performance goals.

School staff develop initiatives to drive school performance.

CurriculumSchool curriculum providers and associate's degree curriculum is decided centrally.

Local teachers review to insure compliance with TEKS.

Professional Development

Library of courses and learning materials are provided centrally.

Executive Director prescribes professional development based on staff assessments.

Data Management and Interim Assessments

Handled centrally. Analyzed locally.

Promotion CriteriaCriteria developed centrally. Promotions are recommended by local staff.

CultureThe CMO creates an environment for the local development of culture.

The Executive Director creates and perpetuates culture.

Budgeting, Finance, and Accounting

Board approves the budget. Executive Director proposes the budget.

Student RecruitmentCMO marketing team assists. Local staff recruit students.

School Staff Recruitment and Hiring

CMO human resource department assists local staff with hiring.

Executive Director is charged with hiring.

H/R Services (payroll, benefits, etc.)

Centrally facilitated. Reported locally to central office.

Development/Fundraising

Central office leads fundraising and grant writing. Local staff assist where and when needed.


Function CMO-Level Decision Making School-Level Decision Making

Community RelationsCentrally, community events are review for appropriateness.

Local staff implement community events on a regular basis.

I/TCentral office makes all information technology decisions.

Facilities ManagementCentral office approves local contract for facility management services.

Local staff implement local contracts.

Vendor Management/Procurement

Central purchasing is used for vendor management and procurement.

Other operational services, if applicable

Depending on the size of the purchase, central office may take-over procurement.

2. Provide, in Attachment MO2, the following CMO organization charts, clearly indicating how they interface with the charter school organization charts:

a. Year 1 organization as a whole b. Year 3 organization as a whole c. Year 5 organization as a whole

The organization charts should clearly delineate the roles and responsibilities of - and lines of authority and reporting among - the governing board(s), staff, any related bodies (such as advisory bodies or parent/teacher councils), and the CMO.

3. Explain how the relationship between the governing board, CMO, and school administration will be managed.

Clearly delineate the roles and responsibilities of - and lines of authority and reporting among - the governing board(s), staff, any related bodies (such as advisory bodies or parent/teacher councils), and any external organizations that will play a role in managing the schools.

TYPE YOUR RESPONSE IN THE NARRATIVE RESPONSE BOX BELOW. IT WILL EXPAND AFTER TABBING OUT OF THE FIELD.The CMO provides shared or centralized support services to the schools in Texas as part of it's management fee. The central charter office is staffed with a senior operations executive who leads the charter school support. The central office has subject matter experts (SME) in each area of school operations. Each charter school will have access to these resources as needed. The CMO provides support for academic operations, curriculum, assessment, regulatory, legal, HR, registrar, IT and marketing. The senior operations executive is held accountable to meet the goals of the each charter school and provides leadership to the SME's as it relates to charter school operations. Ongoing feedback from school operations informs how well the central team is operating and changes are made, when needed, to deliver results for the school. The governing board has contracted with the CMO for operating the school. As such, the CMO makes all decisions regarding school operations per the management agreement. The CMO with provide the governing board at each governing board meeting an update on the schools operations. This involves a series of ongoing reports detailing various aspects of school operations. The Executive Director (ED) attends each board meeting to provide the update. Other members of the CMO may, from time to time, attend the governing board meeting to provide updates on various aspects of the school operations. All school staff report to the ED. The ED informally meets with teachers and staff daily and conducts weekly staff meetings. In these meetings staff inform the ED regarding their areas of school operations. These meetings serve to inform the ED on what is working and what needs to be changed to improve school performance. A Parent/Teacher council is established by the ED and meetings are held to inform parents regarding school activities and provide a forum for parent feedback regarding school operations. Additionally, ITT Tech has a local Program Advisory Committee (PAC) meeting twice per year. The advisory committee includes various members of the local business community with a specific business interest in and knowledge of information technology. The Executive Director attends these meetings to obtain community feedback on the programs offered, the skills they are looking for in entry level employees and the local and national trends that are impacting the field of study.


Performance Management 1. Describe the CMO's approach to academic underperformance for schools that fall short of student academic

achievement expectations or goals at the school-wide, classroom, or individual student level. 2. Describe the CMO's process for monitoring performance of the portfolio as a whole. What actions will you take if

the organization in Texas, or as a whole, fails to meet goals? Discuss how the organization assesses its readiness to grow and under what circumstances the organization will delay or modify its growth plan.


The CMO's performance management system is mature and is applied to a system of schools in 39 states. The same framework is used for all aspects of school operations. Performance management starts with setting goals and making sure the team or person accountable for the goal believes the goal is attainable. The accountable party then develops various initiatives that will be used to achieve the goal. The accountable party and their manager review the interim results and, depending on results, coaching or professional development is implemented. The goal is continually, appropriately evaluated and upon conclusion of the measurement period is recognized. The typical measurement period varies depending on the goal being measured. This approach to performance management works at the school level, for example, with growth in student learning. It works are the classroom level with, for example, growth in student learning. It works at the student level for a particular course, unit exam or project. Central CMO staff, considered Subject Matter Experts (SMEs) monitor school performance data and identify outlier performing schools (both low and high performers). SME's seek to identify the cause of outlier performance in an effort to help low-performing students in achieving content mastery. SME's work with the ED to assist in both identification of issues and initiatives to solve them. The ED works with staff on the annual performance goals for the school and implement school wide performance manage. The ED works with teachers on specific classroom issues or individual students issues. The key is the identification of performance gaps through various data sources and ongoing operations review meetings. Once the source of the gap is identified an initiative is put in place to measure when a gap has been closed. This framework is used at the school-wide level, classroom level and student level. The CMO's performance management process is designed to provide early indicators of issues that may prevent it from achieving its goals. Early indicators allow the CMO to adjust operations to mitigate issues. This process will continue with Texas school operations. The CMO starts small and adds additional schools as each school use the same, general operating policies, procedures, curriculum and infrastructure. Uniformity in the delivery model allows management to work on improving execution and thus, improving results. The CMO will not add operating models outside of its core competency.

Performance Evaluation Information The TEA will use the information in this section to assess the academic, organizational, and financial performance record of the organization and its schools. The CMO must provide all of the requested information for all of its schools. The TEA reserves the right to select a subset of schools for which the applicant will be required to provide additional performance information, including academic proficiency and growth data, recent renewal evaluations and site visit reports, and multiple years of independent financial audit reports.

1. Explain any performance deficiencies or compliance violations that have led to formal authorizer intervention with any school in which services were provided by the CMO in the last five years, and explain how such deficiencies or violations were resolved.

2. Identify any current or past litigation, including arbitration proceedings, per campus, that has involved the CMO or any school it operates. If applicable, provide in Attachment MO3: (a) the demand; (b) any response to the demand; and (c) the results of the arbitration or litigation.


The CMO operates one school in Troy, MI. The CMO has contracts to operate a school in Indianapolis, IN and Tampa, FL, and those school start operations in August, 2015. CMO has had no performance deficiency or compliance violations and has not been a party to any charter school litigation.


Business Plan 1. Nonprofit Charter Management Organizations. Provide, for the organization as a whole and any related business

entities, as Attachment MO4: a. The last three years of independent financial audit reports and management letters; and b. The most recent internal financial statements, including balance sheets and income statements.

Be sure that the CMO level and the overall operations are distinctly represented. Discuss any material audit findings for your organization or any campus that you operate.

--OR-- For-profit Charter Management Organizations. Provide, as Attachment MO4:

a. The last three years' financial statements to be reviewed confidentially; and b. The most recent internal financial statements, including balance sheets and income statements.

Be sure that the CMO level and the overall operations are distinctly represented. Discuss any material audit findings for your organization or any school that you operate. For operators with multiple campuses, TEA requires individual charter and organization-level financial budgeting, reporting, and annual audits. Each charter operator's finances must thus be transparent and distinct from the CMO level.

Attachments in response to this addendum are to be ordered immediately following the Performance Evaluation Information response.

Attachment MO1

Proposed Management Agreement

EDUCATIONAL PRODUCTS AND SERVICES AGREEMENT

DATED

______________, 2015

BETWEEN

ESI SERVICE CORP.

AND


NOTE: Draft Agreement is provided in this attachment. Both the Charter

Applicant and the Charter Management Organization understand that the

agreement will be modified to meet TEA requirements.

2 | P a g e

This EDUCATION PRODUCTS AND SERVICES AGREEMENT (“Agreement”) is made

and entered into this ____ day of ____, ____ by and between ESI Service Corp., a Delaware Corporation

(“ESI”) and wholly owned by ITT Educational Services, Inc. and Education Strategy Foundation, a non-

profit corporation holding a charter from the Texas Education Agency (the “Charter School”) (individually a

“Party” and collectively the “Parties”).

RECITALS

WHEREAS, the Charter Holder has requested or secured a contract with the Texas Education Agency to operate a charter school pursuant to Chapter 12, Subchapter D of the Texas Education Code (the "TEC").

WHEREAS, ESI has a proven record of providing innovative educational products and services to

students pursuing a higher education degree and successfully managing the day-to-day operation of

educational programs, including but not limited to providing the “Educational Products and Services” as

defined in Section 1.13 below;

WHEREAS, the Charter Holder desires to contract with ESI to provide such Educational Products

and Services, and ESI desires to contract with the Charter Holder to provide such Educational Products and

Services; and

WHEREAS, the Charter Holder and ESI are entering into this Agreement to set forth the

obligations and duties of each Party with respect to the provision and Products of Educational Products and

Services by ESI on behalf of the Charter Holder.

NOW THEREFORE, in consideration of the foregoing, of the covenants and agreements

contained in this Agreement, and for other good and valuable consideration, the sufficiency of which is

acknowledged, the Parties agree as follows:

1. Definitions.

1.1 “Academic Year” shall mean the school year as defined by the School Calendar (as defined in

Section 1.21).

1.2 “Administrative Staff” “Administrative Staff” shall include the employees of ESI holding the

positions described in Section 3.4.

1.3 “Affiliate” shall mean any entity controlling, controlled by, or under common control with, ESI.

ITT Educational Services, Inc. and its affiliates shall be deemed Affiliates of ESI.

1.4 “Authorizer” shall mean the Texas Education Agency (the “TEA”).

1.5 “Budget” shall mean the operating budget for the charter school, as approved by the Charter

Holder Board according to the provisions of Section 9.

1.6 “Charter” shall mean the authorization to operate a charter school granted by the Authorizer that

specifies the charter school’s mission, program, goals, students served, methods of assessment, ways to

measure success, or any such other provisions allowed or required by the TEC. The terms of this Agreement

3 | P a g e

shall be subject to the Charter, which is incorporated here be reference. Any conflict between the Charter

and this Agreement shall be reconciled in favor of the Charter.

1.7 “Charter School” shall mean the Early Career Academy (ECA Texas).

1.8 “Charter School Board” shall mean the Board of Directors of the Charter Holder.

1.9 “Charter School Law” shall refer Chapter 12, Subchapter D., and relevant state statutes and

regulations.

1.10 “Career Academy Counselors” shall mean employees who perform the responsibilities described in

Section 3.6(e).

1.11 “Confidential Information” shall have the meaning set forth in Section 10 of this Agreement.

1.12 “Course(s)” shall be comprised of a set of lessons and assessments including both Tangible

Instructional Materials and Intangible Instructional Materials (as defined in Sections 2.1 and 2.2,

respectively) that shall meet the educational content or other standards established by the State of Texas in

order to be recognized for high school credit in grades 11-12.

1.13 “Educational Products and Services” shall mean, collectively, the Educational Products described

in Section 2 and the Educational Services described in Section 3 below.

1.14 “Eligible Students” shall have the meaning set forth in Section 5 of this Agreement.

1.15 “Enrolled” shall apply to a Student (as hereinafter defined) who: (a) has completed all of the

requirements for admission to the Charter School; (b) has been notified of his/her acceptance by the Charter

School; (c) has not been expelled or withdrawn from the Charter School; (d) has not enrolled in another full-

time public or private school; and (e) for whom the enrollment requirements of the Charter School have been

met.

1.16 “Facility” means the building from which educational services are provided to Students. The

Facility shall also house the administrative offices of the Charter School.

1.17 “Instructional Materials” shall mean, collectively, the Tangible Instructional Materials, described in

Section 2.1, and the Intangible Instructional Materials, described in Section 2.2 below.

1.18 “On-Site Teachers” are Teachers employed in accordance with the terms of the Charter and in

connection with the provision of Educational Products and Services pursuant to the terms of this Agreement.

On-Site Teachers typically provide face-to-face instruction at the Facility.

1.19 “Parent/Guardian” shall mean a parent or legal guardian of the Student or another adult

specifically designated by the Student’s parent or legal guardian, or the Student if over 18 or legally

emancipated.

4 | P a g e

1.20 “Performance Review” shall mean a review of ESI’s performance under this Agreement,

conducted at the Charter School Board’s discretion, the design, performance criteria, and the methodology

which shall be developed by the Charter School Board in consultation with ESI.

1.21 “School Calendar” shall be the days when the Educational Services under this Agreement will be

delivered to Students and Teachers, as defined by the School Handbook. ESI will operate on the days

established to be the School Calendar for the Academic Year, except that Students may continue to report

attendance during scheduled school holidays to the extent permitted under the TEC. The School Calendar

for each Academic Year is subject to prior approval by the Charter School Board and shall meet any

regulatory requirements for days and hours of instruction required by law or regulation.

1.22 “School Handbook” shall mean the set of policies, rules and guidelines that are to be followed by

Students.

1.23 “Special Needs Students” shall mean Students who have been identified as disabled under the

Federal Individuals with Disabilities Education Improvement Act, as amended (“IDEIA”), or Section 504 of

the Federal Rehabilitation Act of 1973.

1.24 “Student” shall mean a person who is enrolled in the Charter School.

1.25 “Student Records” shall mean those “educational records,” as defined in the Family Education

Rights and Privacy Act (“FERPA”), 20 USC 1232g(a)(4)(A), which the Charter School or ESI is required to

retain in accordance with state law.

1.26 “Teachers” are persons employed to provide educational instruction to Students.

1.27 “Term” shall have the meaning set forth in Section 6 of this Agreement.

2. Educational Products to be Provided by ESI.

During the Term, ESI shall provide or cause to be provided to the Charter School the following Educational

Products at the prices set forth in Section 9, which may be adjusted from time-to-time upon the mutual

written agreement of both Parties:

2.1 Tangible Instructional Materials. A non-exclusive, non-transferable, royalty-free sub-license to use

tangible educational materials, which may include items such as textbooks, novels, science kits, and other

tangible educational materials provided during each applicable Academic Year during the Term of this

Agreement (“Tangible Instructional Materials”). The Charter School acknowledges and agrees that ESI, its

Affiliates, and/or their vendors, or both, are the sole owners of the Tangible Instructional Materials and that

any payments to ESI for the use of the Tangible Instructional Materials shall be solely for the applicable

Academic Year for each Student and/or Teacher who receives Tangible Instructional Materials in connection

with the provision by ESI of the Educational Products and Services under this Agreement. This Agreement

does not constitute a transfer of title or ownership rights by ESI to the Charter School, the Authorizer, the

Students, or Teachers of the Tangible Instructional Materials. All right, title, and interest in and to the

Tangible Instructional Materials and any content contained in the Tangible Instructional Materials, including,

but not limited to, copyright, patent, trade secret, and trademark rights will remain with ESI, its Affiliates,

and/or their vendors, or both, as the case may be. ESI shall have the right to recover any reusable Tangible

5 | P a g e

Instructional Materials at the conclusion of each Academic Year or when the Student is no longer Enrolled,

whichever is sooner. ESI may invoice Students for any Tangible Instructional Materials that are not returned,

unless prohibited by applicable law. ESI and the Charter School shall cooperate to ensure that Tangible

Instructional Materials are, to the extent possible, recovered, and that no Student or Parent/Guardian retains

or obtains ownership of any such Tangible Instructional Materials. To the extent that any Tangible

Instructional Materials are listed in the Charter School’s Program Guide as being available in both physical

and electronic form, ESI may provide either version.

2.2 Intangible Instructional Materials. A non-exclusive, non-transferable, royalty-free, sub-license to use

intangible educational materials that may include items such as online lesson content, lesson plans, and other

intangible educational materials included in any Courses listed in the Charter School’s Program Guide during

each applicable Academic Year during the Term of this Agreement (“Intangible Instructional Materials”).

The Charter School acknowledges and agrees that ESI, its Affiliates, and/or their vendors are the sole owners

of the Intangible Instructional Materials and that any payments to ESI for the use of the Intangible

Instructional Materials shall be solely for the applicable Academic Year, for each Student or Teacher who

receives Intangible Instructional Materials in connection with the provision by ESI of the Educational

Products and Services under this Agreement. This Agreement does not constitute a transfer of title or

ownership by ESI to the Charter School, the Authorizer, the Students or Teachers of the Intangible

Instructional Materials. All right, title, and interest in and to the Intangible Instructional Materials and any

content contained in the Intangible Instructional Materials, including, but not limited to, copyright, patent,

trade secret, and trademark rights will remain with ESI, its vendors, or both, as the case may be.

2.3 Computer Hardware and Software. ESI shall provide the Charter School with: (a) such computer

hardware, software, or both, that shall meet or exceed any specifications in the Charter or required by law, for

each Student who Enrolls, and (b) any hardware, software, or both, required by Administrative Staff or

Teachers (collectively “Hardware and/or Software”). Any Hardware and/or Software provided by ESI to the

Charter School or a Student will be the exclusive property of ESI or its contractors and will be returned

within a reasonable period of time after the termination of this Agreement or when the Student to whom

such Hardware and/or Software was provided is no longer Enrolled, whichever is sooner. The Hardware

and/or Software may be updated from time-to-time at the discretion of ESI. To the extent that such

Hardware and/or Software are not recovered, ESI may invoice Students, unless prohibited by law for any

Hardware and/or Software not returned. ESI and the Charter School shall cooperate to ensure that such

Hardware and/or Software provided by ESI is, to the extent possible, recovered and returned to ESI, and

agree that no Student, Parent/Guardian, Administrative Staff, or Teacher obtains ownership of any such

Hardware and/or Software.

2.4 Office Products and Supplies. ESI to provide office supplies, office equipment, furniture, and

office-related products. The Charter School acknowledges and agrees that ESI, its Affiliates and/or their

vendors are the sole owners of any such Office Products and Supplies and this Agreement does not

constitute a transfer by ESI to the Charter School of such Office Products and Supplies provided under this

Agreement. To the extent that the Charter School does not obtain such Office Products and Supplies as

described in this Section from ESI, then the Charter School shall be responsible for providing them at its

own cost. Any Office Products and Supplies purchased by the Charter School shall remain the property of

the Charter School in the event of termination of this Agreement.

6 | P a g e

3. Educational Services.

During the Term, ESI shall provide or cause to be provided to the Charter School the following Educational

Services for the fees set forth in Section 9, which may be adjusted from time-to-time upon the mutual written

agreement of both Parties.

3.1 Relationship Manager. One or more employees of ESI shall act as the relationship manager, with

responsibility for working with the Charter School to evaluate instructional and programmatic offerings and

activities, identify and resolve problems, issues and challenges that may arise, and to make recommendations

regarding more effective coordination and collaboration between the Parties.

3.2 Assessments. ESI shall provide and administer a series of assessments to Students to gauge mastery

of core concepts and other quantitative and qualitative assessments that will vary based on the grade and the

Student’s progress in a manner as shall be mutually agreed upon by the Charter School Board and ESI, shall

prepare at least quarterly Progress Reports for each Student, and shall provide any other methods of Student

assessment required by the Charter.

3.3 Standardized Tests. All Students shall be required to participate in the State of Texas’s standardized

tests to the same extent as students enrolled in any other Texas public school. ESI shall establish and

administer the procedures necessary for the delivery of such tests and shall provide to the Charter School

Board information concerning the performance of Students in the testing program as allowed by applicable

laws

3.4 Administrative Staff.

(a) Executive Director. ESI shall employ a person who shall be designated as the “Executive

Director” of the Charter School. The Charter School Board shall have the right to review and approve ESI’s

selection of the Executive Director the Executive Director. ESI may terminate the Executive Director at any

time without the approval of the Charter School Board or the Charter School Board’s designee.

(b) Other Clerical or Support Administrative Positions. ESI may also employ one or more

individuals in clerical or support positions as may be required to support school operations. Such individuals

may be employed in a full-time capacity or contracted for a percentage of their time specifically serving the

Charter School. If such an individual is serving the Charter School in a part-time capacity, compensation will

be set by dividing the individual’s salary and benefits by 40 hours per week for 52 weeks per year and then

allocating that hourly rate by the number of hours specifically serving the Charter School.

(c) Responsibility. The Executive Director shall work to build consensus among all stakeholders,

and hence shall have responsibilities that shall include, but not be limited to, reporting regularly to the Charter

School Board, supervising administrative personnel, inspiring Teachers to teach and inspiring Students to

learn. The Teachers shall report to the Executive Director or such individual as shall have been designated by

him or her, and the Executive Director shall be subject to oversight by the Charter School Board. The

Executive Director shall comply with ESI practices and protocols in the delivery of the Educational Services

and shall report to ESI as to the operation of the Charter School.

7 | P a g e

(d) Review and Replacement of Executive Director. The Charter School Board shall participate

annually in ESI’s evaluation of the Executive Director. The Charter School Board shall have the right to

request that ESI replace the Executive Director in the event that the Charter School Board is dissatisfied with

his or her performance and so notifies ESI in writing. Upon such written request, ESI shall promptly take

steps to replace the Executive Director. If the Executive Director’s position becomes open, due to

termination or otherwise, ESI’s selection of the replacement Executive Director must be reviewed and

approved by the Charter School Board. Any replacement of the Executive Director will be done so as to

minimize the disruption to Students.

(e) Career Academy Counselors. ESI may also employ one or more individuals as Career Academy

Counselors. Career Academy Counselors shall be responsible for non-instructional aspects of the Student’s

program that contribute to a Student’s success, including but not limited to monitoring Student attendance,

monitoring Student progress, encouraging Students to complete assignments and turn in work,

communicating with parents and notifying Teachers when Students are struggling or experience academic or

personal issues that might inhibit academic achievement, mentoring and tutoring Students under the

supervision of Teachers and the Executive Director.

3.5 Teaching Staff.

(a) Employment of Teachers. ESI shall be responsible for recruiting, training, and assigning

Teachers. ESI and the Executive Director will have all day-to-day responsibility for the selection,

supervision, oversight, discipline and dismissal of the Teachers. Compensation for all Teachers shall be set by

ESI.

(b) Teacher Performance and Conduct. The Charter School Board may, at any time, request that the

Executive Director promptly investigate and take action to address any complaints or concerns regarding the

or conduct of any Teacher. The Executive Director shall provide a prompt report to the Charter School

Board and ESI on any and all actions taken in response to such a request. In the event the Executive

Director fails to take timely action to respond to the complaints or concerns raised and make a report, or in

the event the actions taken by the Executive Director are deemed inadequate, the Charter School Board may

require the removal or replacement of a Teacher within sixty (60) days of any written request or immediately

upon written notice in the event the Charter School Board believes there is a risk of any illegal conduct, or a

risk to the health or safety of any Student, and so notifies ESI in writing.

3.6 Contracted Services. ESI shall provide human resources services including, but not limited to,

recruiting, payroll, (including, but not limited to, paying the Administrative Staff and Teaching Staff directly,

and collecting and remitting taxes), benefits administration, supervision and liability insurance. ESI agrees to

require employees, prospective employees and independent contractors, whose responsibilities include having

ongoing physical contact with Students, to undergo background checks that meet or exceed the background

checks required by Charter School of its similarly situated employees and to otherwise meet any other

applicable legal requirements. For purposes of this Section 3.6, third parties, such as facility and IT

maintenance and repair personnel, and delivery persons, such as vending machine operators, couriers and

U.S. post office personnel, whose job responsibilities may bring them into intermittent and sporadic contact

with Students, and which contact is incidental to said job responsibilities shall not be deemed to have ongoing

contact with Students. Notwithstanding, ESI will exercise proper oversight of such third parties to limit any

8 | P a g e

individual student from being in contact with such third parties without supervision from an appropriate ESI

employee.

3.7 Instructional Staff Support and Development. All Teachers will receive access to all Instructional

Materials supplied to Students, as necessary to conduct their teaching responsibilities. Teachers and

Administrative Staff will be trained in the ESI protocols. In addition, continuing professional development

will be provided as required to support the delivery of the Educational Services and shall be sufficient to

allow Teachers to comply with applicable Texas statutes and regulations that specify professional

development requirements.

3.8 Educational and Financial Records. ESI shall provide maintenance of educational and financial

records in accordance with state, local and federal requirements. ESI shall maintain the confidentiality of all

Students’ records in compliance with applicable local, state, and federal laws and regulations, and pursuant to

the confidentiality provisions set out in Section 10 of this Agreement. ESI shall maintain such records as are

required to comply with all attendance rules and apportionment requirements specified by applicable law or

regulations. All Student Records, as well as educational and financial records shall remain the property of

ECA Texas, subject to inspection and copying under the Texas Open Records Law (Texas Government

Code, Chapter 552). All such records shall be maintained and housed at the administrative offices of ESI.

ESI may retain a copy of such records subject to the confidentiality requirements of this Section.

3.9 Services to Special Needs Students. ESI and the Charter School shall work together to ensure

compliance with applicable laws and regulations concerning services to Special Needs Students. On behalf of

the Charter School, ESI shall be responsible for ensuring the provision of necessary special education

programs and services, including development of IEPs, handling administrative proceedings and specialized

services, submitting state or federal reports, applying for and administering supplemental funding, and all

other administrative services associated with the delivery of services to Special Needs Students. All such

services will be provided in a manner that complies with all applicable laws.

3.10 Financial and Other Reporting. ESI will provide treasury and accounting reports to the extent not

provided by the third-party bookkeeping firm engaged by the Charter School Board for all ESI activities

under this Agreement, and for any other Charter School activities as may be reasonably requested by the

Charter School or Charter School Board. ESI will be responsible for providing to the Charter School Board

any such reports as are required by law, regulation, or the Charter and will assist in providing any information

required by the, Charter School, Texas Education Agency, or its auditors to the extent that it has the

information as the Charter School Board will engage a third party bookkeeping firm and an auditor.

Information on the performance of the Charter School and its Students shall be provided to the Charter

School Board, as required by this Agreement or upon request after reasonable advance notice to enable the

Charter School Board to monitor ESI performance. ESI specifically acknowledges its responsibility to make

information concerning the operation available to the Charter School Board in order to enable it to fully

satisfy its obligations under the Charter. ESI shall also respond to requests for public records under Texas

Open Records Law (Texas Government Code, Chapter 552). Financial and other data for the Charter School

will be maintained in such a manner as to ensure that all school financial and other data can be made available

in compliance with all applicable laws. Such financial and other data will be available to the Charter School

Board upon request.

9 | P a g e

3.11 Management of Hardware and/or Software. ESI shall provide for the management of such

Hardware and/or Software that the Charter School leases from ESI. In the event that the Charter School

purchases its own Hardware and/or Software, it shall separately contract with ESI for the management of

such Hardware and/or Software, unless the Charter School agrees in writing to provide management services

comparable to those provided by ESI and to assume all liability related to any failure by the Charter School to

provide such management services.

3.12 Management of Instructional Materials. ESI will provide for the management of the Instructional

Materials, which shall involve procurement, contracting, storage, fulfillment, and other services required to

obtain and deliver such Instructional Materials.

3.13 Accountability Plan. ESI shall be responsible for ensuring the Charter School meets the

performance criteria outlined in the Accountability Plan referenced in the Charter.

3.14 Other Management Services. ESI will provide the administrative support necessary to deliver the

Educational Products and Services (as described in Sections 2 and 3, respectively) for which it will be entitled

to a management fee as defined in Section 9. ESI will have the right to add applicable charges for any new or

additional services not previously provided for under this Agreement to the Fee Schedule described in

Section 9, subject to the Charter School Board’s prior review and approval. Such changes approved by the

Charter School Board may be added as an addendum to this Agreement.

3.15 School Meals. ESI will supply and provide school meals to students attending the Charter School.

Such meals shall be a reimbursable expense per the Fee Schedule.

3.16 Non-delegable Duties. Notwithstanding anything to the contrary in this Agreement, if any service,

responsibility, duty, power or authority delegated to ESI pursuant to this Agreement may not be so delegated

under applicable law, such delegation shall be null and void and the Parties shall adjust the financial terms of

this Agreement accordingly.

3.17 Other. ESI will be responsible for providing such other services not specifically described herein but

which are required by the Charter. ESI will have the right to add applicable charges for any new or additional

services not previously provided for under this Agreement or the Fee Schedule described in Section 9 with

the prior written approval of the Charter School Board. To the extent that any of the terms, conditions, or

provisions of the Charter conflict or are inconsistent with the provisions of any other paragraph or section of

this Agreement, whether or not such inconsistency is expressed or noted herein, the provisions of such other

section or paragraph of such Charter shall in all instances prevail over the provisions of this Agreement,

subject to adjustment of the Fee Schedule to account for any new or additional services not covered by the

Fee Schedule.

3.18 Procedures to Monitor and Oversee the EMO. The Charter School Board shall create procedures to

monitor and oversee the EMO. Such procedures shall include a review of services provided by ESI under

this Agreement.

3.19 Grant Application Assistance. The EMO shall review and determine applicability of any grants and,

if warranted, will apply for such grants on behalf of the Charter School. Costs associated with grant

applications, including grant writing and administration shall be reimbursed to the EMO.

10 | P a g e

4. Services Provided to ESI by the Charter School.

4.1 Compliance with Law and Regulation. The Charter School and the Charter School Board shall

conduct all such oversight activities as are required the TEC or other applicable law and regulation, including

meeting any requirements in the Charter, conducting all required Charter School Board meetings in

accordance with any applicable open meeting laws or regulations, and acting in compliance with its Charter

and the Charter School’s bylaws.

4.2 Insurance. The Charter School shall comply with any insurance provisions as set forth in Section 13.

5. Eligible Students.

5.1 Admission Requirements. Any person qualified under the TEC for admission to a public school is

eligible to become a Student under this Agreement subject to verification of his/her residency or other

requirements established by Texas law. ESI will not charge tuition and shall not charge any other fees unless

approved by the Charter School Board and allowable under State of Texas’s law and approved by the

authorizer.

5.2 Number. The Charter School Board may establish a maximum number of Students to be enrolled

during each Academic Year and ESI shall not exceed that number without specific approval from the Charter

School Board and the Authorizer, if applicable. In addition, ESI may limit the number of Students in each

grade served under this Agreement to conform to the Budget and lottery policy allowable under the Charter

approved by the Authorizer.

5.3 Priority. ESI agrees to follow the admissions preferences as laid out in the Charter and school policy

adopted by the Charter School Board, including any policy or procedures for conducting a lottery. Any limit

on the number of Students who may enroll shall be communicated to interested parents and Students prior to

their enrollment, including any procedure for conducting a lottery. Once Enrolled, Students will not be

required to reapply in subsequent Academic Years, but will need to complete information confirming their

intent to return, in accordance with the terms of the School Handbook.

5.4 Recruiting and Community Education. ESI will be responsible for developing a plan for periodic

community informational meetings and correspondence as required to recruit Students and to inform other

interested parties about the Charter School.

5.5 Public Website. ESI shall maintain a public web site on behalf of the Charter School that will

contain any information required by Texas law.

5.6 Enrollment. The Charter School delegates to ESI responsibility for accepting Students into the

Charter School. However, the Charter School has no responsibility to pay ESI for any Students it admits

who are not eligible. ESI shall maintain a list of the Enrolled Students on behalf of the Charter School and

shall provide such list to the Charter School Board promptly upon request.

5.7 Full-time Status. Students shall be permitted to enroll in the Charter School exclusively on a full-time

basis. Part-time enrollment will not be permitted except by prior written agreement by ESI and the Charter

11 | P a g e

School, and neither Party shall have any obligation to accept part-time enrollment or provide any payment for

services provided by other parties.

5.8 Disenrollment. A Student may withdraw from the Charter School at any time during the Academic

Year. Only to the extent permitted by Texas law, Students who do not comply with the terms of the School

Handbook may also be withdrawn. ESI will use its reasonable best efforts to collect any information required

by law or regulation concerning a previously Enrolled Student’s next school. ESI will report on the status of

withdrawals to the Charter School Board at each regularly scheduled Charter School Board meeting or

whenever requested by the Charter School Board. ESI will be responsible for reimbursing any state and

federal funds that it has received to the extent funding is disallowed as a result of a Student’s withdrawal.

6. Term and Termination.

6.1 Initial Term. The term of this Agreement shall commence upon the Effective Date and shall expire

on the earlier of ___________ ____, 2020 or five years (the “Initial Term”).

6.2 Renewal. Upon expiration of the Initial Term, this Agreement may be renewed for an additional

term of five years or such other renewal period agreed upon by the Parties and allowed by applicable law,

unless either Party provides the other Party with written notice of its intent not to renew no later than six (6)

months prior to the Term expiration date. The Initial Term, and any renewals or extensions thereof, are

collectively herein referred to as the “Term”.

6.3 Early Termination. Except as specifically provided for herein, this Agreement can only be

terminated before its expiration as follows:

(a) By both Parties if they mutually agree in writing to the termination;

(b) By either Party, if one Party materially breaches this Agreement and fails to cure such breach

within ninety (90) days following written notification of such breach from the other Party;

(c) By either Party, if the Charter is terminated or if the Charter School is no longer authorized by

the Authorizer as required by applicable Texas law and regulations;

(d) By the Charter School, if the Charter School Board determines at the end of an Academic Year

that the Educational Products and Services do not meet the requirements for a charter school, as defined by

applicable laws and regulations, but only if ESI is unable to cure such deficiency after being given reasonable

notice thereof and the opportunity to cure any alleged failure to meet such requirements.

(e) By the Charter School, if the Charter School Board determines, after a Performance Review, in

the Charter School’s sole reasonable discretion, that this Agreement should be terminated for failure to

perform, but only if ESI is unable to cure such deficiency after being given reasonable notice thereof

specifying in detail the deficiency and the opportunity to cure any alleged deficiency in performance.

(f) By the Charter School if it is determined the Agreement (i) jeopardizes the Charter School’s or

Charter School’s tax-exempt/non-profit status, (ii) creates adverse tax consequences for Charter School, or

(iii) otherwise causes Charter School to be in violation of applicable law and the Parties fail to negotiate

12 | P a g e

amendments to the Agreement that would result in the basis for termination under this subsection 6.3(f) to

no longer exist; and

(g) By ESI at any time for any reason upon giving 120 days prior notice.

6.4 Notice of Termination. In the event of termination of this Agreement prior to its expiration, written

notice by certified or registered mail, return receipt requested, no later than April 1 of the then current

Academic Year shall be provided and shall list the reason(s) for termination and the effective date of the

termination. Termination shall only occur at the end of an Academic Year except if such termination is the

result of Sections 6.3(b), (c), (e).

6.5 Obligations on Termination. In the event this Agreement is terminated by either Party for any

reason:

(a) ESI shall assist and cooperate with the Charter School in the transition of the provision of

Educational Products and Services from ESI to the Charter School, or another service provider, so as to

minimize the disruption to the Students, it being the intention that the Charter School shall remain open and

operating in its normal course.

(b) Each Party will promptly (not later than thirty (30) days after the effective date of

termination) return to the other Party all Confidential Information, property and material of any type

belonging to the other Party, including but not limited to, electronic versions, hard copies and reproductions

and will not retain copies of any such property or material except as may be expressly permitted in this

Agreement or required by applicable law;

(c) All access to ESI Educational Products and Services by the Charter School shall be

discontinued;

(d) ESI shall provide to the Charter School copies of all Student Records not otherwise in the

Charter School’s possession at no additional cost; and

(e) The Charter School shall pay ESI all amounts due under this Agreement upon the earlier of

either their due dates or thirty (30) days after the effective date of termination.

7. Representation Regarding Non-discrimination.

ESI, the Charter School and the Charter School Board will not discriminate against any person on the basis of

race, creed, color, sex, national origin, religion, ancestry, sexual orientation or disability, or any other basis

prohibited by applicable law.

8. Health and Safety.

8.1 ESI specifically acknowledges that it shall not do anything to interfere with the Charter School’s

compliance with the following standards regarding health and safety:

(a) Reporting child abuse or neglect of which it has reasonable suspicion, as required by state law;

13 | P a g e

(b) Adopting policies prohibiting the use of drugs, alcohol, weapons and tobacco on school grounds

or at school events; and

(c) Complying with all state immunization laws.

9. Financial Terms.

9.1 Payments. The following shall represent the financial responsibilities between the Parties.

(a) As compensation for the Educational Products and Services provided by ESI under this

Agreement, ESI and the Charter School shall negotiate in good faith a schedule of fees (the “Fee

Schedule”) for each year of the Term that shall apply to the following Academic Year. Upon the approval of

such Fee Schedule by the Charter School Board, the Parties acknowledge and agree that the amounts are

reasonable, necessary and fair market value compensation for the services rendered under this Agreement. To

the extent that the Fee Schedule includes any fees that are based on a “percentage of revenue,” such fees shall

be assessed against funds received by the Charter School from all governmental sources received by the

Charter School from whatever source, whether from state, local, or federal government agencies, including

but not limited to Title 1 funds, grants, income, or other funding sources (the “Revenues” and together with

all Revenues in a given Academic Year, collectively, “Total Revenues”).

(b) The Parties may agree to have ESI act as its payment agent for various other expenditures not

included in the Fee Schedule. ESI will be entitled to reimbursement for these expenses on a monthly basis as

they are incurred upon the submission of appropriate documentation.

(c) ESI will invoice the Charter School monthly according to the Fee Schedule. Payment will be due

within thirty (30) days of receipt. ESI may charge interest at the lesser of the rate of one and one half percent

(1.5%) per month or the maximum interest rate permitted by Texas law, for any invoices paid more than sixty

(60) days late unless such failure to pay is the result of funds being withheld from the Charter School due to a

failure by ESI to perform under the terms of this Agreement, or if the Charter School has insufficient funds

to pay the invoice as the result of outstanding receivables, deferred payment by the State of funding due, or if

the Charter School is disputing any charges. The Charter School shall notify ESI of the basis for any dispute

within five (5) days of determination of such dispute and shall work to resolve the dispute within thirty

(30) days. All amounts other than any amount in dispute shall be paid according to the terms herein. Funds

shall also be subject to adjustment based on any adjustments to Student counts as a result of an audit by the

State of Texas. Any differences in amounts that were previously paid under this Agreement as a result of

such audits shall only be applied to or against the next payment or payments otherwise due under this

Section, or if no payment is due, ESI shall refund such amount to the Charter School.

(d) To the extent that any adjustments as a result of a state audit are the result of ESI failure to

adequately perform its responsibilities under this Agreement or the Charter, ESI will be required to either:

(i) return any required funds to the Charter School in the amount determined by the state funding authority,

or (ii) to the extent that funds are withheld from future funding to the Charter School, reduce fees invoiced to

the Charter School by the amount that funding is withheld.

9.2 Budgets. No later than the earlier of June 1 or fourteen (14) working days prior to any deadline

specified in the Charter or other regulatory mandate, ESI agrees that it will present to the Charter School a

14 | P a g e

proposed budget that is balanced (i.e., not resulting in a cumulative net asset deficit) for the following fiscal

year. The Budget shall be in reasonable detail, shall meet all regulatory reporting requirements and shall be

based on the applicable Fee Schedule. In the event that the Charter School Board and ESI do not agree with

the proposed balanced Budget, the Parties agree to work together in good faith to resolve any disagreements

by the earlier of June 30 or such date as is required by applicable laws or regulations or the Charter for budget

submission.

9.3 Receipts and Expenditures for Public Funding, Title Funding, Special Education, Gifted Education,

Grants etc. The Charter School shall be the recipient of all public funds that are disbursed to fund the

operations of the Charter School and all other funds to which the Charter School is entitled. To the extent

that the Charter School is eligible to receive additional revenue over and above the State funding amounts,

ESI will be responsible for collecting such funds on behalf of the Charter School and will make any required

disbursements in accordance with its responsibilities as required under this Agreement or by law. ESI shall

comply with all terms and conditions established by any funding source.

9.4 Breakdown of Charges. No later than September 30 of each year during the Term, ESI will provide

to the Charter School, for informational purposes only, a breakdown of its charges including a breakdown

between Tangible and Intangible Instructional Materials, and amounts charged for staff compensation,

charges related to student courses, Computer Hardware and Software, etc. This shall not change the amounts

due to ESI by the Charter School, but shall provide the Charter School with support for the charges for the

products and services provided by ESI.

9.5 Sales Tax. The Charter School shall provide ESI with support that it is tax exempt. To the extent

that the Charter School is not tax exempt, the Charter School shall be responsible for federal, state, or local

taxes assessed, if any, based on the Educational Products and Services provided to the Charter School under

this Agreement.

9.6 Protection Against Deficits. In the event that as of June 30 of any year during the Term, Total

Revenues are less than the Charter School’s expenditures, including payments to ESI as well as those incurred

and paid by the Charter School, but excluding any payments for capital expenditures (the “Total

Expenditures”), and in the event that the Charter School does not have positive Net Assets (as defined in its

annual audited financial statements) sufficient to offset the difference between Total Revenues and Total

Expenditures, to the extent that any expenditures in excess of Total Revenues were included in the balanced

budget or were subsequently approved by both Parties in an amended budget, ESI shall issue a credit or make

a cash payment to the Charter School to the extent required to maintain positive Net Assets at a level to be

agreed upon between the Charter School and ESI as of each June 30 during the Term of this Agreement. To

the extent that the Net Assets at the end of any June 30 exceeds required Net assets, and in the event that

credits have previously been issued and not repaid, ESI shall be entitled to the repayment of any such credits

without interest

10. Confidential Information.

10.1 Confidential Information Defined. As used in this Agreement, “Confidential Information” means all

information and any idea in whatever form, tangible or intangible, pertaining in any manner to the business of

a disclosing Party (or any of its Affiliates) or to a disclosing Party’s, or its Affiliates’, customers or business

partners, unless it must be disclosed by applicable law or is publicly available, other than as a result of the

15 | P a g e

receiving party’s disclosure. It is acknowledged that the following information will be included, without

limitation, in the definition of Confidential Information, whether in written or verbal form, and including

electronic data recorded or retrieved by any means: (a) educational content, curricula, teaching outlines, lesson

plans, testing processes, and procedures; (b) Student Records and other student-related or Parent/Guardian

personal information; (c) information regarding business strategy and operations such as business plans,

marketing strategies, outreach plans and sales information, pricing information and customer and prospect

lists, the identities and locations of vendors and consultants providing services or materials to or on behalf of

the disclosing Party; (d) information regarding product development such as product designs and concepts,

development methods, computer software, inventions and other work product; (e) financial information such

as budget and expense information, economic models, pricing, cost and sales data, operating and other

financial reports and analysis; (f) human resource information such as compensation policies and schedules,

employee recruiting and retention plans, organization charts, disciplinary records and other personnel data;

(g) the terms of this Agreement; and (h) other similar non-public information that may provide the disclosing

Party with a strategic advantage or could harm the disclosing Party if publicly disclosed.

10.2 Obligation to Protect. To the extent permitted by law, each Party shall maintain the confidentiality

of the other Party’s Confidential Information. Receiving Party agrees to use and disclose Confidential

Information only as required in performing its obligations under this Agreement and for no other purpose

and to hold all such Confidential Information in the strictest confidence, and except with the prior written

authorization of the disclosing Party, not to (a) disclose it to any person, firm or corporation, or (b) use it for

the benefit of anyone other than for the disclosing Party. Notwithstanding the foregoing, the Charter School

shall be permitted to make such disclosures and retain such materials as is required for the Charter School to

comply with applicable laws and regulations, and in accordance with Section 3.8. ESI shall make such

information and facilities available to authorized Charter School personnel, Authorizer, Texas regulatory

authorities, and any other person as required to comply with applicable laws, and in accordance with

Section 3.8.

10.3 Protection of Student Records. The Parties acknowledge and agree that under Texas Law and 20

U.S.C. §1232g, the Family Educational Rights and Privacy Act (“FERPA”) including any regulations

promulgated thereunder, each Party has certain obligations with regard to maintaining the security, integrity

and confidentiality of “education records”, as that term is defined by FERPA. The Parties agree that they

shall perform their obligations under this Agreement in compliance with FERPA and any regulations

promulgated thereunder. The staff, employees and volunteers who provide educational or administrative

services to the Student are agents of the Charter School that have a legitimate educational interest and, thus,

are entitled to access to educational records under FERPA. The Parties shall also maintain Student Records

in accordance with any other applicable state, local and federal laws and regulations.

10.4 Remedy for Breach. The Parties acknowledge that monetary damages may not be a sufficient remedy

for unauthorized disclosure of Confidential Information and that a disclosing Party shall be entitled, without

waiving any other rights or remedies, to such injunctive or equitable relief as may be deemed proper by a

court of competent jurisdiction.

11. Ownership of Intellectual Property and Tangible Personal Property Supplied by ESI.

11.1 Intellectual Property. Charter School agrees that ESI or its licensor is the sole owner of course

design and materials, and ESI, its Affiliates, and/or its contracted vendors are the owners of any Intangible

16 | P a g e

Instructional Materials and other educational content (“Content”) made available pursuant to Section 2.2.

Further, the Charter School will acquire no rights in trademarks, patents, copyrights or trade secrets related to

ESI, the Intangible Instructional Materials or the Content by reason of the Charter School’s use of the same

in connection with this Agreement. The Charter School grants, and agrees to cause its employees and agents

to grant, to ESI and its successors and assigns, a non-exclusive perpetual, irrevocable, worldwide and royalty-

free license to use (including to provide Educational Products and Services), modify, market and create

derivative works based upon any instructional or other copyrightable materials created by employees and

agents of the Charter School, without identifying or seeking the consent of the Charter School or any of its

employees or agents. Any such derivative works created shall be the sole property of ESI and its transferees.

Tangible Personal Property. This Agreement does not constitute a sale or other transfer to the Charter

School or Authorizer of any Educational Products supplied by ESI pursuant to Section 2. All right, title, and

interest in and to such Educational Products will remain with ESI.

11.2 Trademarks. ESI and its Affiliates are the owners of various trademarks, service marks, logos, or

trade names used in its business of providing Educational Products and Services (collectively, the “Licensed

Marks”). ESI grants to the Charter School a non-exclusive, non-transferable, royalty-free sub-license to use

the Licensed Marks during the term of this Agreement solely in connection with the performance of this

Agreement and requires pre-approval of such use by ESI. Licensed Marks approved by ESI for use by the

Charter School from time to time in connection with performance of this agreement shall be specified in

schedule B (“Allowable Use of Licensed Marks”) to this Agreement and approved by the CEO of ESI. The

Charter School agrees to make reasonable efforts to use the Licensed Marks in accordance with any

trademark usage guidelines provided by ESI. ESI retains all right, title and interest in and to the Licensed

Marks and any related proprietary rights not expressly granted to the Charter School hereunder. All goodwill

attributable to the Licensed Marks will inure exclusively to the benefit of ESI. In the event of a termination

of this Agreement, the Charter School agrees to terminate use of the Licensed Marks and amend any publicly

recorded and unrecorded documents to remove the any Licensed Marks that may be contained therein

(including, if applicable, the Charter School Name) within sixty (60) days after the effective date of

termination, unless otherwise agreed to by the Parties. Notwithstanding, ESI may not require the termination

of any use of the Licensed Marks and any publicly recorded and unrecorded documents to remove any

Licensed Marks that may be contained therein during the school year and shall allow continued use until the

conclusion of the school year unless agreed to in writing by the Parties.

12. Limitation of Liabilities.

12.1 In no event will the Charter School, or its directors, officers, employees, or agents, be responsible or

liable for the debts, acts or omissions of ESI or its Affiliates, their directors, officers, employees, or agents.

13. Insurance.

13.1 ESI Insurance. ESI will maintain and keep in force no less than substantially such amounts of

insurance as are provided for in Exhibit A to cover insurable risks associated with operations under this

Agreement, whether such operations are conducted by ESI, or by any subcontractor or anyone directly or

indirectly employed by any of them. Such coverage will include worker’s compensation insurance for any ESI

employees provided under the terms of this Agreement. The Charter School may request to be included as

an “additional insured” at no additional charge. Any charges associated with such insurance shall be included

in the Fee Schedule.

17 | P a g e

13.2 Charter School Insurance. ESI shall maintain and keep in force on behalf of the Charter School

Board, insurance at no less than the minimum levels required by the Charter, applicable law, or both. Further,

the Charter School may elect to maintain additional coverage, in which event ESI shall arrange for the

requisite coverage on behalf of the Charter School and include the cost in the Fee Schedule. ESI shall be

included as an “additional insured” as to any such coverage. ESI shall also maintain and keep in force on

behalf of the Charter School Board, Director and Officer’s Insurance in the amount required by the

Authorizer or by the Charter.

13.3 Liability Insurance. Liability insurance for any facility, capital equipment, furniture, or fixtures used

by the Charter School, owned by a person or entity other than ESI or an Affiliate, and managed by a person

or entity other than ESI or an Affiliate shall not be the responsibility of ESI.

14. Notices.

Any notice, demand, or request from one Party to the other Party hereunder shall be deemed to have been

sufficiently given or served for all purposes as of the date it is delivered by hand, delivered by email, received

by overnight courier, or within three (3) business days of being sent by registered or certified mail, postage

prepaid to the Parties at the following addresses:

If to the Charter School: ECA Texas Board of Directors 1001 Magnolia Street Webster, TX 77598

If to ESI: General Counsel 13000 N. Meridian Street Carmel, IN 46032

15. Miscellaneous.

15.1 Severability. If any provision of this Agreement is held to be invalid or unenforceable, it shall be

ineffective only to the extent of the invalidity, without affecting or impairing the validity and enforceability of

the remainder of the provision or the remaining provisions of this Agreement. If any provision of this

Agreement shall be or become in violation of any federal, state, or local law, such provision shall be

considered null and void, and all other provisions shall remain in full force and effect.

15.2 Successors and Assigns. The terms and provisions of this Agreement shall be assignable by ESI

provided that a change in control of ESI or its parent, notice of which shall be provided by ESI to Charter

School Board, shall not be deemed a violation of this Agreement.

15.3 Complete Agreement; Modification and Waiver. This Agreement constitutes the entire agreement

between the Parties with respect to the matter contained herein and supersedes all prior and

contemporaneous agreements, warranties and understandings of the Parties. There are no agreements,

representations or warranties of any kind except as expressly set forth in this Agreement. No supplement,

modification or amendment of this Agreement shall be binding unless executed in writing by both Parties.

18 | P a g e

No waiver of any provision of this Agreement will be effective unless it is in writing and signed by the Party

to be charged with such modification, and no such waiver will constitute a waiver of any other provision(s) or

of the same provision on another occasion.

15.4 Force Majeure. If any circumstance should occur that is not anticipated or is beyond the control of a

Party or that delays or renders impossible or impracticable performance as to the obligations of such Party,

the Party’s obligation to perform such services shall be postponed for a period equal to the time during which

such circumstance shall extend, or, if such performance has been rendered impossible by such circumstance,

shall be cancelled.

15.5 No Third Party Rights. This Agreement is made for the sole benefit of the Parties. Except as

otherwise expressly provided, nothing in this Agreement shall create or be deemed to create a relationship

among the Parties or any of them, and any third party, including a relationship in the nature of a third party

beneficiary or fiduciary.

15.6 Professional Fees and Expenses. Each Party shall bear its own expenses for legal, accounting, and

other fees or expenses in connection with the negotiation of this Agreement.

15.7 Governing Law. This Agreement shall be governed and controlled by the laws of the State of

Indiana. Any legal actions prosecuted or instituted by any Party under this Agreement shall be brought in a

court of competent jurisdiction located in Hamilton County, Indiana, and each Party hereby consents to the

jurisdiction and venue of any such courts for such purposes.

15.8 Counterparts. This Agreement may be signed in counterparts, which shall together constitute the

signed original agreement.

15.9 Compliance with Laws, Policies, Procedures, and Rules. Each Party will comply with all applicable

federal and state laws and regulations including all of the specific requirements of the Charter, applicable local

ordinances and the Charter School’s policies whether or not specifically listed in this Agreement.

15.10 Interpretation of Agreement. The Parties hereto acknowledge and agree that this Agreement has

been negotiated at arm’s length and between Parties equally sophisticated and knowledgeable in the subject

matter dealt with in this Agreement. Accordingly, any rule of law or legal decision that would require

interpretation of any ambiguities in this Agreement against the Party that has drafted it is not applicable and

this Agreement shall be interpreted in a reasonable manner to affect the intent of the Parties as set forth in

this Agreement.

15.11 Headings; Exhibits. The section headings contained herein are for convenience only and shall not in

any way affect the interpretation or enforceability of any provision of this Agreement. All schedules and

exhibits to this Agreement are incorporated herein and shall be deemed a part of this Agreement as fully as if

set forth in the body hereof.

15.12 Attendance at Meetings. During the Term, ESI will have the right to designate an individual or such

individuals who shall have attendance rights at all Charter School Board meetings that are open to the public

and shall include meetings in executive session. Such rights are limited exclusively to attendance and provide

no rights to participate without the express permission of the Charter School Board. The Board may exclude

ESI from the executive session to discuss matters related to the performance of ESI under this agreement, or

19 | P a g e

as reasonably necessary to maintain any applicable privileges or comply with applicable law. The Board shall

give written notice to ESI of the intent to exclude and the rationale for such exclusion at least twenty-four

(24) hours prior to the meeting.

15.13 Electronic Signatures. This Agreement and related documents may be accepted in electronic form

(e.g., by scanned copy of the signed document, an electronic or digital signature or other means of

demonstrating assent) and each Party’s acceptance will be deemed binding on the Parties. Each Party

acknowledges and agrees it will not contest the validity or enforceability of this Agreement and related

documents, including under any applicable statute of frauds, because they were accepted or signed in

electronic form. Each Party further acknowledges and agrees that it will not contest the validity or

enforceability of a signed facsimile copy of this Agreement and related documents on the basis that it lacks an

original handwritten signature. Facsimile signatures shall be considered valid signatures as of the date

hereof. Computer maintained records of this Agreement and related documents when produced in hard copy

form shall constitute business records and shall have the same validity as any other generally recognized

business records.

15.14 Survival. The rights and responsibilities of Sections 6.5, 9, 10, 11, 12, 13, 14, 15.1, 15.2, 15.3, 15.5,

15.6, 15.7, 15.9, 15.10, 15.11, 15.13 and 15.14 shall survive the termination of this Agreement.

15.15 Status and Relationship of the Parties. ESI is a limited liability corporation organized under the laws

of Delaware, and is not a division or a part of the Charter School. The Charter School is a Texas not-for-

profit education corporation authorized by the Charter School Law and is not a division or part of ESI. The

Parties intend that the relationship created by this Agreement is that of an independent contractor and not

employer-employee. Except as expressly provided in this Agreement, no agent or employee of ESI shall be

deemed to be an agent or employee of the Charter School. ESI shall be solely responsible for its acts and the

acts of its agents, employees and subcontractors, and the Charter School shall be solely responsible for its acts

and the acts of its agents, employees and subcontractors. The relationship between ESI and the Charter

School is based solely on the terms of this Agreement, and the terms and conditions of any other written

agreement execute by ESI and the Charter School.

15.16 Conflict of Interest. Any Charter School Board member or individual who is to hold a leadership

position in the operation of the Charter School, including any administrative position (together, "Interested

Persons"), any family member of any Interested Person, or any organization in which the Interested Person

has a more than a 2% ownership position, which has any direct or indirect financial interest in ESI, must

disclose to the Charter School Board, or to a committee designated by the Charter School Board as having

the authority to review potential conflicts of interest, the existence of his or her financial interest and may be

given the opportunity to disclose facts material to that interest to the Board or committee. A "financial

interest" includes any current or potential ownership interest in, investment interest in, or compensation

arrangement with ESI. The term "family member" includes any spouse, parent, child, step-child or legal

guardian, or sibling of the Interested Person. The disinterested members of the Charter School Board or

committee (that is, all members except for any Interested Person) will evaluate the impact of the Interested

Person's financial interest, assess whether a conflict of interest arises from the financial interest, and

determine what action, if any, is appropriate with regard to the financial interest and any conflict of interest.

The Charter School Board or committee shall conduct whatever additional investigation is considered

appropriate under the circumstances.

20 | P a g e

15.17 Private Benefit. This Agreement, in its entirety, shall be interpreted so as to be consistent with

Charter School’s status as a nonprofit entity under the Internal Revenue Code or applicable state law,

including but not limited to any applicable provisions prohibiting or restricting private benefit or private

inurement.

21 | P a g e

IN WITNESS WHEREOF, the Parties agree to the terms of this Agreement and have executed this

Agreement by their authorized representatives to be effective as of the Effective Date written above.


By: _________________________

Name: ________________________

Title: ________________________

ESI SERVICE CORP.

By: __________________________

Name: ________________________

Title: _________________________

22 | P a g e

Schedule A: Fee Schedule for Products and Services Schedule 1 – EMO Fees Paid to ESI

Item Fee Description Rate Basis

1.01 Student Technology $200 Annual, per student enrolled*

1.02 Curriculum Support (includes assessment materials)

$60 Per student per course**

1.03 School Administration and Business Support ^

10% Revenues from all governmental sources

* For fee calculation purposes, Student Enrollment count will be the arithmetic average of all official state student count days ** For fee calculation purposes, Course Enrollment counts will be determined based on class registration counts on the second Friday of each school trimester ^ School Administration and Business Support services include:

Human Resources – Recruitment, Benefits Administration

Payroll Services

Student Information Systems

Management Reporting Services

Class Scheduling Schedule 2 - Expenses Reimbursed to ESI at Cost

Item Description

2.01 Employee Wages, Benefits, Taxes

2.02 Office Supplies

2.03 Office Postage

2.04 Training / Professional Development

2.05 Travel Expenses

2.06 School Meals

2.07 Textbooks

2.08 Contract School Staff

2.09 Contracted Services – Special Education

2.10 Administrative Office Equipment and Software

2.11 Contracted Student Services (other than Special Education)

2.12 Student Transportation Costs

2.13 Marketing / Community Outreach Costs

Fee Schedules for Products and Services (continued) Schedule 3 - Expenses Paid by the School

Item Description

3.01 Administration Association Dues and Fees

3.02 Board Expenses (including training, supplies, dues, and fees)

3.03 Legal Services for Board

3.04 Audit Services for Board

23 | P a g e

3.05 Bookkeeping and Accounting Services (including banking fees)

3.06 Consulting Services for Charter Operations hired by Board

3.07 Insurance Expenses for Charter Operations (including board D&O)

3.08 Any other expense not listed in schedules 1 or 2

Schedule B – Use of Licensed Marks

Licensed Mark Description Allowed Usage

From Date Allowed Usage

Until Date Notes about Allowed Uses / Restrictions

ESI CEO NAME: _____________________________________ (Printed) ESI CEO Signature: _____________________________________ Signature Date: _________________________

dms.us.53301479.02

Attachment MO2

Organization Charts

The EMO owns and operates ITT Tech. The organizational chart includes select, existing management and staff of ITT Tech – Houston that will assist the ECA Executive Director in the management of the school. The positions are listed on the right side of the chart and brief descriptions are provided on the next page.

Executive Director

Teachers Year 1: 5 FTE Year 3: 9 FTE Year 5: 9 FTE

Career Academy Counselors

Year 1: 1 FTE Year 3: 2 FTE Year 5: 2 FTE

Administrative Assistant

College Director

Dean Registrar

Director of Career Services

Community Relations

Systems Support Technician

CMO

Governing Board

CEO/Superintendent

Central Charter Office

Academic Affairs

Curriculum

Marketing Regulatory

Operations Grant Writers

Parent/Teacher and Program Advisory

Committee

College staff that assist ECA include:

College Director – provides daily management oversight for the college and can provide necessary resources, as needed, to the Executive Director.

Registrar – assists with class scheduling

Dean – assists with college courses and college faculty resources

Director of Career Services – assists with SPE arrangements and graduate employment

Systems Support Technician – maintains computer networks and systems

Community Relations – builds and maintains community relationships

Attachment MO3

Results of Arbitration or Litigation

Performance Evaluation Information – Results of Arbitration or Litigation

Not App licab le.

CMO has had no per f orm ance def iciency or com p liance vio lat ions and has not

been a par t y t o any char t er schoo l li t igat ion .

Attachment MO4

Business Plan

CMO Addendum Business Plan

Following are the audited financials for the CMO, ITT Educational Services, Inc., for 2011, 2012, and 2013

and an interim quarterly financial statement as of June 30, 2014. Note that that no charter school

operations are distinctly represented in these corporate financial statements. The school year 2014-15

is the first year the CMO has provided management services for a Charter School.

ITT Educational Services, Inc. Consolidated Financial Statements

At December 31, 2013 and 2012 and for each of the Three

Years in the Period Ended December 31, 2013

ITT Educational Services, Inc. Table of Contents

December 31, 2013 and 2012

Page(s)

Report of Independent Registered Public Accounting Firm ............................................................................................................. 1 - 2

Consolidated Balance Sheets ..................................................................................................................................................................3

Consolidated Statements of Income ........................................................................................................................................................4

Consolidated Statements of Comprehensive Income ..............................................................................................................................5

Consolidated Statements of Cash Flows .................................................................................................................................................6

Consolidated Statements of Shareholders' Equity ...................................................................................................................................7

Notes to Consolidated Financial Statements ................................................................................................................................... 8 - 59

Appendix I

Management's Report on Internal Control over Financial Reporting

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of ITT Educational Services, Inc. In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of ITT Educational Services, Inc. and its subsidiaries at December 31, 2013 and 2012, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2013 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company did not maintain, in all material respects, effective internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) because material weaknesses in internal control over financial reporting related to (i) the application of consolidation accounting to variable interest entities, (ii) the assessment of the completeness and accuracy of student loan data underlying estimates made in the valuation of the PEAKS Trust student loan receivables, (iii) controls over the estimation and review of contingent loss estimates related to the guarantee obligation under the 2009 RSA , and (iv) the timely identification and communication of information relevant to the private student loan programs to those members of management responsible for the Company’s financial reporting processes existed as of that date. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. The material weaknesses referred to above are described in the accompanying Management's Report on Internal Control Over Financial Reporting as found in Appendix I. We considered these material weaknesses in determining the nature, timing, and extent of audit tests applied in our audit of the December 31, 2013 consolidated financial statements, and our opinion regarding the effectiveness of the Company’s internal control over financial reporting does not affect our opinion on those consolidated financial statements. The Company's management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in management's report referred to above. Our responsibility is to express opinions on these financial statements and on the Company's internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. As discussed in Note 17 to the consolidated financial statements, the Company is subject to risks and uncertainties including litigation, governmental investigations and increasing liquidity pressures that could affect amounts reported in the Company’s financial statements in future periods.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. As described in Management’s Report on Internal Control Over Financial Reporting, management has excluded the PEAKS Trust from its assessment of internal control over financial reporting as of December 31, 2013, because beginning on February 28, 2013, the Company became the primary beneficiary of the PEAKS Trust. We have also excluded the PEAKS Trust from our audit of internal control over financial reporting. The PEAKS Trust is a controlled variable interest entity whose assets and total revenues represent 11% and 1%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2013.

PricewaterhouseCoopers LLP Indianapolis, Indiana October 15, 2014

3

ITT EDUCATIONAL SERVICES, INC. CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share data)

As of December 31,

2013 2012

Assets

Current assets:

Cash and cash equivalents $ 215,771 $ 243,465

Restricted cash 5,636 3,478

Accounts receivable, less allowance for doubtful accounts of $9,174 and $15,663 99,530 78,928

PEAKS Trust student loans, less allowance for loan losses of $0 and $0 7,730 0

Deferred income taxes 77,549 44,547

Prepaid expenses and other current assets 28,400 16,162

Total current assets 434,616 386,580

Property and equipment, net 168,509 189,890

PEAKS Trust student loans, excluding current portion, less allowance for loan losses of

$29,349 and $0 76,479

0

Deferred income taxes 68,324 57,471

Other assets 58,923 41,263

Total assets $ 806,851 $ 675,204

Liabilities and Shareholders’ Equity

Current liabilities:

Current portion of long-term debt $ 50,000 $ 0

Current portion of PEAKS Trust senior debt 157,883 0

Accounts payable 58,021 63,304

Accrued compensation and benefits 18,107 21,023

Other current liabilities 42,136 106,796

Deferred revenue 147,630 135,900

Total current liabilities 473,777 327,023

Long-term debt 0 140,000

PEAKS Trust senior debt, excluding current portion 71,341 0

Other liabilities 146,087 82,416

Total liabilities 691,205 549,439

Commitments and contingent liabilities (Note 16)

Shareholders’ equity:

Preferred stock, $.01 par value, 5,000,000 shares authorized, none issued 0 0

Common stock, $.01 par value, 300,000,000 shares authorized, 37,068,904 issued 371 371

Capital surplus 200,040 197,113

Retained earnings 940,449 967,473

Accumulated other comprehensive income (loss) 3,146 (7,930)

Treasury stock, 13,698,716 and 13,744,395 shares, at cost (1,028,360) (1,031,262)

Total shareholders’ equity 115,646 125,765

Total liabilities and shareholders’ equity $ 806,851 $ 675,204

The accompanying notes are an integral part of the consolidated financial statements.

4

ITT EDUCATIONAL SERVICES, INC. CONSOLIDATED STATEMENTS OF INCOME

(Amounts in thousands, except per share data)

Year Ended December 31,

2013 2012 2011

Revenue $1,072,311 $1,286,633 $1,499,977

Costs and expenses:

Cost of educational services 486,353 538,350 553,065

Student services and administrative expenses 397,541 400,856 414,156

Asset impairment 0 15,166 0

Legal and other investigation costs 6,923 873 0

Loss related to loan program guarantees 90,964 101,025 23,500

Provision for PEAKS Trust student loan losses 29,349 0 0

Total costs and expenses 1,011,130 1,056,270 990,721

Operating income 61,181 230,363 509,256

(Loss) on consolidation of PEAKS Trust (73,248) 0 0

Interest income 108 1,348 2,902

Interest (expense) (25,277) (3,723) (1,825)

Income (loss) before provision for income taxes (37,236) 227,988 510,333

Provision for income taxes (10,212) 89,018 201,247

Net income (loss) $ (27,024) $ 138,970 $ 309,086

Earnings (loss) per share:

Basic $ (1.15) $ 5.82 $ 11.27

Diluted $ (1.15) $ 5.79 $ 11.18

Weighted average shares outstanding:

Basic 23,412 23,880 27,429

Diluted 23,412 23,999 27,655


5

ITT EDUCATIONAL SERVICES, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in thousands)


2013 2012 2011

Net income (loss) $ (27,024) $138,970 $ 309,086

Other comprehensive income (loss), net of tax:

Net actuarial pension (loss) gain, net of income tax of $6,811, $242

and $3,709 10,755

379

(5,795)

Net actuarial pension loss amortization, net of income tax of $790,

$1,062 and $704 1,247

1,656

1,099

Prior service cost (credit) amortization, net of income tax of $604,

$607 and $607 (951)

(948)

(948)

Pension settlement (loss), net of income tax of $17, $309 and $470

25

483

734

Unrealized gains (losses) on available-for-sale securities, net of

income tax of $0, $0 and $0 0

(21)

(60)

Other comprehensive income (loss), net of tax 11,076 1,549 (4,970)

Comprehensive income (loss) $ (15,948) $140,519 $ 304,116


6

ITT EDUCATIONAL SERVICES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)


2013 2012 2011

Cash flows from operating activities:

Net income (loss) $ (27,024) $ 138,970 $ 309,086

Adjustments to reconcile net income to net cash flows from operating activities:

Depreciation and amortization 27,252 29,350 27,886

Provision for doubtful accounts 67,640 56,818 35,655

Deferred income taxes (54,425) (59,999) (8,991)

Excess tax benefit from stock option exercises 0 (1,382) (1,166)

Stock-based compensation expense 11,638 16,658 17,074

Settlement cost (46,000) 21,750 0

Asset impairment 0 15,166 0

Accretion of discount on PEAKS Trust student loans (12,996) 0 0

Accretion of discount on PEAKS Trust senior debt 4,926 0 0

Provision for PEAKS Trust student loan losses 29,349 0 0

Loss on consolidation of PEAKS Trust 73,248 0 0

Other 315 6,992 (1,936)

Changes in operating assets and liabilities, net of acquisition:

Restricted cash (455) 3,794 (942)

Accounts receivable (87,225) (87,138) (17,004)

PEAKS Trust student loans 11,554 0 0

Accounts payable (5,574) (15,572) 10,956

Other operating assets and liabilities 74,203 72,857 35,964

Deferred revenue 11,299 (90,643) (17,819)

Net cash flows from operating activities 77,725 107,621 388,763

Cash flows from investing activities:

Facility expenditures and land purchases (679) (1,046) (4,053)

Capital expenditures, net (4,468) (17,204) (26,847)

Acquisition of company, net of cash acquired (7,150) 0 0

Proceeds from sales and maturities of investments and repayment of notes 461 217,301 337,032

Purchase of investments and note advances (1,242) (75,887) (352,195)

Net cash flows from investing activities (13,078) 123,164 (46,063)

Cash flows from financing activities:

Excess tax benefit from stock option exercises 0 1,382 1,166

Proceeds from exercise of stock options 0 8,345 5,599

Debt issue costs 0 (1,525) 0

Proceeds from revolving borrowings 0 175,000 0

Repayment of revolving borrowings (90,000) (185,000) 0

Repayment of PEAKS Trust senior debt (1,946) 0 0

Repurchase of common stock and shares tendered for taxes (395) (209,371) (283,320)

Net cash flows from financing activities (92,341) (211,169) (276,555)

Net change in cash and cash equivalents (27,694) 19,616 66,145

Cash and cash equivalents at beginning of period 243,465 223,849 157,704

Cash and cash equivalents at end of period $ 215,771 $ 243,465 $ 223,849

Supplemental disclosures of cash flow information:

Cash paid during the period for:

Income taxes (net of refunds) $ 61,131 $ 139,919 $ 196,387

Interest $ 3,310 $ 3,047 $ 1,842

Non-cash operating activities:

Consolidation of PEAKS Trust assets $ 113,819 0 0

Consolidation of PEAKS Trust liabilities 471 0 0

Non-cash financing activities:

Issuance of treasury stock for Directors’ compensation $ 0 $ 37 $ 30

Consolidation of PEAKS Trust senior debt 226,096 0 0


7

ITT EDUCATIONAL SERVICES, INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Dollars and shares in thousands) Common Stock

Capital

Surplus

Retained

Earnings

Accumulated

Other

Comprehensive

Income (Loss)

Common Stock in Treasury

Shares

Amount

Shares

Amount

Total

Balance as of December 31, 2010 37,069 $ 371 $ 170,966 $ 526,619 ($ 4,509) (7,076) ($ 566,405) $ 127,042

Net income

309,086

309,086

Other comprehensive (loss), net of

income tax

(4,970)

(4,970)

Equity award vesting and exercises

(2,397)

(2,359)

155

10,355

5,599

Tax benefit from equity awards

1,190

1,190

Stock-based compensation

14,448

14,448

Common shares repurchased

(4,040) (282,701) (282,701)

Issuance of shares for Directors’

compensation

1

1

29

30

Shares tendered for taxes

(9) (619) (619)

Balance as of December 31, 2011 37,069 371 184,207 833,347 (9,479) (10,969) (839,341) 169,105

Net income

138,970

138,970

Other comprehensive income, net of

income tax

1,549

1,549


(4,224)

(4,843)

272

17,412

8,345


918

918


16,212

16,212

Common shares repurchased

(3,026) (207,918) (207,918)

Issuance of shares for Directors’

compensation

(1)

1

38

37


(22) (1,453) (1,453)

Balance as of December 31, 2012 37,069 371 197,113 967,473 (7,930) (13,744) (1,031,262) 125,765

Net income (loss)

(27,024)

(27,024)

Other comprehensive income, net of

income tax

11,076

11,076


(3,297)

68

3,297

0


(5,414)

(5,414)


11,638

11,638


(23) (395) (395)

Balance as of December 31, 2013 37,069 $ 371 $ 200,040 $ 940,449 $ 3,146 (13,699) ($ 1,028,360) $ 115,646


8

ITT EDUCATIONAL SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data and unless otherwise stated)

1. Business and Significant Accounting Policies

Business. ITT Educational Services, Inc. is a leading proprietary provider of postsecondary degree programs in the United

States based on revenue and student enrollment. References in these Notes to “we”, “us” and “our” refer to ITT Educational Services,

Inc., its wholly-owned subsidiaries and the variable interest entity (“VIE”) of which it is the primary beneficiary, unless the context

requires or indicates otherwise. As of December 31, 2013, we were offering:

• master, bachelor and associate degree programs to approximately 57,000 students at ITT Technical Institute and Daniel

Webster College locations; and

• short-term information technology and business learning solutions for individuals.

In addition, we offered one or more of our online education programs to students who are located in all 50 states. As of

December 31, 2013, we had 149 college locations (including 147 campuses and two learning sites) in 39 states and one training

facility. All of our college locations are authorized by the applicable education authorities of the states in which they operate and are

accredited by an accrediting commission recognized by the U.S. Department of Education (“ED”). We have provided career-oriented

education programs since 1969 under the “ITT Technical Institute” name and since June 2009 under the “Daniel Webster College”

name. In August 2013, we acquired all of the membership interests of Cable Holdings, LLC (“Cable Holdings”), an education

company that offers short-term information technology and business learning solutions for individuals. See Note 4 – Acquisitions, for

additional discussion of the acquisition of Cable Holdings. Our corporate headquarters are located in Carmel, Indiana.

Basis of Presentation. The accompanying consolidated financial statements include the accounts of our wholly-owned

subsidiaries and the VIE that we consolidate, and have been prepared in accordance with generally accepted accounting principles in

the United States (“GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”).

Arrangements where we may have a variable interest in another party are evaluated in accordance with the provisions of Financial

Accounting Standards Board (“FASB”) Accounting Standards Codification TM

(“ASC” or “Codification”) 810, “Consolidation”

(“ASC 810”), to determine whether we would be required to consolidate the other party in our consolidated financial statements. See

Note 10 – Variable Interest Entities, for a further discussion of those entities in which we held a variable interest and the consolidation

of one of those entities in our consolidated financial statements as of December 31, 2013. All significant intercompany balances and

transactions are eliminated upon consolidation.

Use of Estimates. The preparation of these consolidated financial statements, in accordance with GAAP, includes estimates and

assumptions that are determined by our management. Actual results could differ materially from the estimates. Significant accounting

estimates and assumptions are used for, but not limited to:

• the allowance for doubtful accounts;

• useful lives of tangible and intangible assets;

• asset impairments;

• fair value of the assets and liabilities of the PEAKS Trust upon consolidation;

• the provision for PEAKS Trust student loan losses;

• self insurance;

• pension liabilities;

• stock-based compensation;

• guarantees;

• unrecognized tax benefits; and

• litigation exposures.

Cash Equivalents. Highly liquid investments purchased with an original maturity of three months or less are considered cash

equivalents.

9

Restricted Cash. The funds from the federal student financial aid programs under Title IV (“Title IV Programs”) of the Higher

Education Act of 1965, as amended (“HEA”), and certain other monies transferred to us by electronic funds transfer, are subject to

holding restrictions before they can be drawn into our cash account. The funds subject to these holding periods are identified as

restricted cash until they are applied to the students’ accounts. In addition, funds held for students from Title IV Programs that result

in a credit balance on a student’s account are also reflected as restricted cash on our Consolidated Balance Sheet. The amount of these

funds included in restricted cash on our Consolidated Balance Sheet as of December 31, 2013 was $2,433.

Beginning on February 28, 2013, we consolidated a VIE in our consolidated financial statements. Funds held by this VIE are

classified as restricted cash on our Consolidated Balance Sheet, because those funds can only be used to satisfy the obligations of the

VIE. Funds held by the VIE included in restricted cash on our Consolidated Balance Sheet as of December 31, 2013 were $2,593.

We also maintain an escrow account for a guarantee obligation to an unaffiliated third party under a private education loan

program for our students. The funds in this escrow account are considered restricted cash and classified as other assets. The balance in

this escrow account was approximately $8,626 as of December 31, 2013 and approximately $8,622 as of December 31, 2012.

Investments. We classify our investments in marketable securities as available-for-sale or held-to-maturity depending on our

investment intentions with regard to those securities on the date of acquisition. Investments classified as available-for-sale are

recorded at their market value. Investments are classified as either current or non-current based on the maturity date of each security.

We did not hold any investments in marketable securities as of December 31, 2013 or December 31, 2012.

The cost of securities sold is based on the specific identification method.

Accounts Receivable and Allowance for Doubtful Accounts. We extend unsecured credit to our institutions’ students for tuition

and fees, and we record a receivable for the tuition and fees earned in excess of the payment received from or on behalf of a student.

The average student receivable balance is insignificant. We record an allowance for doubtful accounts with respect to accounts

receivable based on the students’ credit profiles and our historical collection experience related to amounts owed by our students with

similar credit profiles. If our collection trends were to differ significantly from our historical collection experience, we would make a

corresponding adjustment to our allowance for doubtful accounts.

When a student is no longer enrolled in an education program at one of our campuses, we increase the allowance for doubtful

accounts related to the former student’s receivable balance to reflect the amount we estimate will not be collected. The amount that we

estimate will not be collected is based on a review of the historical collection experience for our campuses, adjusted as needed to

reflect other facts and circumstances. We review the collection activity after a student withdraws or graduates from an education

program and write off the accounts receivable, if we conclude that collection of the balance is not probable.

PEAKS Trust Student Loans. Beginning on February 28, 2013, we consolidated the VIE, which is a trust (the “PEAKS Trust”)

that purchased, owns and collects private education loans (the “PEAKS Trust Student Loans”) made under the PEAKS Private Student

Loan Program (the “PEAKS Program”), in our consolidated financial statements (the “Consolidation”). Certain of the PEAKS Trust

Student Loans had evidence of credit deterioration since the date those loans were originated and, therefore, we determined that, at the

date of the Consolidation, it was probable that all contractually required payments under those loans would not be collected. We

recorded those loans at fair value at the date of the Consolidation. We also recorded at fair value PEAKS Trust Student Loans that did

not individually have evidence of deteriorated credit quality at the date of the Consolidation, because we determined that the

application of an expected cash flow model provided the most reasonable presentation and this accounting treatment was consistent

with the American Institute of Certified Public Accountants’ (the “AICPA”) December 18, 2009 Confirmation Letter (the

“Confirmation Letter”). No allowance for loan losses was recorded at the date of the Consolidation, because all of the PEAKS Trust

Student Loans were recorded at fair value and future credit losses are considered in the estimate of fair value. Cash flows from

PEAKS Trust Student Loans expected to be collected within the next 12 months have been classified as current in our consolidated

balance sheet. The remaining balance is classified as non-current.

We aggregated the individual PEAKS Trust Student Loans into 24 separate pools of loans, based on common risk characteristics

of the individual loans, which included:

• the fiscal quarter in which the PEAKS Trust Student Loan was originated; and

• the consumer credit score of the borrower.

Loans that did not have evidence of deteriorated credit quality were not aggregated in the same pools with loans that had evidence of

deteriorated credit quality. The same aggregation criteria, however, were used to determine those loan pools. Each loan pool is

accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows.

10

On a quarterly basis, we estimate the total principal and interest expected to be collected over the remaining life of each loan

pool. These estimates include assumptions regarding default rates, forbearances and other factors that reflect then-current market

conditions. If a decrease in the expected cash flows of a loan pool is probable and would cause the expected cash flows to be less than

the expected cash flows at the date of the Consolidation or the end of the previous fiscal quarter, whichever is later, we would record

the impairment as:

• a provision for PEAKS Trust student loan losses in our Consolidated Statement of Income; and

• an increase in the allowance for loan losses on our Consolidated Balance Sheet.

The provision for PEAKS Trust student loan losses represents the increase in the allowance for loan losses that occurred during the

period. The allowance for loan losses is the difference between the carrying value and the total present value of the expected principal

and interest collections of each loan pool, discounted by the loan pool’s effective interest rate at the date of the Consolidation or the

end of the previous fiscal quarter, whichever is later. If a significant increase in the expected cash flows of a loan pool is probable and

would cause the expected cash flows to be greater than the expected cash flows at the date of the Consolidation or the end of the

previous fiscal quarter, whichever is later, we would:

• first reverse any allowance for loan losses with respect to that loan pool that was previously recorded on our Consolidated

Balance Sheet, up to the amount of that allowance; and

• record any remaining increase prospectively as a yield adjustment over the remaining estimated lives of the loans in the

loan pool.

The impact of prepayments, changes in variable interest rates and any other changes in the timing of the expected cash flows of a

loan pool are recognized prospectively as adjustments to interest income.

The impact of modifications made to loans in a loan pool is incorporated into our quarterly assessment of whether a significant

change in the expected cash flows of the loan pool is probable or has occurred. We consider the historical loss experience associated with

the PEAKS Trust Student Loans in estimating the future probabilities of default for all of the outstanding PEAKS Trust Student Loans.

The excess of any cash flows expected to be collected with respect to a loan pool of the PEAKS Trust Student Loans over the

carrying value of the loan pool is referred to as the accretable yield. The accretable yield is not reported on our Consolidated Balance

Sheets, but it is accreted and included as interest income at a level rate of return over the remaining estimated life of the loan pool. If

we determine that the timing and/or amounts of expected cash flows with respect to a loan pool are not reasonably estimable, no

interest income would be accreted and the loans in that loan pool would be reported as nonaccrual loans. We recognize the accretable

yield of the PEAKS Trust Student Loans as interest income, because the timing and the amounts of the expected cash flows are

reasonably estimable.

If a PEAKS Trust Student Loan is paid in full or charged-off, that loan is removed from the loan pool. If the amount of the

proceeds received for that loan, if any, is less than the unpaid principal balance of the loan, the difference is first applied against the

loan pool’s nonaccretable difference for principal losses (i.e., the lifetime credit loss estimate established at the date of the

Consolidation). If the nonaccretable difference for principal losses with respect to a loan pool has been fully depleted, any unpaid loan

principal balance in excess of the proceeds received for the loan is charged-off against the loan pool’s allowance for loan losses. We

do not recognize charge-offs of individual PEAKS Trust Student Loans when those loans reach certain stages of delinquency, because

those loans are accounted for at a loan pool level.

If any portion of a PEAKS Trust Student Loan that had previously been charged-off is recovered, the amount collected increases

the applicable loan pool’s nonaccretable difference. If the nonaccretable difference with respect to the applicable loan pool has been

fully depleted, the amount collected increases that loan pool’s allowance for loan losses.

Property and Equipment. Property and equipment is recorded on our consolidated financial statements at cost, less accumulated

depreciation and amortization. Maintenance and repairs are expensed as incurred. Expenditures that extend the useful lives of our

assets are capitalized.

Developed or purchased software is capitalized in accordance with ASC 350, “Intangibles – Goodwill and Other.” Facility

construction costs are capitalized as incurred, with depreciation commencing when the facility is placed in service.

11

Provisions for depreciation and amortization of property and equipment have generally been made using the straight-line

method over the following ranges of useful lives:

Type of Property and Equipment Estimated Useful Life

Furniture and equipment 3 to 10 years

Leasehold, building and land improvements 3 to 14 years

Buildings 20 to 40 years

We amortize leasehold improvements using the straight-line method over the shorter of the life of the improvement or the term

of the underlying lease. Land is not depreciated.

Asset Impairment. We regularly review our long-lived assets (which are primarily property and equipment) and notes

receivable for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable.

We evaluate each note receivable individually for impairment.

If we determine that the carrying amount of a long-lived asset exceeds the total amount of the estimated undiscounted future

cash flows from that asset, we would determine the fair value of that asset. If the fair value is less than the net book value of the long-

lived asset, we recognize an impairment loss in the amount of the difference. We base our impairment analyses of long-lived assets on

our current business strategy, expected growth rates and estimates of future economic and regulatory conditions.

We consider a note receivable to be impaired when, based on current information or events, it is probable that we will be unable

to collect all amounts of principal and interest owed on the underlying note according to the terms of the note. If the present value of

the expected future cash flows from the note receivable discounted at the underlying note’s effective interest rate is less than the

carrying value of the underlying note, we recognize an impairment loss in the amount of the difference.

Insurance Liabilities. We record liabilities and related expenses for medical, workers compensation and other insurance in

accordance with the contractual terms of the insurance policies. We record the total liabilities that are estimable and probable as of the

reporting date for our insurance liabilities that we self-insure. The accounting for our self-insured arrangements involves estimates and

judgments to determine the liability to be recorded for reported claims and claims incurred but not reported. We consider our historical

experience in determining the appropriate insurance reserves to record. If our current insurance claim trends were to differ

significantly from our historic claim experience, however, we would make a corresponding adjustment to our insurance reserves.

Contingent Liabilities. We are subject to various claims and contingencies in the ordinary course of our business, including

those related to litigation, government investigations, business transactions, guarantee obligations and employee-related matters,

among others. When we are aware of a claim or potential claim, we assess the likelihood of any loss or exposure. If it is probable that

a loss will result and the amount of the loss can be reasonably estimated, we record a liability for the loss. The liability recorded

includes probable and estimable legal costs associated with the claim or potential claim. If the loss is not probable or the amount of the

loss cannot be reasonably estimated, we disclose the claim if the likelihood of a potential loss is reasonably possible and the amount

involved is material.

We determine the amount of our contingent liabilities related to our guarantee obligations by estimating the expected payments

to be made under the guarantee and the amount that we expect to be repaid to us. We also consider the payment options available to

us. To the extent that we project that we will have sufficient funds available to discharge our guarantee obligations for the outstanding

balance of those private education loans that have been charged off at the time that they default, we incorporate that assumption into

our estimate of the contingent liability. If we do not believe that we will have sufficient funds available, we assume that we will make

monthly payments to satisfy our guarantee obligations as allowed under the applicable agreements. We discount the amount of those

expected future monthly payments at a risk-free rate of interest. Making payments for the full amount of the charged-off loans at the

time that they default results in us paying a lesser amount than we otherwise would have been required to pay under our guarantee

obligations in future periods and, therefore, results in an estimated contingent liability that is less than if we had assumed we would

make monthly payments in the future.

We discount the amounts that we expect will be repaid to us to reflect a risk-free rate of interest. The difference between the

amount of the guarantee payments that we expect to make and the discounted amount that we expect will be repaid to us is included in

our estimate of the amount of our contingent liability related to our guarantee obligations.

12

Debt. The PEAKS Trust issued senior debt in the initial aggregate principal amount of $300,000 (the “PEAKS Senior Debt”). In

accordance with ASC 810, we included the PEAKS Senior Debt on our consolidated balance sheet at its fair value as of February 28,

2013, the date of the Consolidation. The difference between the fair value of the PEAKS Senior Debt and its outstanding aggregate

principal balance at the date of the Consolidation was recorded as an accrued discount on our consolidated balance sheet at the date of

the Consolidation. The accrued discount will be recognized in interest expense at a level rate of return over the life of the PEAKS

Senior Debt.

Treasury Stock. Repurchases of outstanding shares of our common stock are recorded at cost. Treasury stock issued in

fulfillment of stock-based compensation awards or other obligations is accounted for under the last in, first out method. We record

“losses” from the sale of treasury stock that exceed previous net “gains” from the sale of treasury stock as a charge to retained

earnings.

Recognition of Revenue. Tuition revenue is recorded on a straight-line basis over the length of the applicable course to the

extent that we consider the collectability of that revenue to be reasonably assured. If a student withdraws from an institution, the

standards of most state education authorities that regulate our institutions, the accrediting commissions that accredit our institutions

and our own internal policy limit a student’s obligation for tuition and fees to the institution depending on when a student withdraws

during an academic term (“Refund Policies”). The terms of the Refund Policies vary by state, and the limitations imposed by the

Refund Policies are generally based on the portion of the academic term that has elapsed at the time the student withdraws. Generally,

the greater the portion of the academic term that has elapsed at the time the student withdraws, the greater the student’s obligation is to

the institution for the tuition and fees related to that academic term. We record revenue net of any refunds that result from any

applicable Refund Policy. On an individual student basis, tuition earned in excess of cash received is recorded as accounts receivable,

and cash received in excess of tuition earned is recorded as deferred revenue.

We do not charge a separate fee for textbooks that students use in their education programs. We record the cost of these

textbooks in prepaid expenses and other current assets and amortize the cost of textbooks on a straight-line basis over the applicable

course length. Tool kit sales, and the related cost, are recognized when the student receives the tool kit. Academic fees (which are

charged only one time to students on their first day of class attendance) are recognized as revenue on a straight-line basis over the

average length of the education program. If a student withdraws from an institution, all unrecognized revenue relating to his or her

fees, net of any refunds that result from any applicable Refund Policy, is recognized upon the student’s departure. An administrative

fee is charged to a student and recognized as revenue when the student withdraws or graduates from an education program at an

institution. We reassess the collectability of tuition revenue on a student-by-student basis throughout our revenue recognition period.

We reassess the collectability of tuition revenue that we may earn based on new information and changes in the facts and

circumstances relevant to a student’s ability to pay, which primarily include when a student withdraws from a program of study.

We report 12 weeks of tuition revenue in each of our four fiscal quarters. We standardized the number of weeks of revenue

reported in each fiscal quarter, because the timing of student breaks in a calendar quarter can fluctuate from quarter to quarter each

year. The total number of weeks of school during each year is 48.

We provide institutional scholarships and awards to our institutions’ students, which those students use to help reduce their

educational expenses. Institutional scholarships and awards reduce the students’ tuition charges and are recorded as offsets to revenue

in the period in which the tuition is earned.

Interest income on the PEAKS Trust Student Loans, which is the accretion of the accretable yield on the PEAKS Trust Student

Loans, is included in revenue and recognized based on the effective interest method as described in Note 11 – PEAKS Trust Student

Loans.

Advertising Costs. We expense all advertising costs as incurred. Advertising expense, which is included in Student services and

administrative expenses in our Consolidated Statements of Income, was $177,791 in the year ended December 31, 2013, $174,009 in

the year ended December 31, 2012 and $192,080 in the year ended December 2011.

Equity-Based Compensation. Stock-based compensation cost for our equity instruments exchanged for employee and director

services is measured at the date of grant, based on the calculated fair value of the grant and is recognized as an expense on a straight-

line basis over the period of time that the grantee must provide services to us before the stock-based compensation is fully vested. The

vesting period is generally the period set forth in the agreement granting the stock-based compensation. Under the terms of our stock-

based compensation plans, some grants immediately vest in full when the grantee’s employment or service terminates due to death or

disability, and, for grants made prior to November 24, 2010, when he or she retires. As a result, in certain circumstances, the period of

time that the grantee must provide services to us in order for that stock-based compensation to fully vest may be less than the vesting

period set forth in the agreement granting the stock-based compensation. In these instances, compensation expense will be recognized

over this shorter period.

13

We use a binomial option pricing model to determine the fair value of stock options granted and we use the market price of our

common stock to determine the fair value of restricted stock and restricted stock units (“RSUs”) granted. The binomial option pricing

model takes into account the variables defined below:

• “Volatility” is a statistical measure of the extent to which the stock price is expected to fluctuate during a period and

combines our historical stock price volatility and the implied volatility as measured by actively traded stock options.

• “Expected life” is the weighted average period that those stock options are expected to remain outstanding, based on the

historical patterns of our stock option exercises, as adjusted to reflect the current position-level demographics of the stock

option grantees.

• “Risk-free interest rate” is based on interest rates for terms that are similar to the expected life of the stock options.

• “Dividend yield” is based on our historical and expected future dividend payment practices.

We generally issue shares of our common stock from treasury shares upon the exercise of stock options or vesting of RSUs. As

of December 31, 2013, approximately 13.7 million shares of our common stock were held in treasury. Our Board of Directors has

authorized us to repurchase outstanding shares of our common stock, but we do not expect to repurchase any outstanding shares of our

common stock in 2014. See Note 8 – Stock Repurchases, for additional disclosures regarding our stock repurchases.

Operating Leases. We lease our non-owned facilities under operating lease agreements. Common provisions within our

operating lease agreements include:

• renewal options, which can be exercised after the initial lease term;

• rent escalation clauses;

• tenant improvement allowances; and

• rent holidays.

We record the rent expense associated with each operating lease agreement evenly over the term of the lease. The difference

between the amount of rent expense recorded and the amount of rent actually paid is recorded as either prepaid or accrued rent, which

is included in Other assets or Other liabilities, on our Consolidated Balance Sheets. We recognize a liability for the costs to terminate

the lease of a leased facility when we cease using that leased facility.

Income Taxes. We account for income taxes using the asset and liability method, which requires the recognition of deferred tax

assets and liabilities for expected future tax consequences of temporary differences that currently exist between the tax bases and

financial reporting bases of our assets and liabilities.

We follow the guidance under ASC 740, “Income Taxes” (“ASC 740”), which prescribes a single, comprehensive model for

how a company should recognize, measure, present and disclose in its financial statements uncertain tax positions that the company

has taken or expects to take on its tax returns. This guidance requires us to evaluate whether it is more likely than not, based on the

technical merits of a tax position, that the benefits resulting from the position will be realized by us.

We record interest and penalties related to unrecognized tax benefits in income tax expense.

2. Revision of 2011 and 2012 Financial Statements

We identified corrections to our 2011 and 2012 financial statements related to the recognition of revenue with respect to

students who withdrew from a program of study. We also corrected the calculation of the contingent loss for the 2009 RSA in our

2012 financial statements.

We evaluated the cumulative impact of those items on prior periods under the guidance in ASC 250, “Accounting Changes and

Error Corrections” (“ASC 250”), relating to SEC Staff Accounting Bulletin (“SAB”) No. 99, “Materiality.” We also evaluated the

impact of correcting those items through an adjustment to our financial statements for the fiscal year ended December 31, 2013. We

concluded, based on the guidance in ASC 250 relating to SAB No. 108, “Considering the Effects of Prior Year Misstatement when

Quantifying Misstatements in Current Year Financial Statements,” that the correction of those items in our 2011 and 2012 fiscal year

would not be material, but would be material if corrected out-of-period in our 2013 fiscal year. As a result, we have revised our

audited consolidated financial statements as of and for the fiscal years ended December 31, 2012 and December 31, 2011 to reflect the

correction of those items that should have been recognized in those periods. The amounts of the corrections as of December 31, 2012

and December 31, 2011 are shown in the Revisions column in the tables below.

Our revised Consolidated Balance Sheet as of December 31, 2012 and Consolidated Statements of Shareholders’ Equity as of

December 31, 2012, 2011 and 2010 also reflect the correction of the classification of funds held for students from Title IV Programs

14

that result in a credit balance on a student’s account as restricted and amounts related to the vesting of RSUs from retained earnings to

capital surplus. The amounts of these corrections related to our Consolidated Balance Sheets were not material and are shown in the

Revisions column in the tables below. The December 31, 2012 Consolidated Balance Sheet reflects an adjustment to increase retained

earnings by $5,366 and decrease capital surplus by $5,366 for the cumulative effect of the classification of the vesting of RSUs as of

December 31, 2011. We also increased retained earnings as of December 31, 2011 by $306 for the cumulative effect of the adjustment

for the recognition of revenue with respect to students who withdrew from a program of study in prior years.

The December 31, 2010 amounts presented on our Consolidated Statement of Shareholders’ Equity reflect an adjustment to

increase retained earnings by $2,969 and decrease capital surplus by $2,969 for the cumulative effect of the classification of the

vesting of RSUs. We also decreased retained earnings as of December 31, 2010 in our Consolidated Statement of Shareholders’

Equity by $1,028 for the cumulative effect of the adjustments for the recognition of revenue with respect to students who withdrew

from a program of study in prior periods.

We reclassified the following items in our Consolidated Statement of Income for the year ended December 31, 2012 to conform

with the current year presentation:

• settlement cost was reclassified to loss related to loan program guarantees;

• loss related to private student loan programs was reclassified to loss related to loan program guarantees; and

• an asset impairment was reclassified from loss related to private student loan programs to a separate line item.

We also corrected the classification of losses related to loan program guarantees, which were previously recorded as

reductions to revenue in our Consolidated Statements of Income for the years ended December 31, 2012 and December 31, 2011, to

report those amounts on a separate line. The amount of those corrections is shown in the Revisions column in the tables below.

The following table sets forth the effect of the revisions on the affected line items on our Consolidated Balance Sheet as of

the date indicated.


As

Previously

Reported

Revisions

As Revised

Balance Sheet Data:

Cash and cash equivalents $ 246,342 $ (2,877) $ 243,465

Restricted cash 601 2,877 3,478

Accounts receivable, net 77,313 1,615 78,928

Deferred income taxes (current) 44,547 0 44,547

Total current assets 384,965 1,615 386,580

Deferred income taxes 56,112 1,359 57,471

Total assets 672,230 2,974 675,204

Other current liabilities 86,722 20,074 106,796

Total current liabilities 306,949 20,074 327,023

Other liabilities 98,327 (15,911) 82,416

Total liabilities 545,276 4,163 549,439

Capital surplus 206,703 (9,590) 197,113

Retained earnings 959,072 8,401 967,473

Total shareholders’ equity 126,954 (1,189) 125,765

Total liabilities and shareholders’ equity 672,230 2,974 675,204

15

The following table sets forth the effect of the revisions and reclassifications on the affected line items in our

Consolidated Statement of Income for the year ended December 31, 2012.

Year Ended December 31, 2012

As

Previously

Reported

Revisions

Reclassifications

As Revised

Statement of Income Data:

Revenue $ 1,287,209 $ (576) $ 0 $1,286,633

Cost of educational

services 539,223

0

(873)

538,350

Student services and

administrative expenses

422,345

(21,489)

0

400,856

Settlement cost 21,750 0 (21,750) 0

Asset impairment 0 0 15,166 15,166

Legal and other

investigation costs

0

0

873

873

Loss related to private

student loan programs

71,102

0

(71,102)

0

Loss related to loan

program guarantees

0

23,339

77,686

101,025

Total costs and expenses

1,054,420

1,850

0

1,056,270

Operating income 232,789 (2,426) 0 230,363

Income before provision

for income taxes 230,414

(2,426)

0

227,988

Provision for income taxes

89,949

(931)

0

89,018

Net income 140,465 (1,495) 0 138,970

Earnings per share:

Basic $ 5.88

$ 5.82

Diluted $ 5.85

$ 5.79

The following table sets forth the effect of the revisions on the affected line items in our Consolidated Statement of

Income for the year ended December 31, 2011.


As

Previously

Reported

Revisions

As Revised

Statement of Income Data:

Revenue $1,499,949 $ (28) $ 1,499,977

Cost of educational services 553,065 0 553,065

Student services and administrative expenses 439,808 (25,652) 414,156

Loss related to loan program guarantees 0 23,500 23,500

Total costs and expenses 992,873 (2,152) 990,721

Operating income 507,076 2,180 509,256

Income before provision for income taxes 508,153 2,180 510,333

Provision for income taxes 200,401 846 201,247

Net income 307,752 1,334 309,086

Earnings per share:

Basic $ 11.22

$ 11.27

Diluted $ 11.13

$ 11.18

16


Comprehensive Income for the year ended December 31, 2012.


As

Previously

Reported

Revisions

As Revised

Statement of Comprehensive Income Data:

Net income $ 140,465 $ (1,495) $ 138,970

Comprehensive income 142,014 (1,495) 140,519


Comprehensive Income for the year ended December 31, 2011.


As

Previously

Reported

Revisions

As Revised

Statement of Comprehensive Income Data:

Net income $ 307,752 $ 1,334 $309,086

Comprehensive income 302,782 1,334 304,116

The following table sets forth the effect of the revisions on the affected line items in our Consolidated Statement of Cash

Flows for the year ended December 31, 2012.


As

Previously

Reported

Revisions

As Revised

Statement of Cash Flows Data:

Net income $ 140,465 $ (1,495) $ 138,970

Provision for doubtful accounts 78,307 (21,489) 56,818

Deferred income taxes (58,640) (1,359) (59,999)

Restricted cash 1,527 2,267 3,794

Accounts receivable (107,514) 20,376 (87,138)

Other operating assets and liabilities 68,890 3,967 72,857

Net cash flows from operating activities 105,354 2,267 107,621

The following table sets forth the effect of the revisions on the affected line items in our Consolidated Statement of Cash

Flows for the year ended December 31, 2011.


As

Previously

Reported

Revisions

As Revised

Statement of Cash Flows Data:

Net income $ 307,752 $ 1,334 $ 309,086

Provision for doubtful accounts 61,308 (25,653) 35,655

Deferred income taxes (8,991) 0 (8,991)

Restricted cash (1,873) 931 (942)

Accounts receivable (40,477) 23,473 (17,004)

Other operating assets and liabilities 35,118 846 35,964

Net cash flows from operating activities 387,832 931 388,763

17

The revisions had an effect on capital surplus, retained earnings and total shareholders’ equity as of December 31, 2012,

December 31, 2011 and December 31, 2010, as reported in our Consolidated Statements of Shareholders’ Equity. The effect on capital

surplus, retained earnings and total shareholders’ equity as of December 31, 2012 is shown in the Balance Sheet Data table above. The

revisions resulted in the following changes to capital surplus, retained earnings and total shareholders’ equity as of December 31,

2011:

• a decrease in capital surplus of $5,366;

• an increase in retained earnings of $5,672; and

• an increase in total shareholders’ equity of $306.

The revisions resulted in the following changes to capital surplus, retained earnings and total shareholders’ equity as of

December 31, 2010:

• a decrease in capital surplus of $2,969;

• an increase in retained earnings of $1,941; and

• a decrease in total shareholders’ equity of $1,028.

The revisions had an effect on net income for the years ended December 31, 2012 and December 31, 2011, as reported in our

Consolidated Statements of Shareholders’ Equity. The effect of the revisions on net income for the years ended December 31, 2012

and December 31, 2011, as reported in our Consolidated Statements of Shareholders’ Equity, is shown in the Statement of Income

Data tables above.

3. New Accounting Guidance

In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, which is included in the Codification

under ASC 606, “Revenue Recognition” (“ASC 606”). This guidance requires the recognition of revenue to depict the transfer of

promised goods or services to customers in an amount that reflects the consideration expected in exchange for those goods or services.

This guidance will become effective for our interim and annual reporting periods beginning January 1, 2017. We have not completed

our evaluation of the impact that this guidance may have on our consolidated financial statements.

In April 2014, the FASB issued ASU No. 2014-08, which is included in the Codification under ASC 205, “Presentation of

Financial Statements” (“ASC 205”). This update changes the requirements for reporting discontinued operations and clarifies when

disposals of groups of assets qualify for a discontinued operations presentation under ASC 205. This guidance will become effective

for our interim and annual reporting periods beginning January 1, 2015, and will be applied to any transactions that meet those

requirements beginning January 1, 2015.

In July 2013, the FASB issued ASU No. 2013-11, which is included in the Codification under ASC 740. This update provides

guidance on the presentation of unrecognized tax benefits when net operating loss carryforwards, similar tax losses or tax credit

carryforwards exist. This guidance became effective for our interim and annual reporting periods beginning January 1, 2014. The

adoption of this guidance did not have a material impact on our consolidated financial statements.

In February 2013, the FASB issued ASU No. 2013-02, which is included in the Codification under ASC 220, “Other

Comprehensive Income” (“ASC 220”). This update requires an entity to report the effect, by component, of significant

reclassifications out of accumulated other comprehensive income on the respective line items in net income. This guidance was

effective for our interim and annual reporting periods beginning January 1, 2013. The adoption of this guidance requires us to provide

additional disclosures regarding the amounts reclassified out of accumulated other comprehensive income during a reporting period.

We have included these disclosures in the footnotes to our consolidated financial statements. The adoption of this guidance did not

have a material impact on our consolidated financial statements

In October 2012, the FASB issued ASU No. 2012-04, which makes technical corrections, clarifications and limited-scope

improvements to various topics throughout the Codification. The amendments in this ASU that do not have transition guidance were

effective upon issuance, and the amendments that are subject to transition guidance were effective for our interim and annual reporting

periods beginning January 1, 2013. The adoption of this guidance did not have a material impact on our consolidated financial

statements.

18

In July 2012, the FASB issued ASU No. 2012-02, which is included in the Codification under ASC 350, “Intangibles –

Goodwill and Other” (“ASC 350”). This update allows an entity to first assess qualitative factors to determine whether it must perform

a quantitative impairment test. An entity would be required to calculate the fair value of an indefinite-lived intangible asset, if the

entity determines, based on a qualitative assessment, that it is more likely than not that the indefinite-lived intangible asset is impaired.

This guidance was effective for impairment tests performed for our interim and annual reporting periods beginning January 1, 2013.

The adoption of this guidance did not have a material impact on our consolidated financial statements.

In December 2011, the FASB issued ASU No. 2011-11, which is included in the Codification under ASC 210, “Balance Sheet”

(“ASC 210”). This update provides for enhanced disclosures to help users of financial statements evaluate the effect or potential effect

of netting arrangements on an entity’s financial position. In January 2013, the FASB issued ASU No. 2013-01, which clarified the

scope of the disclosures required under ASU No. 2011-11. Both of these updates were effective for our interim and annual reporting

periods beginning January 1, 2013. The adoption of this guidance did not have a material impact on our consolidated financial

statements.

4. Acquisitions

On August 1, 2013, we acquired all of the membership interests of Cable Holdings for $7,150 in cash, net of cash acquired.

Cable Holdings is an education company that operates under the name of Benchmark Learning and offers short-term information

technology and business learning solutions for career advancers and other professionals. The acquisition of Cable Holdings allowed us

to immediately begin operating in the short-term learning solutions market, which we hope to expand upon by leveraging our current

employer relationships, alumni and facilities, and integrating Cable Holdings’ operations into the Center for Professional

Development @ ITT Technical Institute (the “CPD”).

Our consolidated financial statements include the results of Cable Holdings from the acquisition date. The revenue and expenses

of Cable Holdings included in our Consolidated Statements of Income for the year ended December 31, 2013 were not material. Our

revenue, net income and earnings per share would not have been materially affected, if the revenue and expenses of Cable Holdings

were presented for the years ended December 31, 2013, 2012 and 2011 as if the transaction had occurred at the beginning of the

earliest period presented. The costs incurred to acquire Cable Holdings were expensed and were not material.

We accounted for the acquisition of Cable Holdings in accordance with ASC 805, “Business Combinations” (“ASC 805”),

which requires the use of the acquisition method of accounting for all business combinations. We considered the report of a third-party

valuation firm in allocating the purchase price to identifiable net assets. The excess of the consideration paid over the estimated fair

values of the identifiable net assets acquired was recognized as goodwill and is expected to be deductible for income tax purposes. The

identifiable intangible assets acquired consist of customer relationships, non-compete agreements and training materials, which are

being amortized over a weighted-average life of approximately five years. The estimated aggregate amortization expense in each of

the next five succeeding fiscal years is not material.

The following table sets forth the estimated fair values to be allocated to the major classes of assets acquired and liabilities

assumed in the Cable Holdings acquisition as of the acquisition date:

Assets

Acquired

Liabilities

Assumed

Accounts receivable and other current assets $ 1,110

Furniture and equipment 480

Identifiable intangible assets 2,390

Goodwill 3,958

Accounts payable and other liabilities $ 788

On January 31, 2014, we acquired certain assets and assumed certain liabilities of CompetenC Solutions, Inc. and Great Equalizer,

Inc. for approximately $5,186. CompetenC Solutions, Inc. and Great Equalizer, Inc. were education companies that operated primarily

under the name of Ascolta and offered short-term information technology and business learning solutions for career advancers and other

professionals. We acquired the Ascolta business to expand the CPD offerings in the short-term learning solutions market.

We will account for the acquisition of the Ascolta business in accordance with ASC 805. The purchase price has been

preliminarily allocated to identifiable net assets. The excess of the consideration paid over the estimated fair values of the identifiable

net assets acquired will be recognized as goodwill and is expected to be deductible for income tax purposes. The fair value of the

identifiable intangible assets acquired is preliminary, pending receipt of the final valuation. The identifiable intangible assets acquired

consist of customer relationships and non-compete agreements, which are expected to be amortized over an estimated weighted-

average life of approximately five years.

19

The following table sets forth the estimated fair values allocated to the major classes of assets acquired and liabilities assumed in

the Ascolta business acquisition as of the acquisition date:

Assets

Acquired

Liabilities

Assumed

Accounts receivable and other current assets $ 849

Furniture and equipment 370

Identifiable intangible assets 1,670

Goodwill 3,332

Other current liabilities $ 1,035

The estimated fair values of the assets acquired and liabilities assumed in the Ascolta acquisition are preliminary and based on

information that was available to us as of the acquisition date and as of the date of issuance of these financial statements. We may

revise the allocation of the purchase price when we complete the final review of the information. We expect to finalize the purchase

price allocation by October 31, 2014.

Our revenue, net income and earnings per share would not have been materially affected, if the revenue and expenses of the

Ascolta business were presented for the years ended December 31, 2013, 2012 and 2011 as if the transaction had occurred at the

beginning of the earliest period presented. The costs incurred to acquire the Ascolta business were expensed and were not material.

5. Fair Value and Credit Risk of Financial Instruments

Fair value for financial reporting is defined as the price that would be received upon the sale of an asset or paid upon the transfer

of a liability in an orderly transaction between market participants at the measurement date. The fair value measurement of our

financial assets utilized assumptions categorized as observable inputs under the accounting guidance. Observable inputs are

assumptions based on independent market data sources.

The following table sets forth information regarding the recurring fair value measurement of our financial assets as reflected on

our Consolidated Balance Sheet as of December 31, 2013:

Fair Value Measurements at Reporting Date Using

Description

As of

December 31,

2013

(Level 1)

Quoted Prices

in

Active Markets

for

Identical

Assets

(Level 2)

Significant

Other

Observable

Inputs

(Level 3)

Significant

Unobservable

Inputs

Cash equivalents:

Money market fund $ 214,985 $ 214,985 $ 0 $ 0

Restricted cash:

Money market fund 2,433 2,433 0 0

Other assets:

Money market fund

8,626

8,626

0

0

$ 226,044 $ 226,044 $ 0 $ 0

20

The following table sets forth information regarding the recurring fair value measurement of our financial assets as reflected on

our Consolidated Balance Sheet as of December 31, 2012:

Fair Value Measurements at Reporting Date Using

Description

As of

December 31,

2012

(Level 1)

Quoted Prices

in

Active Markets

for

Identical Assets

(Level 2)

Significant Other

Observable

Inputs

(Level 3)

Significant

Unobservable

Inputs

Cash equivalents:

Money market fund $ 151,784 $ 151,784 $ 0 $ 0

Restricted cash:


Other assets:


$ 163,283 $ 163,283 $ 0 $ 0

We used quoted prices in active markets for identical assets as of the measurement dates to value our financial assets that were

categorized as Level 1.

The carrying amounts for cash and cash equivalents, restricted cash, accounts receivable, accounts payable, and other

current liabilities approximate fair value because of the immediate or short-term maturity of these financial instruments. We did not

have any financial assets or liabilities recorded at estimated fair value on a non-recurring basis in our Consolidated Balance Sheets as

of December 31, 2013 or 2012.

As of December 31, 2013, the carrying value of the PEAKS Trust Student Loans was approximately $84,209. The estimated fair

value of the PEAKS Trust Student Loans was approximately $99,100 as of December 31, 2013. The fair value of the PEAKS Trust

Student Loans was estimated using the income approach with estimated discounted expected cash flows. We utilized inputs that were

unobservable in determining the estimated fair value of the PEAKS Trust Student Loans. The significant inputs used in determining

the estimated fair value included the default rate, repayment rate and discount rate. Fair value measurements that utilize significant

unobservable inputs are categorized as Level 3 measurements under the accounting guidance.

Each of the carrying value and the estimated fair value of the notes receivable and other receivables included in Prepaid

expenses and other current assets or Other assets on our Consolidated Balance Sheet was approximately $2,500 as of December 31,

2013 and approximately $9,600 as of December 31, 2012. We estimated the fair value of the notes receivable and other receivables by

discounting the future cash flows using current rates for similar arrangements. The assumptions used in this estimate are considered

unobservable inputs. Fair value measurements that utilize significant unobservable inputs are categorized as Level 3 measurements

under the accounting guidance.

Each of the carrying value and the estimated fair value of our debt under our credit agreement was approximately $50,000 as of

December 31, 2013 and $140,000 as of December 31, 2012. The fair value of our debt under our credit agreement was estimated by

discounting the future cash flows using current rates for similar loans with similar characteristics and remaining maturities. We

utilized inputs that were observable or were principally derived from observable market data to estimate the fair value of our debt

under our credit agreement. Fair value measurements that utilize significant other observable inputs are categorized as Level 2

measurements under the accounting guidance.

As of December 31, 2013, the carrying value of the PEAKS Senior Debt was approximately $229,224. The estimated fair value

of the PEAKS Senior Debt was approximately $239,400 as of December 31, 2013. The fair value of the PEAKS Senior Debt was

estimated using the income approach with estimated discounted cash flows. We utilized inputs that were unobservable in determining

the estimated fair value of the PEAKS Senior Debt. The significant input used in determining the estimated fair value was the discount

rate utilized for both credit and liquidity purposes. Fair value measurements that utilize significant unobservable inputs are categorized

as Level 3 measurements under the accounting guidance.

Financial instruments that potentially subject us to credit risk consist primarily of accounts receivable, interest-bearing

investments, notes receivable and the PEAKS Trust Student Loans. There is no concentration of credit risk of our accounts receivable,

as the total is comprised of a large number of individual balances owed by students whose credit profiles vary and who are located

throughout the United States. Our interest-bearing investments and cash equivalents generally consist of high-quality securities issued

by various entities and major financial institutions. Certain of the assets of the party to whom we issued one of the notes receivable

serve as collateral for the repayment of the note. The PEAKS Trust Student Loans consist of a large number of individual loans owed

by borrowers, whose credit profiles vary and who are located throughout the United States.

21

6. Financial Aid Programs

We participate in various Title IV Programs of the HEA. In 2013, in the aggregate, our institutions derived approximately 82%

of their applicable revenue from funds distributed under those Title IV Programs, as determined on a cash accounting basis under the

calculation of the provision of the HEA commonly referred to as the “90/10 Rule.”

We administer the Title IV Programs in separate accounts as required by government regulation. We are required to administer

the funds in accordance with the requirements of the HEA and the ED’s regulations and must use due diligence in approving and

disbursing funds. In the event we do not comply with federal requirements, or if student loan default rates rise to a level considered

excessive by the federal government, we could lose our eligibility to participate in Title IV Programs or could be required to repay

funds determined to have been improperly disbursed. Our management believes that we are in substantial compliance with the federal

requirements.

7. Equity Compensation Plans

We have adopted the following equity compensation plans, referred to collectively as the “Plans”:

• ITT Educational Services, Inc. Amended and Restated 2006 Equity Compensation Plan – On May 7, 2013, our

shareholders approved the ITT Educational Services, Inc. Amended and Restated 2006 Equity Compensation Plan (the

“Amended 2006 Plan”). Prior to May 7, 2013, we adopted and our shareholders approved the 2006 ITT Educational

Services, Inc. Equity Compensation Plan (the “Original 2006 Plan”). Awards may be granted to our employees and

directors under the Amended 2006 Plan in the form of stock options (incentive and nonqualified), stock appreciation

rights (“SARs”), restricted stock, RSUs, performance shares, performance units and other stock-based awards as defined

in the plan. The Amended 2006 Plan increased the maximum number of shares of our common stock that may be issued

pursuant to awards under the plan to 7,350,000, an increase of 3,350,000 over the 4,000,000 maximum under the Original

2006 Plan. Each share underlying stock options and SARs granted and not forfeited or terminated, reduces the number of

shares available for future awards by one share. The delivery of a share in connection with a “full-value award” (i.e., an

award of restricted stock, RSUs, performance shares, performance units or any other stock-based award with value

denominated in shares) reduces the number of shares remaining for other awards by two shares. As of December 31,

2013, restricted stock, RSUs and nonqualified stock options have been awarded under this plan.

• 1999 Outside Directors Stock Option Plan – A maximum of 500,000 shares of our common stock were available to be

issued upon the exercise of nonqualified stock options granted to non-employee directors under the 1999 Outside

Directors Stock Option Plan (“1999 Directors Stock Plan”).

• 1997 ITT Educational Services, Inc. Incentive Stock Plan – A maximum of 8,100,000 shares of our common stock were

available to be issued upon the exercise of stock options and pursuant to other forms of awards under the 1997 ITT

Educational Services, Inc. Incentive Stock Plan (“1997 Stock Plan”), but no more than 20% of the total number of shares

on a cumulative basis could have been used for restricted stock or performance share awards. A maximum of 1.5% of our

outstanding shares of common stock could have been issued annually, with any unissued shares available to be issued in

later years.

No additional awards have been or will be granted after May 9, 2006 under the 1999 Directors Stock Plan or the 1997 Stock Plan. All

awards outstanding as of December 31, 2013 under the 1999 Directors Stock Plan and the 1997 Stock Plan will expire in 2014.

The stock-based compensation expense and related income tax benefit recognized in our Consolidated Statements of Income in the

periods indicated were as follows:


2013 2012 2011

Stock-based compensation expense $ 11,638 $ 16,658 $ 17,074

Income tax (benefit) ($ 4,481) ($ 6,414) ($ 6,574)

We did not capitalize any stock-based compensation cost in the years ended December 31, 2013, 2012 and 2011.

As of December 31, 2013, we estimated that pre-tax compensation expense for unvested stock-based compensation grants in the

amount of approximately $13,900, net of estimated forfeitures, will be recognized in future periods. This expense will be recognized

over the remaining service period applicable to the grantees which, on a weighted-average basis, is approximately 2.0 years.

22

Stock Options. Under the Plans, the stock option exercise price may not be less than 100% of the fair market value of our

common stock on the date of grant. The maximum term of any stock option granted under the Amended 2006 Plan and Original 2006

Plan may not exceed seven years from the date of grant, and those stock options will be exercisable at such times and under conditions

as determined by the Compensation Committee of our Board of Directors, subject to the limitations contained in the plan. All stock

options awarded under the Amended 2006 Plan and Original 2006 Plan typically vest and become exercisable in three equal

installments commencing with the first anniversary of the date of grant.

Under the 1999 Directors Stock Plan, the stock options granted typically vested and became exercisable on the first anniversary

of the grant. The maximum term of any stock option granted under the 1999 Directors Stock Plan was: (a) 10 years from the date of

grant for any stock options granted prior to January 25, 2005; and (b) seven years from the date of grant for any stock options granted

on or after January 25, 2005.

Under the 1997 Stock Plan, the stock options granted typically vested and became exercisable in three equal annual installments

commencing with the first anniversary of the date of grant. The maximum term of any stock option granted under the 1997 Stock Plan

was 10 years and two days from the date of grant.

The stock options granted, forfeited, exercised and expired in the period indicated were as follows:


Weighted

Weighted

Average Aggregate Average Aggregate

# of Exercise Exercise Remaining Intrinsic

Shares Price Price Contractual Term Value (1)

Outstanding at beginning of

period 1,574,604

$ 84.90

$ 133,691

Granted 156,500 $ 19.55 3,059

Forfeited (16,668) $ 75.11 (1,252)

Exercised 0 $ 0.00 0

Expired (381,988) $ 69.48 (26,543)

Outstanding at end of

period 1,332,448

$ 81.77

$ 108,955

2.4 years

$ 2,198

Exercisable at end of

period 1,040,443

$ 92.28

$ 96,016

2.1 years

$ 0

(1) The aggregate intrinsic value of the stock options was calculated by identifying those stock options that had a lower exercise

price than the closing market price of our common stock on December 31, 2013 and multiplying the difference between the

closing market price of our common stock and the exercise price of each of those stock options by the number of shares subject

to those stock options that were outstanding or exercisable, as applicable.

The following table sets forth information regarding the stock options granted and exercised in the periods indicated:


2013 2012 2011

Shares subject to stock options granted 156,500 156,500 159,500

Weighted average grant date fair value $ 9.27 $ 31.36 $ 28.90

Shares subject to stock options exercised 0 202,820 118,410

Intrinsic value of stock options exercised $ 0 $ 4,802 $ 3,095

Proceeds received from stock options exercised $ 0 $ 8,345 $ 5,599

Tax benefits realized from stock options exercised $ 0 $ 1,602 $ 1,190

23

The intrinsic value of a stock option is the difference between the fair market value of the stock and the option exercise price.

The fair value of each stock option grant was estimated on the date of grant using the following assumptions:


2013 2012 2011

Risk-free interest rates 0.7% 0.7% 1.8%

Expected lives (in years) 4.6 4.5 4.7

Volatility 60% 51% 48%

Dividend yield None None None

Restricted Stock Units. Under the Amended 2006 Plan and Original 2006 Plan, RSUs awarded are subject to a restriction period

of at least: (a) for awards made prior to November 24, 2010, three years in the case of a time-based period of restriction and one year

in the case of a performance-based period of restriction; and (b) for awards made after November 24, 2010, one year. All RSUs

awarded under the Amended 2006 Plan and Original 2006 Plan that were not vested as of December 31, 2013 have a time-based

restriction period that ranges from ending on the first to the third anniversary of the date of grant.

The following table sets forth the number of RSUs that were granted, forfeited and vested in the period indicated:


# of RSUs

Weighted

Average

Grant Date

Fair Value

Unvested at beginning of period 413,645 $ 75.35

Granted 522,014 $ 19.98

Forfeited (129,327) $ 46.72

Vested (68,488) $ 88.60

Unvested at end of period 737,844 $ 39.96

The total fair market value of the RSUs that vested and were settled in shares of our common stock was $1,241 in the year ended

December 31, 2013, $4,568 in the year ended December 31, 2012 and $2,454 in the year ended December 31, 2011. Also, in the year

ended December 31, 2012, 48,935 RSUs vested and were settled in cash for $3,073.

8. Stock Repurchases

As of December 31, 2013, approximately 7.8 million shares remained available for repurchase under the share repurchase

program (the “Repurchase Program”) authorized by our Board of Directors. The terms of the Repurchase Program provide that we

may repurchase shares of our common stock, from time to time depending on market conditions and other considerations, in the open

market or through privately negotiated transactions in accordance with Rule 10b-18 of the Securities Exchange Act of 1934, as

amended (the “Exchange Act”). Unless earlier terminated by our Board of Directors, the Repurchase Program will expire when we

repurchase all shares authorized for repurchase thereunder.

The following table sets forth information regarding the shares of our common stock that we repurchased in the periods

indicated:


2013 2012

Number of shares 0 3,025,700

Total cost $ 0 $ 207,918

Average cost per share $ 0 $ 68.72

24

9. Earnings (Loss) Per Common Share

Earnings (loss) per common share for all periods have been calculated in conformity with ASC 260, “Earnings Per Share.” This

data is based on historical net income (loss) and the weighted average number of shares of our common stock outstanding during each

period as set forth in the following table:


2013 2012 2011

(In thousands) Shares:

Weighted average number of shares of common stock

outstanding 23,412

23,880

27,429

Shares assumed issued (less shares assumed purchased for

treasury) for stock-based compensation Not Applicable

119

226

Outstanding shares for diluted earnings (loss) per share

calculation 23,412

23,999

27,655

A total of approximately 1.4 million shares for fiscal year 2013, approximately 1.7 million shares for fiscal year 2012 and

approximately 1.1 million shares for fiscal year 2011 were excluded from the calculation of our diluted earnings per common share,

because the effect was anti-dilutive.

10. Variable Interest Entities

Under ASC 810, an entity that holds a variable interest in a VIE and meets certain requirements would be considered to be the

primary beneficiary of the VIE and required to consolidate the VIE in its consolidated financial statements. In order to be considered

the primary beneficiary of a VIE, an entity must hold a variable interest in the VIE and have both:

• the power to direct the activities that most significantly impact the economic performance of the VIE; and

• the right to receive benefits from, or the obligation to absorb losses of, the VIE that could be potentially significant to the

VIE.

The PEAKS Trust and the 2009 Entity (defined below) are VIEs as defined under ASC 810. We hold variable interests in the

PEAKS Trust as a result of:

• a subordinated note issued to us by the PEAKS Trust in exchange for the portion of each private education loan disbursed to

us under the PEAKS Program that we transferred to the PEAKS Trust (“Subordinated Note”); and

• our guarantee of the payment of the principal and interest owed on the PEAKS Senior Debt, the administrative fees and

expenses of the PEAKS Trust and a minimum required ratio of assets of the PEAKS Trust to outstanding PEAKS Senior

Debt (“PEAKS Guarantee”).

We hold variable interests in an unaffiliated entity (the “2009 Entity) as a result of:

• a risk sharing agreement that we entered into with the 2009 Entity (the “2009 RSA”) on February 20, 2009 in connection

with other agreements to create a program that made private education loans available to our students to help pay the

students’ cost of education that financial aid from federal, state and other sources did not cover (the “2009 Loan

Program”); and

• a revolving note owed to us by the 2009 Entity (the “Revolving Note”).

To determine whether we are the primary beneficiary of the PEAKS Trust or the 2009 Entity, we:

• assessed the risks that the VIE was designed to create and pass through to its variable interest holders;

• identified the variable interests in the VIE;

• identified the other variable interest holders and their involvement in the activities of the VIE;

• identified the activities that most significantly impact the VIE’s economic performance;

• determined whether we have the power to direct those activities; and

• determined whether we have the right to receive the benefits from, or the obligation to absorb the losses of, the VIE that

could potentially be significant to the VIE.

25

We determined that the activities of the PEAKS Trust and the 2009 Entity that most significantly impact the economic

performance of the PEAKS Trust and the 2009 Entity involve the servicing (which includes the collection) of the PEAKS Trust

Student Loans and loans owned by the 2009 Entity. To make that determination, we analyzed various possible scenarios of student

loan portfolio performance to evaluate the potential economic impact on the PEAKS Trust and the 2009 Entity. In our analysis, we

made what we believe are reasonable assumptions based on historical data for the following key variables:

• the composition of the credit profiles of the borrowers;

• the interest rates and fees charged on the loans;

• the default rates and the timing of defaults associated with similar types of loans; and

• the prepayment and the speed of repayment associated with similar types of loans.

Based on our analysis, we concluded that we became the primary beneficiary of the PEAKS Trust on February 28, 2013. This

was the first date that we had the power to direct the activities of the PEAKS Trust that most significantly impact the economic

performance of the PEAKS Trust, because we could have exercised our right to terminate the PEAKS Servicing Agreement (as

defined below), due to the failure of the entity that performs those servicing activities for the PEAKS Trust Student Loans on behalf of

the PEAKS Trust to meet certain performance criteria specified in the PEAKS Servicing Agreement. We have not, however, exercised

our right to terminate the PEAKS Servicing Agreement. As a result of our primary beneficiary conclusion, we consolidated the

PEAKS Trust in our consolidated financial statements beginning on February 28, 2013. Prior to February 28, 2013, the PEAKS Trust

was not required to be consolidated in our consolidated financial statements, because we concluded that we were not the primary

beneficiary of the PEAKS Trust prior to that time. The PEAKS Trust is discussed in more detail below. The PEAKS Servicing

Agreement is the agreement between the servicer and the PEAKS Trust (among other parties) that specifies the servicing activities to

be provided by the servicer related to the PEAKS Trust Student Loans (the “PEAKS Servicing Agreement”).

Our consolidated financial statements for periods after February 28, 2013 include the PEAKS Trust, because we were

considered to have control over the PEAKS Trust under ASC 810 as a result of our substantive unilateral right to terminate the

PEAKS Servicing Agreement. We do not, however, actively manage the operations of the PEAKS Trust, and the assets of the

consolidated PEAKS Trust can only be used to satisfy the obligations of the PEAKS Trust. Our obligations under the PEAKS

Guarantee remain in effect, until the PEAKS Senior Debt and the PEAKS Trust’s fees and expenses are paid in full. See Note 16—

Commitments and Contingencies.

Based on our analysis, we also concluded that we were not the primary beneficiary of the 2009 Entity as of December 31, 2013,

because we did not have the power to direct the servicing activities on the private education loans owned by the 2009 Entity. As a

result, we are not required under ASC 810 to consolidate the 2009 Entity in our consolidated financial statements as of and for the

fiscal year ended December 31, 2013. Our conclusion that we were not the primary beneficiary of the 2009 Entity did not change from

the prior reporting period. Therefore, there was no effect on our consolidated financial statements arising from our conclusion that we

were not the primary beneficiary of the 2009 Entity. The 2009 Entity is discussed in more detail below.

We may become the primary beneficiary of the 2009 Entity, if the entity that performs the servicing activities for the 2009

Entity (the “2009 Loan Program Servicer”) fails to meet certain performance criteria specified in the servicing agreement that governs

the servicing activities of the private education loans made under the 2009 Loan Program (the “2009 Servicing Agreement”). If the

2009 Loan Program Servicer fails to meet those performance criteria, we have the right to terminate the 2009 Servicing Agreement

and, therefore, would be considered to have the power to direct the activities of the 2009 Entity that most significantly impact the

economic performance of the 2009 Entity. If that occurs, we would be required to consolidate the 2009 Entity in our consolidated

financial statements. As of December 31, 2013, we believe that the performance criteria specified in the 2009 Servicing Agreement

were met and, therefore, we did not have the right to terminate the 2009 Servicing Agreement. Based on preliminary loan performance

data as of September 30, 2014 that we have received regarding the private education loans made under the 2009 Loan Program,

however, we believe that, as of September 30, 2014, the 2009 Loan Program Servicer may not have met the performance criteria

specified in the 2009 Servicing Agreement. As a result, it appears likely that the 2009 Loan Program Servicer either has failed, or

within the foreseeable future will fail, to meet the performance criteria in the 2009 Servicing Agreement. Once that occurs, following

a cure period and that assuming that no cure occurs, we will have the right to terminate the 2009 Servicing Agreement. As a result of

that right, we will be required to consolidate the 2009 Entity into our consolidated financial statements. We believe that this right to

terminate the 2009 Servicing Agreement will become operative in late 2014 or early 2015.

26

PEAKS Trust. On January 20, 2010, we entered into agreements with unrelated third parties to establish the PEAKS Program,

which was a private education loan program for our students. Under the PEAKS Program, an unrelated lender originated private

education loans to our eligible students and, subsequently, sold those loans to the PEAKS Trust. The PEAKS Trust issued the PEAKS

Senior Debt to investors. The lender disbursed the proceeds of the private education loans to us for application to the students’ account

balances with us that represented their unpaid education costs. We transferred a portion of the amount of each private education loan

disbursed to us under the PEAKS Program to the PEAKS Trust in exchange for the Subordinated Note. No new private education

loans were or will be originated under the PEAKS Program after July 2011, but immaterial amounts related to loans originated prior to

that date were disbursed by the lender through March 2012.

The Subordinated Note does not bear interest and was recorded net of an unamortized discount based on an imputed interest rate

of 9.0% in Other assets on our Consolidated Balance Sheet as of December 31, 2012. Prior to October 1, 2012, the discount was

amortized and recognized in Interest income in our Consolidated Statements of Income over the term of the Subordinated Note. The

maturity date of the Subordinated Note is in March 2026. The amount owed to us under the Subordinated Note was approximately

$73,000 as of December 31, 2012. The carrying value of the Subordinated Note was eliminated from our Consolidated Balance Sheet

when we consolidated the PEAKS Trust in our consolidated financial statements beginning on February 28, 2013.

The PEAKS Trust utilized the proceeds from the issuance of the PEAKS Senior Debt and the Subordinated Note to purchase the

private education loans made by the lender to our students. The assets of the PEAKS Trust (which include, among other assets, the

PEAKS Trust Student Loans) serve as collateral for, and are intended to be the principal source of, the repayment of the PEAKS

Senior Debt and the Subordinated Note.

In the three months ended December 31, 2012, we determined it was probable that we would not collect the carrying value of

the Subordinated Note and, therefore, concluded that the Subordinated Note was impaired. We recorded an impairment charge in the

amount of approximately $10,300, which equaled the total carrying value of the Subordinated Note prior to recording the impairment

charge. The carrying value of the Subordinated Note was approximately $0 as of December 31, 2012, and was included on our

Consolidated Balance Sheet in Other assets. The carrying value of the Subordinated Note was eliminated from our Consolidated

Balance Sheet when we consolidated the PEAKS Trust in our consolidated financial statements. We did not recognize any interest

income related to the Subordinated Note in our Consolidated Statements of Income after September 30, 2012.

Under the PEAKS Guarantee we guarantee payment of the principal and interest owed on the PEAKS Senior Debt, the

administrative fees and expenses of the PEAKS Trust and a minimum required ratio of assets of the PEAKS Trust to outstanding

PEAKS Senior Debt. Our guarantee obligations under the PEAKS Program remain in effect until the PEAKS Senior Debt and the

PEAKS Trust’s fees and expenses are paid in full. At such time, we will be entitled to repayment of the amounts that we paid under

the PEAKS Guarantee (which do not include Payments on Behalf of Borrowers, as defined below), to the extent of available funds

remaining in the PEAKS Trust. As of December 31, 2012, we had made payments totaling $12,342 under the PEAKS Guarantee

(excluding Payments on Behalf of Borrowers), which we expected to be repaid to us (the “PEAKS Guarantee Receivable”). The

PEAKS Guarantee Receivable was eliminated from our Consolidated Balance Sheet when we consolidated the PEAKS Trust in our

consolidated financial statements. See Note 16 – Commitments and Contingencies, for a further discussion of the PEAKS Guarantee.

We did not consolidate the PEAKS Trust in our consolidated financial statements as of December 31, 2012, because we

concluded that we were not the primary beneficiary of the PEAKS Trust prior to February 28, 2013. We did, however, include the

PEAKS Guarantee Receivable, net of accrued discount, and the contingent liability related to the PEAKS Guarantee in our

consolidated financial statements as of December 31, 2012. We did not record a PEAKS Guarantee Receivable or a contingent

liability related to the PEAKS Guarantee in our consolidated financial statements as of December 31, 2013. See Note 16 –

Commitments and Contingencies, for a further discussion of those amounts.

27

We concluded that we became the primary beneficiary of the PEAKS Trust on February 28, 2013 and, therefore, were required

to consolidate the PEAKS Trust in our consolidated financial statements. In accordance with ASC 810, the consolidation of the

PEAKS Trust was treated as an acquisition of assets and liabilities and, therefore, the assets and liabilities of the PEAKS Trust were

included in our consolidated financial statements at their fair value as of February 28, 2013. The following table sets forth the fair

value of the assets and liabilities of the PEAKS Trust as of February 28, 2013 that were included on our Consolidated Balance Sheet

on that date:

As of February 28, 2013

Assets Liabilities

Restricted cash $ 1,703

PEAKS Trust student loans, less allowance for loan losses of

$0 7,282

PEAKS Trust student loans, excluding current portion, less

allowance for loan losses of $0 104,834

Current portion of PEAKS Trust senior debt $103,356

Other current liabilities 471

PEAKS Trust senior debt, excluding current portion 122,740

Total $113,819 $226,567

The following table sets forth the carrying value of the assets and liabilities related to the PEAKS Program as of February 28,

2013 that we eliminated from our consolidated balance sheet when we consolidated the PEAKS Trust in our consolidated financial

statements, and the line items within which those assets and liabilities were included:


Assets Liabilities

Other assets $ 6,614

Other current liabilities $ 3,060

Other liabilities 43,054

Total $ 6,614 $ 46,114

The fair value of the PEAKS Trust’s liabilities exceeded the fair value of the PEAKS Trust’s assets as of February 28, 2013 by

$112,748. The amount of this excess was reduced by $39,500, which represented the net amount of the carrying value of the assets

and liabilities related to the PEAKS Program that had been recorded in our consolidated financial statements as of February 28, 2013

and were eliminated upon the Consolidation. As a result, we recognized a total loss of $73,248 in our Consolidated Statement of

Income for the year ended December 31, 2013 related to the Consolidation.

The following table sets forth the carrying values of assets and liabilities of the PEAKS Trust that were included on our

Consolidated Balance Sheet as of December 31, 2013:


Assets Liabilities

Restricted cash $ 2,593

PEAKS Trust student loans, less allowance for loan losses of $0 7,730

PEAKS Trust student loans, excluding current portion, less

allowance for loan losses of $29,349 76,479

Current portion of PEAKS Trust senior debt $ 157,883

Other current liabilities 697

PEAKS Trust senior debt, excluding current portion 71,341

Total $ 86,802 $ 229,921

The assets of the PEAKS Trust can only be used to satisfy the obligations of the PEAKS Trust. Payment of the administrative

fees and expenses of the PEAKS Trust and the principal and interest owed on the PEAKS Senior Debt are guaranteed by us under the

PEAKS Guarantee.

28

The following table sets forth the revenue and expenses of the PEAKS Trust, excluding the loss on consolidation of the PEAKS

Trust, that were included in our Consolidated Statement of Income in the year ended December 31, 2013:

Year Ended

December 31,

2013

Revenue $ 12,996

Student services and administrative expenses 5,288

Provision for PEAKS Trust student loan losses 29,349

Interest expense 21,288

Income (loss) before provision for income taxes $ (42,929)

The revenue of the PEAKS Trust consists of interest income on the PEAKS Trust Student Loans, which is the accretion of the

accretable yield on the PEAKS Trust Student Loans. The servicing, administrative and other fees incurred by the PEAKS Trust are

included in Student services and administrative expenses in our Consolidated Statements of Income. The provision for PEAKS Trust

student loan losses represents the increase in the allowance for loan losses that occurred during the period. The allowance for loan

losses represents the difference between the carrying value and the total present value of the expected principal and interest collections

of each loan pool of the PEAKS Trust Student Loans, discounted by the loan pool’s effective interest rate as of December 31, 2013.

Interest expense of the PEAKS Trust represents interest expense on the PEAKS Senior Debt, which includes the contractual interest

obligation and the accretion of the discount on the PEAKS Senior Debt.

Beginning in the fourth quarter of 2012 and continuing through January 2014, we made payments on behalf of certain student

borrowers under the PEAKS Program to the PEAKS Trust to avoid defaults by those borrowers on their PEAKS Trust Student Loans

(“Payments on Behalf of Borrowers”), which defaults would have triggered much larger contractually required payments by us under

the PEAKS Guarantee. At the time we made Payments on Behalf of Borrowers, we believed that those payments were contractually

permitted and a form of payment to the PEAKS Trust that would satisfy obligations that were contractually required. Since that time,

however, we have determined that Payments on Behalf of Borrowers are not permitted or required to support the PEAKS Trust. If we

had not made Payments on Behalf of Borrowers, we would have had to make contractually required payments under the PEAKS

Guarantee in greater amounts. We made Payments on Behalf of Borrowers after assessing:

• the likelihood of us being contractually required to make payments under the PEAKS Guarantee in the near future;

• the effect on our liquidity that would result from making payments under the PEAKS Guarantee compared to making

Payments on Behalf of Borrowers;

• the effect that Payments on Behalf of Borrowers may have on the funds available to the PEAKS Trust to repay the

Subordinated Note to us following full payment of the PEAKS Trust’s other obligations; and

• the fact that we will not be able to recover Payments on Behalf of Borrowers from the PEAKS Trust or the student

borrowers on whose behalf we made those payments.

Payments on Behalf of Borrowers assisted in:

• maintaining the ratio of assets of the PEAKS Trust to outstanding PEAKS Senior Debt at the required level (the

“Asset/Liability Ratio”); and

• satisfying the following month’s required payment of interest on the PEAKS Senior Debt and administrative fees and

expenses of the PEAKS Trust.

Prior to the Consolidation, Payments on Behalf of Borrowers were reflected on our financial statements as a reduction to our

contingent liability accrual. Following the Consolidation, Payments on Behalf of Borrowers were not reflected on our financial

statements, since those payments were intercompany transactions, which were eliminated from our financial statements as a result of

the Consolidation.

29

The following table sets forth the guarantee payments and Payments on Behalf of Borrowers that were made related to the

PEAKS Program in the periods indicated:

Type of Payment

January 1,

2013

Through

February 28,

2013 (1)

March 1,

2013

Through

December 31,

2013 (1)

Total Year

Ended

December 31,

2013

Year Ended

December 31,

2012

PEAKS Guarantee $ 854 $ 1,559 $ 2,413 $ 12,342

Payments on Behalf of

Borrowers 532

10,967

11,499

2,762

Total $ 1,386 $ 12,526 $ 13,912 $ 15,104

(1) We have provided separate columns showing the payment amounts prior to and after the Consolidation, because all transactions

with the PEAKS Trust were eliminated from our consolidated financial statements after the Consolidation. Cash payments were,

however, made by us throughout the periods indicated, including the periods after the Consolidation

In January 2014, we made Payments on Behalf of Borrowers of $1,832. In March 2014, we entered into a letter agreement,

dated as of March 17, 2014, with the trustee under the PEAKS Program and the holders of the PEAKS Senior Debt (the “Letter

Agreement”), in order to resolve differing interpretations of the permissibility of the Payments on Behalf of Borrowers under the

PEAKS Program documents. Pursuant to the Letter Agreement, the trustee agreed to waive, and the holders of the PEAKS Senior

Debt consented to the waiver of, any:

• breach of the PEAKS Program documents caused by us making Payments on Behalf of Borrowers, including any failure

to make payments under the PEAKS Guarantee as a result thereof; and

• event of default under the PEAKS Program documents that may have arisen or resulted by us making Payments on Behalf

of Borrowers.

In the Letter Agreement, we agreed, after the date of the Letter Agreement, not to make any further payments of any kind on behalf of

any borrower in respect of a private education loan made under the PEAKS Program. In accordance with the terms of the Letter

Agreement, we paid $40,000 on March 20, 2014, which is considered to be a payment under the PEAKS Guarantee and was applied

primarily to make a mandatory prepayment of the PEAKS Senior Debt.

2009 Entity. On February 20, 2009, we entered into agreements with the 2009 Entity to create the 2009 Loan Program. Under

the 2009 Loan Program, an unrelated lender originated private education loans to our eligible students and, subsequently, sold those

loans to the 2009 Entity. The 2009 Entity purchased the private education loans from the lender utilizing funds received from its

owners in exchange for participation interests in the private education loans acquired by the 2009 Entity. The lender disbursed the

proceeds of the private education loans to us for application to the students’ account balances with us that represented their unpaid

education costs. No new private education loans were or will be originated under the 2009 Loan Program after December 31, 2011,

but immaterial amounts related to loans originated prior to that date were disbursed by the lender through June 2012.

In connection with the 2009 Loan Program, we entered into the 2009 RSA with the 2009 Entity. Under the 2009 RSA, we

guarantee the repayment of any private education loans that are charged off above a certain percentage of the private education loans

made under the 2009 Loan Program, based on the annual dollar volume. Under the 2009 RSA, we have an obligation to make the

monthly payments due and unpaid on those private education loans that have been charged off above a certain percentage (“Regular

Payments”). Instead of making Regular Payments, however, we may elect to:

• pay the then outstanding balance (plus accrued and unpaid interest) of those private education loans that have been charged

off above a certain percentage and, with respect to which, an amount equal to at least ten monthly payments has been paid; or

• pay the then outstanding balance (plus accrued and unpaid interest) of those private education loans that have been

charged off above a certain percentage and, with respect to which, an amount equal to at least ten monthly payments has

not been paid, plus any interest that would otherwise have been payable until ten monthly payments had been made,

discounted at the rate of 10% per annum

(collectively, “Discharge Payments”). We determined that the ability to make Discharge Payments as of December 31, 2013 did not

give us the power to direct the activities that most significantly impacted the economic performance of the 2009 Entity and, therefore,

did not change our conclusion that we were not the primary beneficiary of the 2009 Entity.

30

We are entitled to all amounts that the 2009 Entity recovers from loans in a particular loan pool made under the 2009 Loan

Program that have been charged off, until all payments that we made under the 2009 RSA with respect to that loan pool have been

repaid to us by the 2009 Entity. The following table sets forth the payments that we made to the 2009 Entity related to our guarantee

obligations under the 2009 RSA and the amount of recoveries from charged-off loans paid to us by the 2009 Entity in the periods

indicated:


2013 2012

Regular Payments $ 1,791 $ 1,990

Discharge Payments 912 0

Recoveries from Charged-Off Loans (103) (234)

$ 2,600 $ 1,756

In the fiscal year ended December 31, 2013, we also offset $9,091 owed by us under the 2009 RSA against amounts owed to us

by the 2009 Entity under the Revolving Note, instead of making additional payments in that amount. See Note 16 – Commitments and

Contingencies for a further discussion of the offset. Approximately $6,786 of the amount that we claimed as an offset against the

Revolving Note represented Discharge Payments. We recorded all of the amounts claimed as offsets in Other current liabilities on our

Consolidated Balance Sheet as of December 31, 2013. In the year ended December 31, 2013, the 2009 Entity did not remit to us $574

of recoveries from charged-off loans that were owed to us. We recorded all of the amounts owed to us from the 2009 Entity for

recoveries from charged-off loans in Prepaid expenses and other current assets on our Consolidated Balance Sheet as of December 31,

2013. See Note 16 – Commitments and Contingencies, for a further discussion of the 2009 RSA. We determined that claiming an

offset against the Revolving Note for Regular Payments or Discharge Payments did not give us the power to direct the activities that

most significantly impacted the economic performance of the 2009 Entity as of and for the year ended December 31, 2013 and,

therefore, did not change our conclusion that we were not the primary beneficiary of the 2009 Entity.

In addition, we have made advances to the 2009 Entity under the Revolving Note. We did not make any advances in the fiscal

years ended December 31, 2013 or 2012 to the 2009 Entity under the Revolving Note that we were not contractually required to make.

Certain of the assets of the 2009 Entity serve as collateral for the Revolving Note. The Revolving Note bears interest, is subject to

customary terms and conditions and is currently due and payable in full. The advances under the Revolving Note were primarily used

by the 2009 Entity to purchase additional private education loans under the 2009 Loan Program that otherwise may not have been

originated. The period of time during which we could have made additional advances under the Revolving Note ended on January 1,

2014.

The amount owed to us under the Revolving Note, excluding the offsets described above, was approximately $8,200 as of

December 31, 2013 and $8,300 as of December 31, 2012. In the three months ended December 31, 2012, we determined that

circumstances indicated it was probable that we would not collect the full carrying value of the Revolving Note and, therefore,

concluded that the Revolving Note was impaired. We recorded an impairment charge in the amount of $4,900, which equaled the

amount that the carrying value of the Revolving Note exceeded the present value of the expected future cash flows from that note. The

carrying value of the Revolving Note prior to recording the impairment charge was approximately $7,800. The carrying value of the

Revolving Note was approximately $2,500 as of December 31, 2013 and $2,900 as of December 31, 2012, and was included on our

Consolidated Balance Sheets in Prepaid expenses and other current assets as of December 31, 2013 and in Other assets as of

December 31, 2012. We have not recognized any interest income related to the Revolving Note in our Consolidated Statements of

Income during the time that the Revolving Note has been impaired.

11. PEAKS Trust Student Loans

We concluded that we were required to consolidate the PEAKS Trust in our consolidated financial statements beginning on

February 28, 2013. See Note 10 – Variable Interest Entities, for a further discussion of the Consolidation. As a result, the assets and

liabilities of the PEAKS Trust were included on our Consolidated Balance Sheet as of December 31, 2013. The PEAKS Trust Student

Loans are included in the line items related to the PEAKS Trust Student Loans on our Consolidated Balance Sheet.

A significant number of the PEAKS Trust Student Loans were determined to be credit impaired upon consolidation. Loans

determined to be credit impaired upon consolidation or acquisition (“Purchased Credit Impaired Loans” or “PCI Loans”), are initially

measured at fair value in accordance with ASC 310-30, “Receivables – Loans and Debt Securities Acquired with Deteriorated Credit

Quality” (“ASC 310-30”). A loan is considered a PCI Loan, if it has evidence of deteriorated credit quality following the loan’s

origination date. As a result, at the date of consolidation or acquisition, it is probable that all contractually required payments under a

PCI Loan will not be collected.

31

The PEAKS Trust Student Loans that did not individually have evidence of deteriorated credit quality at the time of

consolidation were also initially measured at fair value and are accounted for in accordance with ASC 310-30. We believe that

following the guidance of ASC 310-30 by analogy with respect to those loans provides the most reasonable presentation of the value

of those loans, primarily due to:

• the evidence of deteriorated credit quality of a significant number of the PEAKS Trust Student Loans; and

• the probability that all contractually required payments with respect to those loans will not be collected.

All of the PEAKS Trust Student Loans are, therefore, considered to be, and reported as, PCI Loans.

This accounting treatment is consistent with the Confirmation Letter, in which the AICPA summarized the SEC staff’s view

regarding the accounting in subsequent periods for discount accretion associated with loan receivables acquired in a business

combination or asset purchase. In this letter, the AICPA states that it understands that the SEC staff will not object to an accounting

policy based on contractual or expected cash flow. We believe that following ASC 310-30 by analogy with respect to the PEAKS

Trust Student Loans that did not individually have evidence of deteriorated credit quality at the time of consolidation is an appropriate

application of the accounting guidance to determine the initial measurement of the value of those loans.

PCI Loans recognized upon consolidation or acquisition in the same fiscal quarter may be aggregated into one or more pools,

provided that the PCI Loans in each pool have common risk characteristics. The PEAKS Trust Student Loans were considered to be

PCI Loans upon consolidation and were aggregated into 24 separate pools of loans, based on common risk characteristics of the loans,

which included:

• the fiscal quarter in which the PEAKS Trust Student Loan was originated; and

• the consumer credit score of the borrower.

PCI Loans that do not have evidence of deteriorated credit quality are not aggregated in the same pools with PCI Loans that have

evidence of deteriorated credit quality. The same aggregation criteria, however, were used to determine those loan pools. Each loan

pool is accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows.

Upon the Consolidation on February 28, 2013, the PEAKS Trust Student Loans were recorded at their estimated fair value. The

estimated fair value of the PEAKS Trust Student Loans as of February 28, 2013 was determined using an expected cash flow

methodology. Projected default rates and forbearances were considered in applying the estimated cash flow methodology.

Prepayments of loans were not considered when estimating the expected cash flows, because, historically, few PEAKS Trust Student

Loans have been prepaid. No allowance for loan loss was established as of February 28, 2013, because all of the PEAKS Trust

Student Loans were recorded at fair value and future credit losses are considered in the estimate of fair value.

The following table sets forth the estimated fair value, accretable yield and expected cash flows for the PEAKS Trust Student

Loans, in total and for those loans pursuant to which ASC 310-30 was applied by analogy, as of the date indicated:


Total

ASC 310-30

Applied By

Analogy

Estimated fair value $112,116 $ 60,177

Accretable yield $100,953 $ 58,843

Expected cash flows $213,069 $ 119,020

The excess of any cash flows expected to be collected with respect to a loan pool of the PEAKS Trust Student Loans over the

carrying value of the loan pool is referred to as the accretable yield. The accretable yield is not reported on our Consolidated Balance

Sheets, but it is accreted and included as interest income using the effective interest method, which is at a level rate of return over the

remaining estimated life of the loan pool.

The contractually required future principal and interest payments for all PEAKS Trust Student Loans outstanding at

February 28, 2013 totaled approximately $487,800. The contractually required future principal and interest payments for the PEAKS

Trust Student Loans outstanding at February 28, 2013 pursuant to which ASC 310-30 was applied by analogy totaled approximately

$213,600. The excess of the contractually required payments of the PEAKS Trust Student Loans over the expected cash flows is

referred to as the nonaccretable difference. As of February 28, 2013, the nonaccretable difference was approximately $274,700 for all

outstanding PEAKS Trust Student Loans and approximately $94,600 for those outstanding PEAKS Trust Student Loans pursuant to

which ASC 310-30 was applied by analogy.

32

On a quarterly basis subsequent to February 28, 2013, we estimate the principal and interest expected to be collected over the

remaining life of each loan pool. These estimates include assumptions regarding default rates, forbearances and other factors that

reflect then-current market conditions. Prepayments of loans were not considered when estimating the expected cash flows, because,

historically, few PEAKS Trust Student Loans have been prepaid.

If a decrease in the expected cash flows of a loan pool is probable and would cause the expected cash flows to be less than the

expected cash flows at the date of the Consolidation or the end of the previous fiscal quarter, whichever is later, we would record the

impairment as:

• a provision for PEAKS Trust student loan losses in our Consolidated Statement of Income; and

• an increase in the allowance for loan losses on our Consolidated Balance Sheet.

The provision for PEAKS Trust student loan losses represents the increase in the allowance for loan losses that occurred during the

period. The allowance for loan losses is the difference between the carrying value and the total present value of the expected principal

and interest collections of each loan pool, discounted by the loan pool’s effective interest rate at the date of the Consolidation or the

end of the previous fiscal quarter, whichever is later. If a significant increase in the expected cash flows of a loan pool is probable and

would cause the expected cash flows to be greater than the expected cash flows at the date of Consolidation or the end of the previous

fiscal quarter, whichever is later, we would:

• first reverse any allowance for loan losses with respect to that loan pool that was previously recorded on our Consolidated

Balance Sheet, up to the amount of that allowance; and

• record any remaining increase prospectively as a yield adjustment over the remaining estimated lives of the loans in the

loan pool.

The following table sets forth information regarding changes in the allowance for loan losses of the loan pools of the PEAKS

Trust Student Loans in the aggregate in the period indicated:

Year Ended

December 31,

2013

Balance as of February 28, 2013 $ 0

Loans charged off 0

Recoveries from charged off loans 0

Provision for loan losses 29,349

Balance as of December 31, 2013 $ 29,349

Adjustments to the interest income of a loan pool are recognized prospectively, if those adjustments are due to:

• changes in variable interest rates; or

• any other changes in the timing of the expected cash flows of the loan pools.

Modifications were made to PCI Loans in each of the fiscal quarters in 2013 and were primarily due to forbearances granted

with respect to the payment of those loans. We consider the impact of any modifications made to PCI Loans as part of our quarterly

assessment of whether:

• a probable and significant change in the expected cash flows of the PCI Loans has occurred; and

• the loans should continue to be accounted for and reported as PCI loans.

In evaluating the impact of modifications made to PCI Loans on the expected cash flows of those loans, we consider the effect of

any foregone interest and the potential for future default. These default estimates are used to calculate expected credit losses with

respect to each loan pool. In developing these probabilities of default estimates, we considered the relationship between the credit

quality characteristics of the loans in the loan pool and certain assumptions based on the performance history of the PEAKS Trust

Student Loans and industry data related to the severity and recovery lag of defaults applicable to private education loans. Loans for

which Payments on Behalf of Borrowers were made were assumed to be defaulted loans in our default estimates. Forbearances have

been granted with respect to the payment of approximately 25% of the PEAKS Trust Student Loans.

The charge off of a PCI Loan results in the removal of that loan from the underlying PCI Loan pool and reduces the loan pool

discount. If the discount for principal losses for a particular PCI Loan pool has been fully depleted, the charge off of a PCI Loan will

reduce the PCI Loan pool’s allowance for loan losses. Removal of a PCI Loan from the underlying PCI Loan Pool does not change the

effective yield of the PCI Loan Pool.

33

As of December 31, 2013, the outstanding balance of the PEAKS Trust Student Loans, including accrued interest, was

approximately $279,400. The carrying amount of the PEAKS Trust Student Loans included under the line items related to the PEAKS

Trust Student Loans on our Consolidated Balance Sheet was $84,209 as of December 31, 2013. The PEAKS Trust Student Loans

were not included on our Consolidated Balance Sheets prior to February 28, 2013.

The following table sets forth information regarding aggregate changes in accretable yield of the loan pools of the PEAKS Trust

Student Loans, in total and for those loans pursuant to which ASC 310-30 was applied by analogy, for the period indicated:


Total

ASC 310-30

Applied By

Analogy

Balance as of January 1 $ 0 $ 0

Additions resulting from the Consolidation 100,953 58,843

Accretion (12,996) (7,243)

Reclassification from nonaccretable difference and changes in

expected cash flows (17,377)

(9,326)

Balance as of December 31 $ 70,580 $ 42,274

12. Property and Equipment

The following table sets forth our property and equipment, net, as of the dates indicated:

As of December 31,

2013 2012

Furniture and equipment $ 162,128 $ 171,534

Buildings and building improvements 134,993 134,303

Land and land improvements 39,609 39,609

Leasehold improvements 20,953 21,447

Software 8,620 8,620

Construction in progress 156 1,177

$ 366,459 $ 376,690

Less: Accumulated depreciation and amortization (197,950) (186,800)

Property and equipment, net $ 168,509 $ 189,890

Software includes purchased and internally developed software.

The following table sets forth the depreciation and amortization expense for the assets listed above in the periods indicated:


2013 2012 2011

Depreciation and amortization expense $ 27,007 $ 29,320 $ 27,856

13. Debt

On March 21, 2012, we entered into a credit agreement (the “Credit Agreement”) that provided for a $325,000 senior revolving

credit facility. We entered into amendments to the Credit Agreement on March 31, 2014, May 29, 2014, June 30, 2014 (the “Third

Amendment”), July 30, 2014 (the “Fourth Amendment”) and September 15, 2014 (the “Fifth Amendment”), and we entered into a

Consent to Credit Agreement, which is effective upon the delivery by us to the lenders of our audited consolidated financial

statements included in this filing (the “Consent”). The Credit Agreement, as so amended and including the Consent, is referred to

herein as the “Amended Credit Agreement.” The Amended Credit Agreement has a maturity date of March 21, 2015.

A portion of the borrowings under the Credit Agreement were used to prepay the entire outstanding indebtedness under a prior

credit agreement which was terminated on March 21, 2012. In addition to the prepayment of the outstanding indebtedness under the

prior credit agreement, borrowings under the Amended Credit Agreement are used for general corporate purposes.

34

Under the Amended Credit Agreement, the aggregate commitment of the lenders, effective June 30, 2014, is reduced to

$135,000, and the portion of the commitments available for letters of credit is increased from $25,000 to $85,000. Certain letters of

credit in an aggregate amount of approximately $2,352 previously issued by JPMorgan Chase Bank, N.A. are deemed to be letters of

credit issued pursuant to the Amended Credit Agreement. If we have not caused the issuance of a letter of credit payable to the ED

(“ED Letter of Credit”) by November 15, 2014, the aggregate commitments of the lenders will be reduced to $100,000. In addition,

the commitments of the lenders under the Amended Credit Agreement will be reduced to the extent that borrowings are repaid by us

using proceeds from certain types of transactions specified in the Fourth Amendment and the Fifth Amendment, as described further

below.

Borrowings under the Amended Credit Agreement bear interest, at our option, at the London Interbank Offered Rate (“LIBOR”)

plus an applicable margin or at an alternative base rate, as defined under the Amended Credit Agreement, plus an applicable margin.

The applicable margin for borrowings under the Amended Credit Agreement is determined based on the ratio of our total Indebtedness

(as defined in the Amended Credit Agreement and which primarily includes outstanding borrowings, recorded contingent liabilities

related to our guarantee obligations, letters of credit and surety bonds) to EBITDA (as defined in the Amended Credit Agreement) (the

“Leverage Ratio”) as of the end of each fiscal quarter. We also pay a commitment fee on the amount of the unutilized commitments

under the Amended Credit Agreement. The amount of the commitment fee is determined based on the Leverage Ratio as of the end of

each quarter. The effective interest rate on our borrowings was approximately:

• 3.60% per annum in the year ended December 31, 2013;

• 2.40% per annum in the year ended December 31, 2012; and

• 1.20% per annum in the year ended December 31, 2011.

The commitment fee under the Amended Credit Agreement was 0.40% as of December 31, 2013.

We recognized interest expense and fees (including the facility fee and commitment fee) on our borrowings under the Amended

Credit Agreement or the prior credit agreement, as applicable, of $3,424 in the year ended December 31, 2013, $3,303 in the year

ended December 31, 2012 and $1,825 in the year ended December 31, 2011.

In addition to the participation fee required to be paid by us pursuant to the original terms of the Credit Agreement related to

letters of credit, which accrues at the same rate used to determine the interest rate applicable to Eurodollar Revolving Loans (as

defined in the Amended Credit Agreement), the Fifth Amendment provides that an additional participation fee is required to be paid

by us related to the ED Letter of Credit, which will accrue at a ticking fee rate on the average daily amount of the lenders’ letter of

credit exposure with respect to the ED Letter of Credit. The ticking fee rate is defined as:

• 0.00% per annum for the period from September 15, 2014 through and including March 21, 2015;

• 1.00% per annum for the period from March 22, 2015 through and including March 21, 2016;



• 4.00% per annum for the period from March 22, 2018 through and including March 21, 2019; and

• 5.00% per annum for the period from March 22, 2019 through November 15, 2019.

The Amended Credit Agreement contains, among other things, covenants, representations and warranties and events of default

customary for credit facilities. We are required to maintain compliance with a maximum Leverage Ratio, a minimum fixed charge

coverage ratio, a minimum liquidity amount, and several covenants related to the ED’s regulations. We were in compliance with those

covenants as of December 31, 2013, after giving effect to the Third Amendment and the Fourth Amendment. The Third Amendment

provides that noncompliance with the Leverage Ratio as of the end of the fiscal quarters ending March 31, 2013, June 30, 2013 and

September 30, 2013, and noncompliance with the fixed charge coverage ratio as of the end of the fiscal quarters ending March 31,

2013, June 30, 2013, September 30, 2013, and December 31, 2013 (in each case, before giving effect to the Third Amendment) have

been waived by the lenders. In addition, among other things, the Third Amendment, the Fourth Amendment, the Fifth Amendment and

the Consent, taken together:

• provided that our consolidated financial statements (and related certificates) as of and for the fiscal year ended

December 31, 2013, did not have to be furnished by us to the lenders until October 15, 2014;

• provide that our condensed consolidated financial statements (and related certificates) as of and for the fiscal quarter

ended March 31, 2014, do not have to be furnished by us to the lenders until November 15, 2014;


ended June 30, 2014, do not have to be furnished by us to the lenders until November 15, 2014;

35


ended September 30, 2014, do not have to be furnished by us to the lenders until December 15, 2014;

• amend certain covenants to allow for the Consolidation beginning on February 28, 2013, and for other factors; and

• waive certain defaults related to our financial reporting.

The Amended Credit Agreement:

• is secured by a pledge of the equity interests of our subsidiaries;

• is guaranteed by one of our subsidiaries;

• is secured by security interests in substantially all of our personal property and the personal property of the subsidiary

guarantor; and

• is secured by mortgages on 30 separate parcels of land owned by us, including all of the improvements thereto and

fixtures thereon (the “Mortgaged Property”).

The Fourth Amendment provides that an event of default under the Amended Credit Agreement will occur, if, among other

things, the ED imposes a delay of more than five days in our receipt of Title IV Program funds. The Fifth Amendment provides that an

event of default under the Amended Credit Agreement will occur if, among other things, we do not engage a financial advisor

acceptable to the administrative agent before November 15, 2014 (or another date not later than December 15, 2014, if acceptable to

the administrative agent). Based on our discussions with the administrative agent, we understand that the financial advisor would be

retained to assist us in our ongoing efforts to identify and secure alternative financing.

The Fifth Amendment provides that the ED Letter of Credit will not be issued unless we have previously delivered certain real

estate due diligence items related to the Mortgaged Property. In addition, the Fifth Amendment allows for the ED Letter of Credit, if

issued, to have a term ending not later than November 15, 2019.

Under the Amended Credit Agreement, we are required to provide cash collateral (in an amount equal to 109% of the face

amount of the ED Letter of Credit and 103% of the face amount of all other letters of credit) for any letter of credit issued under the

Amended Credit Agreement:

• after July 30, 2014, immediately upon issuance, except for the ED Letter of Credit, for which cash collateral is not

required, until the earlier of December 31, 2014 or when net cash proceeds are received from certain transactions

described in the next paragraph; and

• before July 30, 2014, by the earlier of December 31, 2014 or when net cash proceeds are received from certain

transactions described in the next paragraph.

All amounts posted as cash collateral for letters of credit will be treated as cash for purposes of determining our compliance with

the minimum liquidity covenant of the Amended Credit Agreement.

Under the Fourth Amendment and the Fifth Amendment, in the event that any net cash proceeds are received by us or a material

subsidiary of ours in connection with any sale, transfer, lease or other disposition of the Mortgaged Property, including in connection

with any sale and leaseback transaction, any mortgage financing or similar transaction with respect to the Mortgaged Property or the

incurrence by us of indebtedness that is not permitted under the Amended Credit Agreement, those net cash proceeds will:

• first, be delivered to the administrative agent in order to cash collateralize all then outstanding letters of credit under the

Amended Credit Agreement, until such time as the administrative agent holds cash collateral equal to 109% of the face

amount of the ED Letter of Credit and 103% of the face amount of all other letters of credit, or if the ED Letter of Credit

has not yet been issued when the net cash proceeds are received, to be held by the administrative agent until the issuance

of the ED Letter of Credit and application of the proceeds to cash collateral; and

• second, be used to repay outstanding borrowings under the Amended Credit Agreement, which repayments will be

accompanied by a corresponding pro rata reduction of the commitment of each lender under the Amended Credit

Agreement.

The Fourth Amendment also implements additional restrictions on us, including, without limitation:

• the exception to the limitation on asset dispositions not otherwise permitted under the Amended Credit Agreement is

reduced from $75,000 in the aggregate during the term of the Amended Credit Agreement to $5,000 in the aggregate

during the period from July 30, 2014 through the remaining term of the Amended Credit Agreement, and all of those asset

dispositions must be for fair market value and an adequate cash purchase consideration, as reasonably determined by the

36

administrative agent, provided that those limitations do not apply to an asset disposition of the Mortgaged Property, if that

asset disposition generates net cash proceeds of at least 75% of the appraised value of that Mortgaged Property;

• in addition to the existing limitation on sale and leaseback transactions that the net cash proceeds received therefrom may

not exceed $125,000 in the aggregate during the term of the Amended Credit Agreement, any sale and leaseback

transaction must be for fair market value and an adequate cash purchase consideration, as reasonably determined by the

administrative agent, provided that any sale and leaseback transaction of the Mortgaged Property will be deemed to be for

fair market value and an adequate cash purchase consideration, if it generates net cash proceeds of at least 75% of the

appraised value of that Mortgaged Property;

• the permitted indebtedness consisting of secured indebtedness at any time outstanding (and not otherwise permitted by the

Amended Credit Agreement) is reduced from $25,000 to $5,000 in aggregate principal amount; and

• permitted liens to secure indebtedness, obligations and/or liabilities at any one time outstanding (which liens are not

otherwise permitted by the Amended Credit Agreement) may not secure debt in excess of $5,000 in aggregate principal

amount, reduced from the original $25,000.

If any collateral is sold in a transaction permitted under the Amended Credit Agreement or is financed by indebtedness

permitted under the Amended Credit Agreement, the administrative agent will release the mortgage or other security interest in that

collateral.

As of December 31, 2013, the outstanding borrowings under the Amended Credit Agreement totaled $50,000 and were

classified as a current liability, because we believed it was probable that we would not be in compliance with certain covenants under

the Amended Credit Agreement during the 12 months following December 31, 2013.

If we are not in compliance with one or more covenants and are unable to obtain a waiver of our noncompliance or an

amendment to the Amended Credit Agreement that would allow us to be in compliance with those covenants or otherwise not be in

default under the Amended Credit Agreement, the lenders would have various remedies, including:

• the lending commitments under the Amended Credit Agreement may be terminated;

• our ability to request the issuance of letters of credit and to obtain amendments, extensions or renewals of letters of credit

already issued under the Amended Credit Agreement may be terminated;

• all then outstanding borrowings and other amounts owed under the Amended Credit Agreement may be declared

immediately due and payable; and

• we could be required to provide cash collateral (in an amount equal to 109% of the face amount of the ED Letter of Credit

and 103% of the face amount of all other letters of credit) for our obligations with respect to any outstanding letters of

credit, if that cash collateral has not already been posted.

In the event that we or our subsidiary guarantor do not pay in full, upon demand, all of our outstanding borrowings and other

amounts owed under the Amended Credit Agreement or we, or our subsidiary guarantor, do not provide, upon demand, the cash

collateral for our letter of credit obligations, the lenders would be entitled to recourse against the collateral security, including the

Mortgaged Property, that we and our subsidiary guarantor have provided, in order to obtain payment of amounts we owe or are

required to provide as cash collateral.

37

For the period February 28, 2013 through December 31, 2013, our consolidated financial statements consolidate the PEAKS

Trust. See Note 10 – Variable Interest Entities, for a further discussion of the Consolidation. In January 2010, the PEAKS Trust issued

PEAKS Senior Debt in the aggregate principal amount of $300,000 to investors. The PEAKS Senior Debt matures in January 2020

and bears interest at a variable rate based on the LIBOR, plus a 550 basis point margin. The minimum LIBOR rate applied to the

PEAKS Senior Debt cannot be less than 2.00%. There are no scheduled principal repayment requirements for the PEAKS Senior Debt

prior to the January 2020 maturity date. Under the terms of the PEAKS Program documents, however, amounts received on a monthly

basis by the PEAKS Trust that exceed the fees and expenses of the PEAKS Trust then due and the interest then due on the PEAKS

Senior Debt are to be paid to reduce the outstanding principal balance of the PEAKS Senior Debt. We estimate that the amount

received in 2014 by the PEAKS Trust from PEAKS Trust Student Loan borrowers that could be used to reduce the outstanding

principal balance of the PEAKS Senior Debt, will not be material. The assets of the PEAKS Trust (which include, among other assets,

the PEAKS Trust Student Loans) serve as collateral for, and are intended to be the principal source of, the repayment of the PEAKS

Senior Debt. Payment of the PEAKS Senior Debt may be accelerated by the indenture trustee of the PEAKS Trust or by the holders of

the PEAKS Senior Debt in response to certain events of default under the indenture under the PEAKS Program (the “PEAKS

Indenture”), including, among other things:

• a payment default by the PEAKS Trust;

• a default in the performance or observation of the PEAKS Trust’s covenants, agreements or conditions under the PEAKS

Indenture;

• a breach of our obligations under the PEAKS Guarantee; and

• certain bankruptcy events with respect to the PEAKS Trust or us.

An acceleration of the payment of the PEAKS Senior Debt would result in an acceleration of our obligation to pay the full

amount of the PEAKS Senior Debt pursuant to the terms of the PEAKS Guarantee, if the PEAKS Trust was not able to make that

payment (and we believe that it is unlikely that the PEAKS Trust would be able to make that payment). The acceleration of our

obligation to pay the full amount of the PEAKS Senior Debt, and/or our inability to make that payment, could result in cross-defaults

under the Amended Credit Agreement.

The PEAKS Trust must maintain a minimum required Asset/Liability Ratio. The minimum required Asset/Liability Ratio is

1.05/1.00. The applicable required Asset/Liability Ratio as of each monthly measurement date, however, is based on our compliance,

as of the prior quarterly measurement date, with certain metrics specified in the PEAKS Program documents, including maximum

leverage ratios and minimum liquidity amounts. If we are not in compliance with those metrics as of the end of a fiscal quarter, the

required Asset/Liability Ratio increases to 1.40/1.00, until the monthly measurement date following the end of a succeeding quarter at

which we are in compliance with those metrics. As a result of the Consolidation and other factors, we were not in compliance with

those metrics as of December 31, 2013. We do not expect to be in compliance with those metrics prior to December 31, 2014.

If the amount of the assets of the PEAKS Trust does not equal or exceed the outstanding PEAKS Senior Debt by the applicable

required Asset/Liability Ratio on a monthly measurement date, we are required to make a payment under the PEAKS Guarantee in an

amount that would reduce the outstanding principal balance of the PEAKS Senior Debt to the extent necessary to cause the ratio of the

assets of the PEAKS Trust to the resulting outstanding PEAKS Senior Debt to equal or exceed the applicable required Asset/Liability

Ratio. See Note 16 – Commitments and Contingencies, for a further discussion of the PEAKS Guarantee.

As a consequence of the restatement of our unaudited condensed consolidated financial statements in our Quarterly Reports on

Form 10-Q for the fiscal quarters ended March 31, 2013, June 30, 2013 and September 30, 2013, certain quarterly reports that we

were required to deliver to the indenture trustee of the PEAKS Trust under the PEAKS Guarantee were inaccurate. We delivered

corrected quarterly reports to the indenture trustee on October 9, 2014. If we had delivered accurate quarterly reports or, with respect

to periods in 2014 through June 30, 2014, delivered quarterly reports, to the indenture trustee of the PEAKS Trust, we believe the

indenture trustee would have made payment demands beginning in April 2013, requiring us to make additional payments under the

PEAKS Guarantee totaling $60,340, in the aggregate, in order to maintain an Asset/Liability Ratio of 1.40/1.00. On October 9, 2014,

we made a guarantee payment of $50,000, which payment, along with other payments that we have made to the PEAKS Trust in

recent months, included amounts that would have become due between April 2013 and September 2014, had we delivered accurate

quarterly reports. The delivery of inaccurate quarterly reports constituted a breach of the PEAKS Guarantee and an event of default

under the PEAKS Indenture. In the event of a default under the PEAKS Indenture, the payment of the entire amount of the PEAKS

Senior Debt could be accelerated, which would trigger our obligation to pay the full amount of the PEAKS Senior Debt pursuant to

our obligations under the PEAKS Guarantee, additional remedies could be sought against us and there could be a cross-default under

the Amended Credit Agreement, any of which would have a material adverse effect on our results of operations, financial condition

and cash flows. We believe that the delivery of the corrected quarterly reports and making the additional guarantee payments satisfied

our obligations under the PEAKS Guarantee with respect to these matters and cured the event of default under the PEAKS Indenture.

We cannot predict, however, whether the holders of the PEAKS Senior Debt will assert other breaches of the PEAKS Guarantee by us

or assert that any breach of the PEAKS Guarantee or event of default under the PEAKS Indenture was not properly cured.

38

We estimate that we have and will make payments under the PEAKS Guarantee totaling approximately $159,500 in the year

ending December 31, 2014 to cause the PEAKS Trust to maintain the applicable required Asset/Liability Ratio. That estimated

amount includes the:

• $40,000 that we paid in March 2014 pursuant to the Letter Agreement, which was applied primarily to make a mandatory

prepayment of the PEAKS Senior Debt (see Note 10 – Variable Interest Entities, for a further discussion of the Letter

Agreement);

• payments totaling approximately $51,700 that we made from July 2014 through September 2014 to satisfy our obligations

under the PEAKS Guarantee with respect to the increased minimum required Asset/Liability Ratio in prior periods; and

• $50,000 that we paid in October 2014, as described in the immediately preceding paragraph.

As of December 31, 2013, the outstanding principal balance of the PEAKS Senior Debt was approximately $255,600 and the

carrying value was $229,224. We recorded $157,883 as a current liability as of December 31, 2013, which represented our estimate of the

amount of the carrying value that would have been due in the 12 months following December 31, 2013 after giving consideration to the

effects of the restatement, as described above. The PEAKS Senior Debt was recorded on our consolidated balance sheet as of

February 28, 2013 at its estimated fair value on that date, which was approximately $226,096. The outstanding principal balance of the

PEAKS Senior Debt as of February 28, 2013 was $257,533. The $31,437 difference between the estimated fair value and the outstanding

principal balance of the PEAKS Senior Debt as of February 28, 2013 was recorded as an accrued discount on our consolidated balance

sheet and will be recognized as Interest expense in our Consolidated Statements of Income using an effective interest rate method over the

term of the PEAKS Senior Debt. The effective interest rate on the PEAKS Senior Debt was approximately 9.90% per annum in the year

ended December 31, 2013. We recognized interest expense on the PEAKS Senior Debt of $21,288 in the year ended December 31, 2013,

which included $4,926 of discount accretion.

The following table sets forth the estimated principal payments on the PEAKS Senior Debt in the periods indicated:

Fiscal Year Amount

2014 $161,219

2015 $ 16,699

2016 $ 7,618

2017 $ 8,194

2018 $ 8,909

2019 - 2020 $ 51,393

14. Income Taxes

The following table sets forth the components of the provision for income taxes in the periods indicated:


2013 2012 2011

Current income tax expense:

U.S. federal $ 39,279 $ 126,585 $ 174,264

State and local 4,611 22,004 35,128

Total $ 43,890 $ 148,589 $ 209,392

Deferred income tax (benefit):

U.S. federal ($46,345) ($ 51,145) ($ 6,718)

State and local (7,757) (8,426) (1,427)

Total ($54,102) ($ 59,571) ($ 8,145)

Total provision (benefit) for income taxes ($10,212) $ 89,018 $ 201,247

We recognized approximately $298 of state income tax benefit in the year ended December 31, 2013, as a result of state

operating losses.

We do not include the PEAKS Trust in our consolidated income tax returns because the PEAKS Trust is a tax-exempt entity.

Therefore, we did not recognize income tax expense or benefit for the PEAKS Trust in the provision for income taxes included in our

Consolidated Statement of Income for the year ended December 31, 2013. The effect of the exclusion of the PEAKS Trust from our

income tax provision is shown in the reconciliation of our effective income tax rate as a percentage of income shown below.

39

The following table sets forth the components of our deferred income tax assets (liabilities) as of the dates indicated:

As of December 31,

2013 2012

Deferral of book costs ($ 1,748) ($ 1,810)

Property and equipment (1,807) (6,416)

Pension (10,566) (2,712)

Other (1,189) (2,308)

Gross deferred tax (liabilities) ($ 15,310) ($ 13,246)

Deferred revenue $ 10,902 $ 14,687

Accounts receivable 3,551 6,073

Legal accrual 3,455 2,018

Compensation and benefits 3,316 1,643

Stock-based compensation 20,794 22,680

Operating leases 2,386 735

Legal settlement accrual 0 17,834

Other assets 8,356 18,772

Other contingent liabilities 108,423 30,822

Gross deferred tax assets $ 161,183 $ 115,264

Net deferred income tax asset $ 145,873 $ 102,018

The difference between the U.S. federal statutory income tax rate and our effective income tax rate as a percentage of income in the periods

indicated is reconciled in the following table:


2013 2012 2011

U.S. federal statutory income tax rate (35.0%) 35.0% 35.0%

PEAKS Trust rate differential 11.9% 0% 0%

State income taxes, net of federal benefit (5.6%) 3.4% 3.9%

Permanent book/tax differences 2.8% 0.9% 0.4%

Other (1.5%) (0.3%) 0.1%

Effective income tax rate (27.4%) 39.0% 39.4%

The following table sets forth the activity with respect to our unrecognized tax benefits in the period indicated:


2013 2012 2011

Balance as of January 1 $20,690 $22,050 $22,888

Increases (decreases) from:

Tax positions taken during a prior period 1,675 195 1,042

Tax positions taken during the current period 870 759 2,434

Settlements with taxing authorities 186 (1,027) (2,487)

Lapse of statute of limitations (1,130) (1,287) (1,827)

Balance as of December 31 $22,291 $20,690 $22,050

The amount of unrecognized tax benefits that, if recognized, would have affected our effective tax rate as of December 31, 2013 was $10,575.

We do not expect the amount of our unrecognized tax benefits to significantly increase or decrease during the next 12 months. The amount of interest

and penalties related to unrecognized tax benefits accrued on our Consolidated Balance Sheets was $6,371 as of December 31, 2013 and $5,699 as of

December 31, 2012. In each of the years ended December 31, 2013, 2012 and 2011, the amount of interest expense and penalties related to our

unrecognized tax benefits that we recognized in our Consolidated Statements of Income was not material.

We file income tax returns in the United States (federal) and in various state and local jurisdictions. As of December 31, 2013, we were no

longer subject to federal, state or local income tax examinations for tax years prior to 2010, except in eleven states where we are still subject to

income tax examinations for tax year 2009 and one state where we are still subject to income tax examination for the tax years 2005 through 2008.

40

15. Employee Benefit Plans

Employee Pension Benefits. Our ESI Pension Plan, a non-contributory defined benefit pension plan, commonly referred to as a cash

balance plan, covers substantially all of our employees who began their employment with us prior to June 2, 2003. This plan provides

benefits based on an employee’s annual earnings times an established percentage of pay determined by the employee’s age and years of

benefit service. Effective June 2, 2003, we closed participation in the ESI Pension Plan to all new employees. Employees who begin their

employment with us on or after June 2, 2003 do not participate in the ESI Pension Plan.

Our ESI Excess Pension Plan, a nonqualified, unfunded retirement plan, covers a select group of our management. The purpose of the

ESI Excess Pension Plan is to restore benefits earned, but not available, to eligible employees under the ESI Pension Plan due to federal

statutory limitations on the amount of benefits that can be paid and compensation that may be recognized under a tax-qualified retirement

plan.

The benefit accruals under the ESI Pension Plan and the ESI Excess Pension Plan for all participants in those plans were frozen

effective March 31, 2006, such that no further benefits accrue under those plans after March 31, 2006. Participants in those plans, however,

continue to be credited with vesting service and interest according to the terms of the ESI Pension Plan and the ESI Excess Pension Plan.

The information presented below is based on an actuarial valuation date as of December 31 for 2013 and 2012.

The following table sets forth the change in projected benefit obligation for the periods indicated:


2013 2012

Projected benefit obligation at beginning of year $ 57,246 $ 54,485

Service cost 0 0

Actuarial (gain) loss (5,345) 3,180

Interest cost 1,756 2,062

Benefits paid (4,245) (2,481)

Plan amendments 0 0

Projected benefit obligation at end of year $ 49,412 $ 57,246

Fair value of plan assets at end of year 76,710 64,390

Funded status at end of year $ 27,298 $ 7,144

Our accumulated benefit obligation was $49,412 at December 31, 2013 and $57,246 at December 31, 2012.

The following table sets forth the funded status of our defined benefit plans that was recognized on our Consolidated Balance Sheets as

of the dates indicated:

As of December 31,

2013 2012

Non-current assets $27,584 $7,459

Non-current (liabilities) (286) (315)

Total $27,298 $7,144

The weighted-average assumptions used to determine benefit obligations as of December 31, 2013 and 2012 are as follows:

2013 2012

Discount rate 4.25% 3.25%

Rate of compensation increase N/A N/A

41

The following table sets forth the change in the fair value of plan assets for the periods indicated:


2013 2012

Fair value of plan assets at beginning of year $ 64,390 $ 58,839

Actual return on plan assets 16,565 8,032

Employer contributions 0 0

Benefits paid (4,245) (2,481)

Fair value of plan assets at end of year $ 76,710 $ 64,390

The following tables set forth the fair value of total plan assets by major asset category as of the dates indicated:

Fair Value Measurements as of December 31, 2013

Asset Category

Total

(Level 1)

Quoted Prices

in Active

Markets for

Identical

Assets

(Level 2)

Significant

Other

Observable

Inputs

(Level 3)

Significant

Unobservable

Inputs

Cash and cash equivalents $ 934 $ 934 $ 0 $ 0

Fixed income securities (a)

12,596 12,596 0 0

Equity securities:

Domestic large cap 40,669 40,669 0 0

Mid cap value/growth (a)

12,610 12,610 0 0

Small cap value/growth (a)

7,163 7,163 0 0

Foreign equities 2,738 2,738 0 0

Total $ 76,710 $ 76,710 $ 0 $ 0

(a) Mutual funds.

Fair Value Measurements as of December 31, 2012

Asset Category

Total

(Level 1)

Quoted Prices

in Active

Markets for

Identical

Assets

(Level 2)

Significant

Other

Observable

Inputs

(Level 3)

Significant

Unobservable

Inputs

Cash and cash equivalents $ 1,078 $ 1,078 $ 0 $ 0

Fixed income securities (a)

17,318 17,318 0 0

Equity securities:

Domestic large cap 29,594 29,594 0 0

Mid cap value/growth (a)

9,090 9,090 0 0

Small cap value/growth (a)

5,137 5,137 0 0

Foreign equities 2,173 2,173 0 0

Total $ 64,390 $ 64,390 $ 0 $ 0

(a) Mutual funds.

We used quoted prices in active markets for identical assets as of the measurement dates to value our plan assets that were categorized

as Level 1.

42

The following table sets forth the amounts in Accumulated other comprehensive loss on our Consolidated Balance Sheets that

have not been recognized as components of net periodic pension benefit cost as of the dates indicated:

As of December 31,

2013 S 2012

Net actuarial (loss) ($ 546) ($20,191)

Prior service credit 5,578 7,133

Total accumulated other comprehensive income (loss) $ 5,032 ($13,058)

Income tax benefit (expense) (1,886) 5,128

Total accumulated other comprehensive income (loss), net of tax $ 3,146 ($ 7,930)

The following table sets forth the changes in the components of Accumulated other comprehensive loss on our Consolidated Balance

Sheet in the fiscal year ended December 31, 2013:

Defined Benefit Pension Items

Accumulated

Other

Comprehensive

Income (Loss)

Income Tax

Benefit

(Expense)

Accumulated

Other

Comprehensive

Income (Loss) Net

of Income Tax

Balance at January 1, 2013 ($ 13,058) $ 5,128 ($ 7,930)

Net actuarial gain 17,566 (6,811) 10,755

Settlement gain 42 (17) 25

Amortization of:

Actuarial (gains)/losses 2,037 (790) 1,247

Prior service costs/(credits) (1,555) 604 (951)

Balance at December 31, 2013 $ 5,032

($ 1,886)

$ 3,146

The reclassification of prior service costs or credits, actuarial gains or losses and settlement gain from Accumulated other

comprehensive loss are included in the computation of net periodic pension benefit cost (income). Net periodic pension benefit cost (income)

was included in compensation expense in Cost of educational services and Student services and administrative expenses in our Consolidated

Statements of Income in the fiscal year ended December 31, 2013.

The following table sets forth the components of net periodic pension benefit (income) in the periods indicated:


2013 2012 2011

Interest cost $ 1,756 $ 2,062 $ 2,405

Expected return on assets (4,344) (4,231) (4,756)

Recognized net actuarial loss 2,037 2,718 1,803

Amortization of prior service (credit) cost (1,555) (1,555) (1,555)

Settlement loss 42 792 1,204

Total net periodic pension benefit (income) ($ 2,064) ($ 214) ($ 899)

The benefit accruals under the ESI Pension Plan and ESI Excess Pension Plan were frozen effective March 31, 2006. As a result, no

service cost has been included in the net periodic pension benefit income.

43

The following table sets forth the amounts related to changes in plan assets and projected benefit obligations that were recognized in

other comprehensive (income) loss in the periods indicated:


2013 2012 2011 Net actuarial (gain) loss ($17,566) ($ 621) $ 9,504

Amortization of net actuarial loss (2,037) (2,718) (1,803)

Prior service cost (credit) 0 0 0

Amortization of prior service cost (credit) 1,555 1,555 1,555

Settlement (42) (792) (1,204)

Other comprehensive (income) loss ($18,090) ($ 2,576) $ 8,052

Total recognized in net periodic pension benefit (income) and

other comprehensive (income) loss ($20,154)

($ 2,790)

$ 7,153

The amortization of any prior service cost is determined using a straight-line amortization of the cost over the average remaining

service period for employees expected to receive benefits under the pension plans. The estimated net actuarial loss that is expected to be

amortized from accumulated other comprehensive income and recognized in net periodic pension benefit cost for the year ended

December 31, 2014 is $0 and the estimated prior service credit that is expected to be amortized from accumulated other comprehensive

income and recognized in net periodic pension benefit cost for the year ended December 31, 2014 is $1,555.

The weighted-average assumptions used to determine net periodic pension benefit cost in the years ended December 31, 2013, 2012

and 2011 are as follows:

2013 2012 2011

Discount rate 3.25% 4.00% 5.00%

Expected long-term return on plan assets 7.00% 7.50% 8.00%

Rate of compensation increase N/A N/A N/A

The following table sets forth the benefit payments that we expect to pay from the pension plans in the periods indicated:

Year

Amount Fiscal 2014 $ 3,576

Fiscal 2015 $ 3,464

Fiscal 2016 $ 4,315

Fiscal 2017 $ 4,896

Fiscal 2018 $ 3,538

Fiscal 2019 – 2023 $16,838

We invest plan assets based on a total return on investment approach, pursuant to which the plan assets include a diversified blend of

equity and fixed income investments toward a goal of maximizing the long-term rate of return without assuming an unreasonable level of

investment risk. We determine the level of risk based on an analysis of plan liabilities, the extent to which the value of the plan assets

satisfies the plan liabilities and our financial condition. Our investment policy includes target allocations ranging from 30% to 70% for equity

investments, 20% to 60% for fixed income investments and 0% to 50% for cash equivalents. Actual asset allocations may vary from the

targeted allocations for various reasons, including market conditions and the timing of transactions. The equity portion of the plan assets

represents growth and value stocks of small, medium and large companies. We measure and monitor the investment risk of the plan assets

both on a quarterly basis and annually when we assess plan liabilities.

We use a building block approach to estimate the long-term rate of return on plan assets. This approach is based on the capital market

principle that the greater the volatility, the greater the return over the long term. An analysis of the historical performance of equity and fixed

income investments, together with current market factors such as the inflation and interest rates, are used to help us make the assumptions

necessary to estimate a long-term rate of return on plan assets. Once this estimate is made, we review the portfolio of plan assets and make

adjustments thereto that we believe are necessary to reflect a diversified blend of equity and fixed income investments that is capable of

achieving the estimated long-term rate of return without assuming an unreasonable level of investment risk. We also compare the portfolio of

plan assets to those of other pension plans to help us assess the suitability and appropriateness of the plan investments.

We determine our discount rate by performing a yield curve analysis based on a portfolio of high-quality fixed income investments

with various maturities. Our expected future benefit payments are discounted to their present value at the appropriate yield curve rate to

generate the overall discount rate for pension obligations.

In 2013 and 2012, we made no contributions to the ESI Excess Pension Plan or the ESI Pension Plan. We do not expect to make any

contributions to either the ESI Pension Plan or the ESI Excess Pension Plan in 2014.

44

Retirement Savings Plan. Our ESI 401(k) Plan, a defined contribution plan, covers substantially all of our employees. All of our

contributions under the ESI 401(k) Plan are in the form of cash to plan investment options directed by the participant.

On July 1, 2013, we changed the rate at which we made contributions to the ESI 401(k) Plan on behalf of our employees. Prior to

July 1, 2013, we contributed 100% of the first 1% and 50% of the next 4% of an employee’s salary that the employee contributed to his or

her ESI 401(k) Plan account. Beginning July 1, 2013, we contribute 50% of the first 6% of an employee’s salary that the employee

contributes to his or her ESI 401(k) Plan account.

Our ESI Excess Savings Plan, a nonqualified, unfunded deferred compensation plan, covers a select group of our management. The

plan provided for salary deferral of contributions that the participants were unable to make under the ESI 401(k) Plan and our contributions

that could not be paid under the ESI 401(k) Plan due to federal statutory limits on the amount that an employee could contribute under a

defined contribution plan. Effective for plan years beginning on and after January 1, 2008, we froze the ESI Excess Savings Plan, such that

employees may no longer make salary deferrals and we will no longer make contributions under the ESI Excess Savings Plan. Amounts

previously credited to an employee under the ESI Excess Savings Plan will, however, continue to accrue interest in accordance with the terms

of the ESI Excess Savings Plan, until those amounts are distributed pursuant to the plan’s terms.

The costs of providing the benefits under the ESI 401(k) Plan and ESI Excess Savings Plan (including certain administrative costs of

the plans) were:

• $3,454 in the year ended December 31, 2013;

• $4,597 in the year ended December 31, 2012; and

• $5,308 in the year ended December 31, 2011.

16. Commitments and Contingencies

As part of our normal operations, one of our insurers issues surety bonds for us that are required by various education authorities that

regulate us. We are obligated to reimburse our insurer for any of those surety bonds that are paid by the insurer. As of December 31, 2013,

the total face amount of those surety bonds was approximately $19,300. As of December 31, 2013, we also had issued approximately $2,246

of letters of credit to our workers’ compensation insurers.

We are also subject to various claims and contingencies, including those related to litigation, government investigations,

business transactions, guarantee arrangements and employee-related matters, among others. We record a liability for those claims and

contingencies, if it is probable that a loss will result and the amount of the loss can be reasonably estimated. Although we believe that

our estimates related to any claims and contingencies are reasonable, we cannot make any assurances with regard to the accuracy of

our estimates, and actual results could differ materially.

The following table sets forth the components of our recorded liability related to our claims and contingencies and where the

amounts were included on our Consolidated Balance Sheets as of the dates indicated:

As of December 31,

2013 2012

PEAKS Guarantee (1)

$ 0 $ 47,500

2009 RSA 116,923 28,232

2007 RSA(2)

0 46,000

Other 8,957 5,246

Total $125,880 $126,978

Other current liabilities $ 25,893 $ 85,655

Other liabilities 99,987 41,323

Total $125,880 $126,978

(1) We consolidated the PEAKS Trust in our consolidated financial statements as of February 28, 2013. See Note 10 – Variable

Interest Entities, for a further discussion of the Consolidation.

(2) As defined below

Other current liabilities primarily represented our estimate of the loss that we believed we would realize during the 12- month

period following the dates indicated. As of December 31, 2013, Other current liabilities included $9,091 that we claimed as an offset

against amounts owed to us under the Revolving Note. See “ – Guarantees,” for a further discussion of the amounts we claimed as

offsets under the Revolving Note. The amounts included in Other liabilities primarily related to our estimated contingent liabilities for

the 2009 RSA as of December 31, 2013 and the PEAKS Guarantee and 2009 RSA as of December 31, 2012, and represented our

estimate of the loss that we believed we would realize after the 12-month period following the dates indicated and over a period that

could exceed 10 years.

45

The following table sets forth the activity with respect to our recorded liability related to our claims and contingencies in the

periods indicated:


2013 2012

Balance as of January 1 $126,978 $ 36,028

Increases (decreases) from:

Additional accruals:

PEAKS Guarantee (1)

0 55,935

2009 RSA (2)

90,964 23,340

2007 RSA 0 21,750

Other 4,038 117

Payments, net of recoveries of $103 and $234 (3)

(2,600) (1,756)

Payments under PEAKS Guarantee, net of estimated

recoveries of $1,408 and $6,668 (1,005)

(5,674)

Payments on Behalf of Borrowers (11,499) (2,762)

Settlement payment – 2007 RSA (46,000) 0

Elimination of intercompany transactions (4)

11,118 0

Elimination of PEAKS Guarantee accrual (5)

(46,114) 0

Balance as of December 31 $125,880 $126,978

(1) Our guarantee obligations under the PEAKS Program remain in effect until the PEAKS Senior Debt and the PEAKS Trust’s

fees and expenses are paid in full. At such time, we will be entitled to repayment by the PEAKS Trust of the amount of

payments we made under the PEAKS Guarantee (which do not include Payments on Behalf of Borrowers) to the extent that

funds remain in the PEAKS Trust after the PEAKS Senior Debt and all fees and expenses of the PEAKS Trust have been paid in

full. The PEAKS Senior Debt matures in January 2020 and, therefore, we do not expect to begin receiving any repayment of

amounts that we previously paid under the PEAKS Guarantee until February 2020. The accrual related to the PEAKS Guarantee

as of December 31, 2012 was recorded net of estimated recoveries, taking into consideration the present value of the estimated

recoveries.

(2) This amount represents a change in our accounting estimate for the amount of our guarantee obligations under the 2009

RSA. We revised our estimate for the 2009 RSA based on an enhanced default rate methodology and more recent performance

data that we obtained in the three months ended December 31, 2013. The primary enhancements and performance data included:

(i) an adjustment to the default estimates for student borrowers, as a result of recently obtained actual default data for similarly-

situated student borrowers; (ii) an adjustment to the default rate expectations, due to declines in repayment performance; (iii)

our ability to make Discharge Payments; and (iv) a lower expectation for collections on defaulted loans as a result of the

performance to date of collections.

(3) Includes payments, net of recoveries, under the 2009 RSA.

(4) We consolidated the PEAKS Trust in our consolidated financial statements as of February 28, 2013 and, as a result, we have

eliminated from our consolidated financial statements the amount of payments under the PEAKS Guarantee and Payments on

Behalf of Borrowers that we made following the Consolidation. See Note 10 – Variable Interest Entities, for a further discussion

of the Consolidation.

(5) As a result of the Consolidation, we have eliminated from our consolidated financial statements the contingent liability related

to the PEAKS Guarantee that we had previously recorded.

We had guaranteed the repayment of private education loans made by a lender to our students in 2007 and early 2008 (the “2007

RSA”) that the lender charged off above a certain percentage of the total dollar volume of private education loans made under the

2007 RSA. In January 2013, we paid $46,000 in a settlement to absolve us from any further obligations with respect to our guarantee

obligations under the 2007 RSA, which amount is included in the Settlement payment – 2007 RSA line item in the year ended

December 31, 2013 in the table above. The liability for this settlement was included in Other current liabilities on our Consolidated

Balance Sheet as of December 31, 2012.

46

In order to determine the amount of the contingent liability to record related to our guarantee obligations under the 2009 RSA

and, prior to the Consolidation, the PEAKS Guarantee, we utilize estimates of, among other things, the projected repayment

performance of the private education loans made under each of the 2009 Loan Program and the PEAKS Program, which projections

involve numerous assumptions. Based on those projections and other factors, we estimate the amount of payments that we expect to

make and the amounts that we expect to be repaid to us under those programs.

Under the 2009 RSA, we are entitled to all amounts that the 2009 Entity recovers from loans in a particular loan pool made

under the 2009 Loan Program that have been charged off, until all payments that we made under the 2009 RSA with respect to that

loan pool have been repaid to us by the 2009 Entity. Pursuant to the terms of the PEAKS Program documents, we will be entitled to

repayment by the PEAKS Trust of the amount of payments we made under the PEAKS Guarantee (which do not include Payments on

Behalf of Borrowers) to the extent that funds remain in the PEAKS Trust after the PEAKS Senior Debt and all fees and expenses of

the PEAKS Trust have been paid in full. The PEAKS Senior Debt matures in January 2020 and, therefore, we do not expect to begin

receiving any repayment of amounts that we previously paid under the PEAKS Guarantee until February 2020.

We discount the amounts that we expect will be repaid to us under each of the 2009 RSA and the PEAKS Program documents

to reflect an imputed interest cost for the period of time between when payments are expected to be made by us and when amounts are

expected to be repaid to us. The difference between the amount of the guarantee payments that we expect to make and the discounted

amount that we expect will be repaid to us under each of the 2009 RSA and the PEAKS Program documents is included in our

estimate of the amount of our contingent liability related to our guarantee obligations under the 2009 RSA and PEAKS Guarantee.

In connection with the change in accounting estimate of the contingent liability related to our guarantee obligations under the

2009 RSA, we also consider the payment options available to us under the 2009 Loan Program, including our ability to make

Discharge Payments under the 2009 RSA. To the extent that we project that we will have sufficient funds available to make Discharge

Payments under the 2009 RSA, we incorporate an assumption that we will make Discharge Payments into our estimate of the amount

of payments that we expect to make when determining the contingent liability. Making Discharge Payments results in us paying a

lesser amount than we otherwise would have been required to pay under our guarantee obligations in future periods under the 2009

RSA and, therefore, results in an estimated contingent liability amount that is less than if we had assumed that we would make

Regular Payments in future periods.

In connection with estimating our recorded liability for claims and contingencies as of December 31, 2013 and 2012, we

considered whether additional losses for claims and contingencies were reasonably possible, could be estimated and might be material

to our financial condition, results of operations or cash flows. In order to estimate the possible range of losses under the PEAKS

Guarantee (for the year ended December 31, 2012 only) and 2009 RSA (collectively, the “RSAs”), we made certain assumptions with

respect to the performance of the private education loans made under the 2009 Loan Program and PEAKS Program over the life of

those loans. The life of a private education loan made under the 2009 Loan Program or PEAKS Program may be in excess of ten years

from the date of disbursement. Therefore, our estimate of the possible range of losses under the RSAs was based on assumptions for

periods in excess of ten years, and those assumptions included, among other things, the following:

• the repayment performance of the private education loans made under each of the 2009 Loan Program and PEAKS

Program;

• the timing and rate at which those private education loans will be paid;

• the changes in the variable interest rates applicable to the private education loans and PEAKS Senior Debt;

• the amounts and timing of collections in the future on those private education loans that have defaulted;

• the fees and expenses associated with servicing those private education loans; and

• our ability to utilize the available options for payment of our obligations under the 2009 RSA.

We consulted with third-party consumer credit consulting firms in arriving at our assumptions and estimates. The assumptions have

changed, and may continue to change, significantly over time as actual results become known, which would affect our estimated range

of possible losses related to the 2009 RSA. With respect to our guarantee obligations under the 2009 RSA, we believe that it is reasonably

possible that we may incur losses in an estimated range of $11,000 less than to $28,000 greater than the liability recorded as of December 31,

2013 for those contingencies. As with any estimate, as facts and circumstances change, the recorded liability and estimated range of

reasonably possible losses could change significantly. With respect to legal proceedings, we determined that we cannot provide an estimate

of the possible losses, or the range of possible losses, in excess of the amount, if any, accrued, for various reasons, including but not limited

to some or all of the following:

• there are significant factual issues to be resolved;

• there are novel or unsettled legal issues presented;

• the proceedings are in the early stages;

47

• there is uncertainty as to the likelihood of a class being certified or decertified or the ultimate size and scope of the class;

• there is uncertainty as to the outcome of pending appeals or motions; and

• in many cases, the plaintiffs have not specified damages in their complaint or in court filings.

Litigation . We are subject to various litigation in the ordinary course of our business. We cannot assure you of the ultimate outcome

of any litigation involving us. Although we believe that our estimates related to any litigation are reasonable, deviations from our estimates

could produce a materially different result. Any litigation alleging violations of education or consumer protection laws and/or regulations,

misrepresentation, fraud or deceptive practices may also subject our affected campuses to additional regulatory scrutiny. The following is a

description of pending litigation that falls outside the scope of litigation incidental to the ordinary course of our business.

On December 22, 2008, we were served with a qui tam action that was filed on July 3, 2007 in the United States District Court for the

Southern District of Indiana by a former employee (“relator”) on behalf of herself and the federal government under the following caption:

United States of America ex rel. Debra Leveski v. ITT Educational Services, Inc. (the “Leveski Litigation”). We were served with the Leveski

Litigation after the U.S. Department of Justice declined to intervene in the litigation. On June 3, 2008, the relator filed an amended complaint

in the Leveski Litigation. On September 23, 2009, the court dismissed the Leveski Litigation without prejudice and gave the relator an

opportunity to replead her complaint. On October 8, 2009, the relator filed a second amended complaint. In the second amended complaint,

the relator alleges that we violated the False Claims Act, 31 U.S.C. § 3729, et seq., and the HEA by compensating our sales representatives

and financial aid administrators with commissions, bonuses or other incentive payments based directly or indirectly on success in securing

enrollments or federal financial aid. The relator alleges that all of our revenue derived from the federal student financial aid programs from

July 3, 2001 through July 3, 2007 was generated as a result of our violating the HEA. The relator seeks various forms of recovery on behalf

of herself and the federal government, including:

• treble the amount of unspecified funds paid to us for federal student grants;

• treble the amount of unspecified default payments, special allowance payments and interest received by lenders with respect to

federal student loans received by our students;

• all civil penalties allowed by law; and

• attorney’s fees and costs.

A qui tam action is a civil lawsuit brought by one or more individuals (a qui tam “relator”) on behalf of the federal or state government

for an alleged submission to the government of a false claim for payment. A qui tam action is always filed under seal and remains under seal,

until the government decides whether to intervene in the litigation. Whenever a relator files a qui tam action, the government typically

initiates an investigation in order to determine whether to intervene in the litigation. If the government intervenes, it has primary control over

the litigation. If the government declines to intervene, the relator may pursue the litigation on behalf of the government. If the government or

the relator is successful in the litigation, the relator receives a portion of the government’s recovery.

On August 8, 2011, the district court granted our motion to dismiss all of the relator’s claims in the Leveski Litigation for lack of

subject-matter jurisdiction and issued a judgment for us. On February 16, 2012, the relator in the Leveski Litigation filed a Notice of Appeal

with the 7th Circuit Court of Appeals regarding the final judgment entered by the district court dismissing all claims against us. On March 26,

2012, the district court in the Leveski Litigation awarded us approximately $395 in sanctions against the relator’s attorneys for filing a

frivolous lawsuit. Relator’s attorneys also appealed this award to the 7th Circuit Court of Appeals. On July 8, 2013, the 7

th Circuit Court of

Appeals reversed the district court’s dismissal of the Leveski Litigation for lack of subject-matter jurisdiction and the award of sanctions

against relator’s attorneys. In addition, the 7th Circuit Court of Appeals remanded the Leveski Litigation back to the district court for further

proceedings.

We have defended, and intend to continue to defend, ourselves vigorously against the allegations made in the complaint.

On March 11, 2013, a complaint in a securities class action lawsuit was filed against us and two of our current executive officers in the

United States District Court for the Southern District of New York under the caption:

William Koetsch, Individually and on Behalf of All Others Similarly Situated v. ITT Educational Services, Inc., et al. (the “Koetsch

Litigation”). On April 17, 2013, a second complaint in a securities class action lawsuit was filed against us and two of our current executive

officers in the United States District Court for the Southern District of New York under the caption: Massachusetts Laborers’ Annuity Fund,

Individually and on Behalf of All Others Similarly Situated v. ITT Educational Services, Inc., et al. (the “MLAF Litigation”). On July 25,

2013, the court consolidated the Koetsch Litigation and the MLAF Litigation under the caption: In re ITT Educational Services, Inc.

Securities Litigation (the “Securities Litigation”) and named the Plumbers and Pipefitters National Pension Fund and Metropolitan Water

Reclamation District Retirement Fund as the lead plaintiffs. On October 7, 2013, an amended complaint was filed in the Securities Litigation,

and on January 15, 2014, a second amended complaint was filed in the Securities Litigation. The second amended complaint alleges, among

other things, that the defendants violated Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder by:

• our failure to properly account for the 2007 RSA, 2009 RSA and PEAKS Program;

• employing devices, schemes and artifices to defraud;

48

• making untrue statements of material facts, or omitting material facts necessary in order to make the statements made, in light of

the circumstances under which they were made, not misleading;

• making the above statements intentionally or with reckless disregard for the truth;

• engaging in acts, practices, and a course of business that operated as a fraud or deceit upon lead plaintiffs and others similarly

situated in connection with their purchases of our common stock;

• deceiving the investing public, including lead plaintiffs and the purported class, regarding, among other things, our artificially

inflated statements of financial strength and understated liabilities; and

• causing our common stock to trade at artificially inflated prices and causing the plaintiff and other putative class members to

purchase our common stock at inflated prices.

The putative class period in this action is from April 24, 2008 through February 25, 2013. The plaintiffs seek, among other things, the

designation of this action as a class action, an award of unspecified compensatory damages, interest, costs and expenses, including counsel

fees and expert fees, and such equitable/injunctive and other relief as the court deems appropriate. On July 22, 2014, the district court denied

most of our motion to dismiss all of the plaintiffs’ claims for failure to state a claim for which relief can be granted. On August 5, 2014, we

filed our answer to the second amended complaint denying all of the plaintiffs’ claims. All of the defendants have defended, and intend to

continue to defend, themselves vigorously against the allegations made in the second amended complaint.

On September 30, 2014, a complaint in a securities class action lawsuit was filed against us and two of our current executive officers in

the United States District Court for the Southern District of Indiana under the caption: David Banes, Individually and on Behalf of All Others

Similarly Situated v. Kevin M. Modany, et al. (the “Banes Litigation”). The complaint alleges, among other things, that the defendants

violated Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder by:

• misleading investors regarding the integrity of our financial reporting, including the reporting of the PEAKS Trust;

• knowingly or recklessly making materially false and/or misleading statements and/or failing to disclose material adverse facts

about our business operations and prospects, including that:

• our financial statements contained errors related to the accounting of the PEAKS Trust and the PEAKS Program; and

• we lacked adequate internal controls over financial reporting;

• knowingly or recklessly engaging in acts, transactions, practices, and courses of business that operated as a fraud or deceit upon

the plaintiff and the purported class;

• employing devices, schemes and artifices to defraud in connection with the purchase and sale of our common stock;

• deceiving the investing public, including the plaintiff and the purported class; and

• artificially inflating and maintaining the market price of our common stock and causing the plaintiff and other putative class

members to purchase our common stock at artificially inflated prices.

The putative class period in this action is from April 26, 2013 through September 19, 2014. The plaintiffs seek, among other things, the

designation of this action as a class action, an award of unspecified damages, interest, costs and expenses, including counsel fees and expert

fees, and such other relief as the court deems proper. All of the defendants intend to defend themselves vigorously against the allegations

made in the complaint.

On October 3, 2014, a complaint in a securities class action lawsuit was filed against us and two of our current executive officers in the

United States District Court for the Southern District of Indiana under the caption: Babulal Tarapara, Individually and on Behalf of All

Others Similarly Situated v. ITT Educational Services, Inc., et al. (the “Tarapara Litigation”). The complaint alleges, among other things, that

the defendants violated Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder by knowingly or recklessly

making false and/or misleading statements and failing to disclose material adverse facts about our business, operations, prospects and

financial results. In particular, the complaint alleges that:

• we failed to consolidate the PEAKS Trust in our consolidated financial statements;

• our consolidated financial statements contained errors related to the accounting of the PEAKS Trust and PEAKS Program;

• we improperly accounted for our guarantee obligations under the PEAKS Guarantee;

• our financial results were overstated;

• we lacked adequate internal and financial controls;

• our consolidated financial statements were materially false and misleading at all relevant times;

• we artificially inflated and maintained the market price of our common stock, causing the plaintiff and other putative class

members to purchase our common stock at artificially inflated prices;

• we deceived the investing public, including the plaintiff and the purported class; and

49

• we employed devices, schemes and artifices to defraud in connection with the purchase and sale of our common stock.

The putative class period in this action is from February 26, 2013 through September 18, 2014. The plaintiffs seek, among other things:

• the designation of this action as a class action;

• an award of unspecified compensatory damages, including interest;

• an award of reasonable costs and expenses, including counsel fees and expert fees; and

• such other relief as the court deems proper.

All of the defendants intend to defend themselves vigorously against the allegations made in the complaint.

On October 9, 2014, a complaint in a securities class action lawsuit was filed against us and two of our current executive officers in the

United States District Court for the Southern District of Indiana under the caption: Kumud Jindal, Individually and on Behalf of All Others

Similarly Situated v. Kevin M. Modany, et al. (the “Jindal Litigation”). The complaint alleges, among other things, that the defendants

violated Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder by knowingly or recklessly making false

and/or misleading statements and failing to disclose material adverse facts about our business, operations, prospects and financial results. In

particular, the complaint alleges that:

• our financial statements contained errors related to the accounting of the PEAKS Trust and PEAKS Program;

• we lacked adequate internal controls over financial reporting;

• our financial statements were materially false and misleading at all relevant times;

• we engaged in acts, transactions, practices and courses of business which operated as a fraud and deceit upon plaintiff and the

purported class;

• we employed devices, schemes and artifices to defraud in connection with the purchase and sale of our common stock; and

• we artificially inflated and maintained the market price of our common stock, causing the plaintiff and other putative class

members to purchase our common stock at artificially inflated prices.

The putative class period in this action is from April 26, 2013 through September 19, 2014. The plaintiffs seek, among other things, the

designation of this action as a class action, an award of unspecified damages, interest, attorneys’ fees, expert fees and other costs, and such

other relief as the court deems proper. All of the defendants intend to defend themselves vigorously against the allegations made in the

complaint.

On May 8, 2013, a complaint in a shareholder derivative lawsuit was filed against two of our current executive officers and all of

our current Directors in the United States District Court for the Southern District of New York under the following caption: Sasha

Wilfred, Derivatively on Behalf of Nominal Defendant ITT Educational Services, Inc. v. Kevin M. Modany, et al. (the “Wilfred

Litigation”). The complaint alleges, among other things, that from April 24, 2008 through February 25, 2013, the defendants violated

state law, including breaching their fiduciary duties to us, grossly mismanaging us, wasting our corporate assets and being unjustly

enriched, by:

• causing or allowing us to disseminate to our shareholders materially misleading and inaccurate information relating to a

series of risk-sharing agreements through SEC filings, press releases, conference calls, and other public statements and

disclosures;

• willfully ignoring obvious and pervasive problems with our internal controls and practices and procedures, and failing to

make a good faith effort to correct these problems or prevent their recurrence;

• violating and breaching fiduciary duties of care, loyalty, reasonable inquiry, oversight, good faith and supervision;

• causing or allowing us to misrepresent material facts regarding our financial position and business prospects; and

• abandoning their responsibilities and duties with regard to prudently managing our businesses in a manner imposed upon

them by law.

The complaint seeks:

• unspecified damages;

• restitution;

• disgorgement of all profits, benefits and other compensation obtained by the individual defendants;

• an order directing us to take all necessary actions to reform and improve our corporate governance and internal

procedures; and

• costs and disbursements, including attorneys’, accountants’ and experts’ fees, costs and expenses.

50

On August 6, 2013, the parties agreed to stay the Wilfred Litigation, until the Securities Litigation was dismissed with prejudice

or the defendants filed an answer in the Securities Litigation. On September 8, 2014, the district court approved the parties’ agreement

for an additional stay of the Wilfred Litigation, until the earlier of:

• a final disposition of the Securities Litigation; or

• 30 days after written notice terminating the stay has been provided by any of the parties in the Wilfred Litigation to all

other parties.

On May 27, 2014, a complaint in a shareholder derivative lawsuit was filed against two of our current executive officers, all of

our current Directors and one former Director in the United States District Court for the District of Delaware under the following

caption: Janice Nottenkamper, Derivatively on Behalf of Nominal Defendant ITT Educational Services, Inc. v. Kevin M. Modany, et

al. (the “Nottenkamper Litigation”). The complaint alleges, among other things, that from 2008 to May 27, 2014, the defendants

engaged in illicit conduct, made false and misleading statements, concealed the truth and failed to disclose material information

concerning:

• our exposure under guarantees entered into with third-party lenders to obtain financing for our students;

• increases in our bad debt expense caused by increases in student loan defaults;

• our reserves associated with our obligations under third-party private education loan programs and internal student

financing;

• the unwillingness of third-party lenders to provide private education loans to our students; and

• our pushing students into high-cost private loans that were likely to default.

As a result of this conduct, the complaint alleges that the defendants breached their fiduciary duties to us, were unjustly enriched, abused

their control of us and grossly mismanaged us by:

• causing or allowing us to disseminate to our shareholders materially misleading and inaccurate information relating to a series of

risk-sharing agreements through SEC filings, press releases, conference calls, and other public statements and disclosures;

• willfully ignoring obvious and pervasive problems with our internal controls and practices and procedures, and failing to make a

good faith effort to correct these problems or prevent their recurrence;

• violating and breaching fiduciary duties of care, loyalty, good faith, diligence and candor;

• causing or allowing us to misrepresent material facts regarding our financial position and business prospects; and

• abandoning and abdicating their responsibilities and duties with regard to prudently managing our businesses in a manner

imposed upon them by law.


• unspecified damages;

• restitution;

• disgorgement of all profits, benefits and other compensation obtained by the individual defendants;

• an order directing us to take all necessary actions to reform and improve our corporate governance and internal procedures; and

• costs and disbursements, including attorneys’, accountants’ and experts’ fees, costs and expenses.

Although the Wilfred Litigation and Nottenkamper Litigation are each brought nominally on behalf of us, we expect to incur defense costs

and other expenses in connection with those actions.

On May 18, 2012, we received a Civil Investigative Demand (the “Original CID”) from the U.S. Consumer Financial Protection

Bureau (the “CFPB”). In September 2013, the CFPB withdrew the Original CID and we received a new Civil Investigative Demand (the

“New CID”) from the CFPB. Both the Original CID and the New CID provided that the purpose of the CFPB’s investigation was, in part, “to

determine whether for-profit post-secondary companies, student loan origination and servicing providers, or other unnamed persons have

engaged or are engaging in unlawful acts or practices relating to the advertising, marketing, or origination of private student loans.” Both the

Original CID and the New CID contained broad requests for oral testimony, production of documents and written reports related to private

education loans made to our students, internal financing provided to our students and certain other aspects of our business. We provided

documentation and other information to the CFPB, while preserving our rights to object to its inquiry.

On February 26, 2014, the CFPB filed a complaint against us in the United States District Court for the Southern District of Indiana

under the following caption: Consumer Financial Protection Bureau v. ITT Educational Services, Inc. (the “CFPB Litigation”). The

complaint alleges, among other things, that we violated:

51

• Section 1036(a)(1) of the Consumer Financial Protection Act of 2010 (the “CFPA”), 12 U.S.C. §5536(a)(1), which prohibits

unfair, deceptive and abusive acts and practices, from July 21, 2011 through December 2011, by:

• subjecting consumers to undue influence or coercing them into taking out private education loans through a variety of

unfair acts and practices designed to interfere with the consumers’ ability to make informed, uncoerced choices;

• taking unreasonable advantage of consumers’ inability to protect their interest in selecting or using the private education

loans; and

• taking unreasonable advantage of consumers’ reasonable reliance on us to act in the consumers’ interests; and

• the Truth in Lending Act, 15 U.S.C. §§ 1601 et seq., and Regulation Z thereunder, 12 C.F.R. Part 1026, which require

certain disclosures to be made in writing to consumers in connection with the extension of consumer credit, since

March 2009 by failing to disclose a discount that constituted a finance charge.

On April 28, 2014, we filed a motion to dismiss the CFPB Litigation for, among other reasons, lack of jurisdiction and failure to state a

claim upon which relief can be granted. We have defended, and intend to continue to defend, ourselves vigorously against the allegations

made in the complaint.

On February 27, 2014, the New Mexico Attorney General filed a complaint against us in the District Court of New Mexico under the

following caption: State of New Mexico, ex rel. Gary K King, Attorney General v. ITT Educational Services, Inc., et al. (the “New Mexico

Litigation”). On April 4, 2014, we removed the New Mexico Litigation to the U.S. District Court for the District of New Mexico. The complaint

alleges, among other things, that we engaged in a pattern and practice of exploiting New Mexico consumers by using deceptive, unfair,

unconscionable and unlawful business practices in the marketing, sale, provision and financing of education goods and services in violation of New

Mexico’s Unfair Practices Act. In particular, the complaint contains allegations that:

• we misrepresented matters related to our nursing education program, including, without limitation, its programmatic accreditation

status, the transferability of credits earned in the program and the curriculum of the program;

• we misrepresented the terms of the financial aid available to students and the cost of our programs;

• we engaged in unfair or deceptive trade practices;

• we failed to issue refunds; and

• our form enrollment agreement contained unenforceable and unconscionable provisions.


• an order declaring portions of our enrollment agreement illusory, unconscionable and unenforceable;

• preliminary and permanent injunctive relief;

• disgorgement of unjust enrichment amounts;

• unspecified civil penalty amounts;

• restitution; and

• reasonable costs, including investigative costs.

We have defended, and intend to continue to defend, ourselves vigorously against the allegations made in the complaint.

On December 17, 2013, a complaint was filed against us in a purported class action in the Superior Court of the State of California for the

County of Los Angeles under the following caption: La Sondra Gallien, an individual, James Rayonez, an individual, Giovanni Chilin, an individual,

on behalf of themselves and on behalf of all persons similarly situated v. ITT Educational Services, Inc., et al. (the “Gallien Litigation”). The

plaintiffs filed an amended complaint on February 13, 2014. The amended complaint alleges, among other things, that under California law, we:

• failed to pay wages owed;

• failed to pay overtime compensation;

• failed to provide meal and rest periods;

• failed to provide itemized employee wage statements;

• engaged in unlawful business practices; and

• are liable for civil penalties under the California Private Attorney General Act.

The purported class includes recruiting representatives employed by us during the period of December 17, 2009 through December 17,

2013. The amended complaint seeks:

• compensatory damages, including lost wages and other losses;

52

• general damages;

• pay for missed meal and rest periods;

• restitution;

• liquidated damages;

• statutory penalties;

• interest;

• attorneys’ fees, cost and expenses;

• civil and statutory penalties;

• injunctive relief; and

• such other and further relief as the court may deem equitable and appropriate.

We have defended, and intend to continue to defend, ourselves vigorously against the allegations made in the amended complaint.

There can be no assurance that the ultimate outcome of the Leveski Litigation, Securities Litigation, Banes Litigation, Tarapara Litigation,

Jindal Litigation, Wilfred Litigation, Nottenkamper Litigation, CFPB Litigation, New Mexico Litigation, Gallien Litigation or other actions

(including other actions under federal or state securities laws) will not have a material adverse effect on our financial condition, results of operations

or cash flows.

The current officers named in the Securities Litigation, Banes Litigation, Tarapara Litigation, Jindal Litigation, Wilfred Litigation and

Nottenkamper Litigation include Daniel M. Fitzpatrick and Kevin M. Modany.

Certain of our current and former officers and Directors are or may become a party in the actions described above and/or are or

may become subject to government investigations. Our By-laws and Restated Certificate of Incorporation obligate us to indemnify our

officers and Directors to the fullest extent permitted by Delaware law, provided that their conduct complied with certain requirements.

We are obligated to advance defense costs to our officers and Directors, subject to the individual’s obligation to repay such amount if

it is ultimately determined that the individual was not entitled to indemnification. In addition, our indemnity obligation can, under

certain circumstances, include indemnifiable judgments, penalties, fines and amounts paid in settlement in connection with those

actions and investigations.

Government Investigations. We are subject to investigations and claims of non-compliance with regulatory standards and other

actions brought by regulatory agencies. Some of the more significant pending investigations, claims and actions are described below.

If the results of any investigations, claims and/or actions are unfavorable to us, we may be required to pay money damages or be

subject to fines, penalties, injunctions, operational limitations, loss of eligibility to participate in federal or state financial aid

programs, debarments, additional oversight and reporting, or other civil and criminal sanctions. Those sanctions could have a material

adverse effect on our financial condition, results of operations and cash flows.

On October 30, 2012, we received a Civil Investigative Demand (“CID”) from the Massachusetts Office of the Attorney General

(“MAG”). The MAG’s CID provides that the MAG is investigating allegations that we may have violated Massachusetts General

Laws, Chapter 93A, Section 2(a) by “engaging in unfair or deceptive practices in connection with marketing and advertising job

placement and student outcomes, the recruitment of students, and the financing of education.” The MAG’s CID contains broad

requests for production of documents related to our students in Massachusetts, including the financial aid available to those students,

our recruitment of those students, the career services that we offer to those students, our marketing and advertising, the retention and

graduation rates of those students and many other aspects of our business. We are cooperating with the MAG in its investigation, and

we have provided documentation, communications and other information to the MAG in response to the CID. We believe that our acts

and practices relating to our students in Massachusetts are lawful. There can be no assurance, however, that the ultimate outcome of

the MAG investigation will not have a material adverse effect on our financial condition, results of operations and/or cash flows.

In January, February, April and May 2014, we received subpoenas and/or CIDs from the Attorneys General of Arkansas,

Arizona, Colorado, Connecticut, Hawaii, Idaho, Iowa, Kentucky, Missouri, Nebraska, North Carolina, Oregon, Pennsylvania,

Tennessee and Washington under the authority of each state’s consumer protection statutes. The Attorney General of the

Commonwealth of Kentucky has informed us that it will serve as the point of contact for the multistate group to respond to questions

relating to the subpoenas and CIDs. The subpoenas and CIDs contain broad requests for information and the production of documents

related to our students and practices, including marketing and advertising, recruitment, financial aid, academic advising, career

services, admissions, programs, licensure exam pass rates, accreditation, student retention, graduation rates and job placement rates, as

well as many other aspects of our business. We believe that several other companies in the proprietary postsecondary education sector

have received similar subpoenas and CIDs. We are cooperating with the Attorneys General of the states involved. There can be no

assurance, however, that the ultimate outcome of the state Attorneys General investigation will not have a material adverse effect on

our financial condition, results of operations and/or cash flows.

53

On February 8, 2013, we received the first of many subpoenas from the SEC. In a letter accompanying each of the subpoenas,

the SEC states that it is conducting an investigation of us. The SEC’s subpoenas requested the production of documents and

communications that, among other things, relate to our actions and accounting associated with:

• agreements that we entered into with the 2009 Entity to create the 2009 Loan Program, including, without limitation, the

2009 RSA;

• agreements that we entered into to create the PEAKS Program;

• certain accounting-related documents associated with the 2009 Loan Program, the PEAKS Program and internal student

financing; and

• our board of directors-related materials associated with the 2009 Loan Program, the PEAKS Program and internal student

financing.

We have provided the information requested, including testimony of senior employees. On August 7, 2014, we received a “Wells Notice” from the

Staff of the SEC notifying us that the Staff had made a preliminary determination to recommend that the SEC file an enforcement action against us.

According to the Staff, the enforcement action would allege violations of Sections 10(b), 13(a) and 13(b)(2) of the Exchange Act and Rules 10b-5,

12b-20, 13a-1, 13a-11, 13a-13 and 13a-15 under the Exchange Act. The proposed action relates primarily to certain disclosures and accounting

surrounding the two loan programs noted above. The SEC’s notice said that the Staff’s recommendation may:

• involve a civil injunctive action, public administrative proceeding and/or cease-and-desist proceeding against us; and

• seek remedies that include an injunction, a cease-and-desist order and monetary relief, including civil monetary penalties.

A Wells Notice is neither a formal allegation nor a finding of wrongdoing. Instead, it is a preliminary determination by the Staff to recommend

that the SEC file a civil enforcement action or administrative proceeding against the recipient. Under the SEC’s procedures, a recipient of a Wells

Notice has an opportunity to respond in the form of a Wells submission that seeks to persuade the SEC that such an action should not be brought.

Accordingly, we made a submission to the Staff in response to the Wells Notice setting forth why the factual record does not support the enforcement

action recommended by the Staff and that any perceived shortcomings were made in good faith. Although we intend to defend ourselves vigorously

should the SEC authorize any legal action that does not comport with our view of the facts, we cannot predict the outcome of any legal action or

whether the matters will result in any settlement. We cannot assure you that the ultimate outcome of the SEC investigation, any legal action by the

SEC or any settlement will not have a material adverse effect on our financial condition, results of operations and/or cash flows.

Lease Commitments. We lease our non-owned facilities under operating lease agreements. A majority of the operating leases contain renewal

options that can be exercised after the initial lease term. Renewal options are generally for periods of one to five years. All operating leases will

expire over the next 10 years and we expect that:

• most of those leases will be renewed or replaced by other leases in the normal course of business;

• we may purchase the facilities represented by those leases; or

• we may purchase or build other replacement facilities.

There are no material restrictions imposed by the lease agreements, and we have not entered into any significant guarantees related to the

leases. We are required to make additional payments under the operating lease terms for taxes, insurance and other operating expenses incurred

during the operating lease period.

Rent expense under our operating leases was:

• $53,212 in the year ended December 31, 2013;

• $50,817 in the year ended December 31, 2012; and

• $47,833 in the year ended December 31, 2011.

Future minimum rental payments required under our operating leases that have initial or remaining non-cancelable lease terms in excess of one

year as of December 31, 2013 are as follows:

2014 $ 44,714

2015 38,582

2016 27,939

2017 19,084

2018 13,282

2019 and thereafter 12,446

$156,047

Future minimum rental payments related to equipment leases are not significant.

54

Guarantees. We entered into the PEAKS Guarantee in connection with the PEAKS Program and the 2009 RSA in connection with the 2009

Loan Program. Under the PEAKS Guarantee, we guarantee payment of the principal and interest owed on the PEAKS Senior Debt, the

administrative fees and expenses of the PEAKS Trust and a minimum required Asset/Liability Ratio. The PEAKS Guarantee contains, among other

things, representations and warranties and events of default that we believe are customary for guarantees of this type. In addition, under the PEAKS

Program, some or all of the holders of the PEAKS Senior Debt could require us to purchase their PEAKS Senior Debt, if the law is changed to reduce

the maximum allowable percentage of our annual revenue derived from Title IV Program funds from 90% to 75% or less. At this time, we believe

that the likelihood of such a change in the law is remote. Our guarantee and purchase obligations under the PEAKS Program remain in effect until the

PEAKS Senior Debt and the PEAKS Trust’s fees and expenses are paid in full. At such time, we will be entitled to repayment of the amount of any

payments we made under the PEAKS Guarantee (which do not include Payments on Behalf of Borrowers) to the extent that funds are remaining in

the PEAKS Trust. As of December 31, 2012, the amount of payments that we had previously made under the PEAKS Guarantee and that we

expected to recover was $12,342. We recorded this amount, net of an accrued discount of $5,674, in Other assets on our Consolidated Balance Sheet

as if December 31, 2012.

We concluded that we were required to consolidate the PEAKS Trust in our consolidated financial statements beginning on

February 28, 2013. See Note 10 – Variable Interest Entities, for a further discussion of the Consolidation. As a result, the assets and

liabilities of the PEAKS Trust have been included on, and all intercompany transactions have been eliminated from, our Consolidated

Balance Sheet as of December 31, 2013. While we no longer record a contingent liability for the PEAKS Guarantee on our

Consolidated Balance Sheet beginning on February 28, 2013, our obligations under the PEAKS Guarantee remain in effect.

We entered into the 2009 RSA in connection with the 2009 Loan Program. Under the 2009 RSA, we guarantee the repayment of

the principal amount (including capitalized origination fees) and accrued interest payable on any private education loans that are

charged off above a certain percentage of the private education loans made under the 2009 Loan Program, based on the annual dollar

volume. The total initial principal amount of private education loans that the 2009 Entity purchased under the 2009 Loan Program was

approximately $141,000. No new private education loans were or will be originated under the 2009 Loan Program after December 31,

2011, but immaterial amounts related to loans originated prior to that date were disbursed by the lender through June 2012. Our

obligations under the 2009 RSA will remain in effect, until all private education loans made under the 2009 Loan Program are paid in

full or charged off. The standard repayment term for a private education loan made under the 2009 Loan Program is ten years, with

repayment generally beginning six months after a student graduates or three months after a student withdraws or is terminated from

his or her program of study.

Under the 2009 RSA, we have the right to elect to make Discharge Payments with respect to private education loans made under

the 2009 Loan Program that have been charged off. The effect of a making a Discharge Payment related to a private education loan is

to reduce the aggregate amount that we may have to pay under our guarantee obligations with respect to that loan. We have claimed as

an offset against the Revolving Note amounts that would have the effect of discharging our obligations with respect to certain charged

off loans under the 2009 RSA. In addition, in the three months ended December 31, 2013, we made Discharge Payments to the 2009

Entity. We may continue to make Discharge Payments in future periods, if we believe that doing so would be economically beneficial

to us. Making Discharge Payments may result in us paying amounts to the 2009 Entity in advance of when a guarantee payment would

be due, which would negatively impact our liquidity in a particular period, but may result in us paying a lesser amount than we

otherwise would have been required to pay under our guarantee obligation in future periods under the 2009 RSA. See Note 10 –

Variable Interest Entities, for a further discussion of Discharge Payments.

We are not able to estimate the undiscounted maximum potential amount of future payments that we could be required to make

under the 2009 RSA, because those payments will be affected by:

• the timing of future defaults;

• the use, timing and length of forbearances granted to borrowers;

• of the use, timing and length of deferral periods;

• changes in the interest rate on the loans made under the 2009 Loan Program, since those loans are based on the prime rate

plus a margin; and

• the fact that those loans will consist of a large number of loans of individually immaterial amounts.

55

We believe that it is probable that we will make additional payments under the 2009 RSA. The following table sets forth the

estimated amount of Regular Payments and Discharge Payments that we expect to pay and the estimated amount of recoveries from

charged-off loans that we expect to be paid to us by the 2009 Entity in the periods indicated:

Year

Estimated

Regular

Payments

Estimated

Discharge

Payments

Estimated

Total

Payments

Estimated

Recoverie

2014 $ 9,009 $ 0 $ 9,009 $ (1,011)

2015 14,251 0 14,251 (1,200)

2016 16,060 0 16,060 (1,200)

2017 16,333 0 16,333 (1,200)

2018 and later 0 75,194 75,194 (300)

$ 55,653 $ 75,194 $ 130,847 $ (4,911)

We believe that the vast majority of the $75,194 of estimated payments projected to be paid after 2017 will be made by us in

2018. The estimated future payment amounts and timing related to the 2009 RSA assume, among other factors, that we do not make

any Discharge Payments until 2018 and do make Discharge Payments to the fullest extent possible in 2018 and later years. If we do

not make the Discharge Payments as assumed in 2018 and later years, we estimate that we would make approximately $97,400 of

Regular Payments in 2018 through 2027. Of this amount, approximately $15,100 to $16,400 would be paid annually in each of 2018

through 2022, and approximately $16,600, in the aggregate, would be paid in 2023 through 2027.

The amounts of the estimated Regular Payments and the estimated recoveries were discounted at a risk-free rate of interest in

determining our contingent liability for the 2009 RSA. The total amount of the discount as of December 31, 2013 was approximately

$9,015.

The estimated future payment amounts, the estimated timing of those payments and the estimated amount of recoveries with

respect to the RSAs discussed above and elsewhere in this Annual Report on Form 10-K are only estimates, are based on numerous

assumptions and are subject to change. As with any estimate, as facts and circumstances change, the estimated amounts and timing

could change. We made a number of assumptions in preparing the estimates, which assumptions may not be correct. The assumptions

included, among other things, the following:

• the repayment performance of the private education loans made under the 2009 Loan Program or PEAKS Program, as

applicable;


• the changes in the variable interest rates applicable to those private education loans and, with respect to the PEAKS

Program, the PEAKS Senior Debt;

• the amounts and timing of collections in the future on those private education loans that have been charged off;

• the fees and expenses associated with servicing those private education loans; and


Pursuant to the 2009 RSA, we are required to maintain collateral to secure our guarantee obligation in an amount equal to a

percentage of the outstanding balance of the private education loans disbursed to our students under the 2009 Loan Program. As of

December 31, 2013 and December 31, 2012, the total collateral maintained in a restricted bank account was approximately $8,600.

This amount was included in Other assets on our Consolidated Balance Sheets as of each of those dates. The 2009 RSA also requires

that we comply with certain covenants, including that we maintain certain financial ratios which are measured on a quarterly basis and

deliver compliance certificates on a quarterly basis setting forth the status of our compliance with those financial ratios. If we are not

in compliance with those covenants at the end of each fiscal quarter, we are required to increase the amount of collateral maintained in

the restricted bank account to a predetermined amount, until the end of a succeeding quarter at which we are in compliance with those

covenants. The predetermined amount is based on the percentage of the aggregate principal balance of the private education loans

made under the 2009 Loan Program that exceeds a certain percentage as of the end of each fiscal quarter. We were not in compliance

with those covenants as of December 31, 2013.

As a consequence of the restatement of our unaudited condensed consolidated financial statements in our Quarterly Reports on

Form 10-Q for the fiscal quarters ended March 31, 2013, June 30, 2013 and September 30, 2013, certain quarterly compliance

certificates that we were required to deliver to the 2009 Entity under the 2009 RSA were inaccurate. Those inaccuracies did not affect

our compliance with the financial ratio covenants in the 2009 RSA as of March 31, 2013. We were not, however, in compliance with

the financial ratio covenants in the 2009 RSA as of June 30, 2013 and subsequent measurement dates. Further, due to our failure to

timely file our Annual Report on Form 10-K for the fiscal year ended December 31, 2013 and our Quarterly Reports on Form 10-Q for

56

the fiscal quarters ended March 31, 2014 and June 30, 2014, we did not timely deliver the required compliance certificates under the

2009 RSA with respect to those periods. As a result of our noncompliance with the financial ratio covenants as of June 30, 2013 and

subsequent measurement dates, the amount of collateral required to be maintained in the restricted bank account has been increased by

approximately $2,600. We intend to make in October 2014 a deposit in that amount to the restricted bank account to be held as

additional collateral under the 2009 RSA.

The following table sets forth the approximate aggregate amount of guarantee payments, Discharge Payments and Payments on Behalf of

Borrowers that were made related to the PEAKS Program and 2009 RSA and the amount of recoveries from charged-off loans paid to us by the 2009

Entity, in the periods indicated:

Type of Payment (Receipt)

January 1,

2013

Through

February 28,

2013(1)(2)

March 1,

2013

Through

December 31,

2013(1)(2)

Total Year

Ended

December 31

, 2013

Year Ended

December 31, 2012

Guarantee:

PEAKS Program $ 854 $ 1,559 $ 2,413 $ 12,342

2009 RSA Regular Payments 0 0 1,791 1,990

2009 RSA Discharge Payments 0 0 912 0

Payments on Behalf of Borrowers 532 10,967 11,499 2,762

2009 RSA-Recoveries from Charged-Off

Loans

0

0

(103)

(234)

Total $ 1,386 $ 12,526 $ 16,512 $ 16,860

(1) We have provided separate columns showing the payment amounts prior to and after the Consolidation, because all transactions with the

PEAKS Trust were eliminated from our consolidated financial statements after the Consolidation. Cash payments were, however, made by us

throughout the periods indicated, including the periods after the Consolidation.

(2) The 2009 RSA payments are made to, and recoveries are received from, the 2009 Entity. The 2009 Entity was not consolidated in our

consolidated financial statements and, therefore, separate disclosure of amounts paid or received before and after the February 28, 2013 date of

Consolidation is not applicable.

In the fiscal year ended December 31, 2013, we also offset $9,091 owed by us under the 2009 RSA against amounts owed to us by the 2009

Entity under the Revolving Note, instead of making additional payments in that amount. Approximately $6,786 of the amount that we claimed as an

offset against the Revolving Note in the fiscal year ended December 31, 2013 represented Discharge Payments. We recorded all of the amounts

claimed as offsets in Other current liabilities on our Consolidated Balance Sheet as of December 31, 2013. In the year ended December 31, 2013, the

2009 Entity did not remit to us $574 of recoveries from charged-off loans that were owed to us. We recorded all of the amounts owed to us from the

2009 Entity for recoveries from charged-off loans in Prepaid expenses and other current assets on our Consolidated Balance Sheet as of

December 31, 2013.

In the first quarter of 2013, we notified the 2009 Entity that:

• we had determined that the 2009 Entity was in default of its obligations to us under the loan and security agreement pursuant to which

the Revolving Note was issued (the “2009 Loan Agreement”);

• as a result of that default, all amounts under the Revolving Note were immediately due and payable; and

• we would not make payments under the 2009 RSA until we received credit for the full amount due us under the Revolving Note, based

on the provisions of the 2009 Loan Agreement and the 2009 RSA that allow us to set off amounts owed by us under the 2009 RSA

against amounts owed to us by the 2009 Entity under the Revolving Note.

At that time, the outstanding amount of the Revolving Note due to us was approximately $8,200, representing principal and accrued interest. In

response to our notification, the 2009 Entity:

• denied that it had defaulted under the 2009 Loan Agreement and, therefore, our ability to accelerate the payment of the Revolving Note;

and

• refused our demand to immediately pay the Revolving Note in full.

As a consequence, over the period from February 2013 through August 2013, we offset our then current payment obligations under the 2009

RSA and the amount of Discharge Payments we elected to make during that period against all of the 2009 Entity’s obligations owed to us under the

Revolving Note (the “Offset”).

57

We understand that the 2009 Entity’s position is that the Offset was improper, because:

• it has not defaulted under the 2009 Loan Agreement; and

• even if it had defaulted under the 2009 Loan Agreement, the assets of the 2009 Entity against which we could offset or exercise our

other remedies, were limited.

We further understand the 2009 Entity’s position to be that, because the Offset was improper, we are in default under the 2009 RSA. In

April 2013, the 2009 Entity notified us that it had taken control of the restricted account containing the cash collateral that we deposited to secure our

obligations under the 2009 RSA (the “Collateral”). At that time, the amount of funds in that account was approximately $8,600. To our knowledge,

the 2009 Entity has taken no further action related to the Collateral. We believe that our good faith exercise of our right of offset provided for in the

2009 Loan Agreement and the 2009 RSA does not constitute an event of default under the 2009 RSA, and that the 2009 Entity’s seizure of control of

the restricted account containing the Collateral constitutes an additional default by the 2009 Entity. We cannot assure you, however, that the Offset

will ultimately be determined to have been proper. In the event of a default by us under the 2009 RSA related to the Offset, we may be required to

pay to the 2009 Entity approximately $8,600, representing the amount of the Offset, net of approximately $500 of recoveries from charged-off loans

that are owed, but have not been paid, to us. If the 2009 Entity instead were to withdraw Collateral in that amount from the restricted bank account,

we would be required to deposit that amount of cash in the account to maintain the required level of Collateral. Any such payment or deposit would

reduce the amount of our contingent liability related to the 2009 RSA.

At the end of each reporting period, we assess whether we should recognize a contingent liability related to our guarantee obligations under

the 2009 RSA (and, prior to February 28, 2013, the PEAKS Guarantee) and, if so, in what amount. As with any assessment, as facts and

circumstances change, the recorded liability could change, and has changed, significantly. In order to make this assessment, we made certain

assumptions with respect to the performance of the private education loans made under the 2009 Loan Program (and, prior to February 28, 2013, the

PEAKS Program) over the life of those loans. The life of a private education loan made under the 2009 Loan Program or PEAKS Program may be in

excess of ten years from the date of disbursement. Therefore, our assessment was based on assumptions for periods in excess of ten years, and those

assumptions included, among other things, the following:

• the repayment performance of the private education loans made under the 2009 Loan Program (and, prior to February 28, 2013, the

PEAKS Program);


• the changes in the variable interest rates applicable to those private education loans (and, prior to February 28, 2013, the PEAKS Senior

Debt);

• the amounts and timing of collections in the future on those private education loans that have defaulted;

• prior to February 28, 2013, the fees and expenses associated with servicing the PEAKS Trust Student Loans; and


We consulted with third-party consumer credit consulting firms in arriving at our assumptions. The assumptions have changed, and may continue to

change, significantly over time as actual results become known. Our recorded liability for our guarantee obligations under the 2009 RSA (and, prior

to February 28, 2013, the PEAKS Guarantee) was included in Other current liabilities and Other liabilities on our Consolidated Balance Sheets.

58

17. Risks and Uncertainties

Many of the amounts of assets, liabilities, revenues and expenses reported in our consolidated financial statements are based on estimates and

assumptions that affect the amounts reported. We are subject to risks and uncertainties that could affect amounts reported in our consolidated

financial statements in future periods. Our future performance, results of operations, financial condition, cash flows, liquidity, capital resources,

ability to meet our obligations and ability to comply with covenants, metrics and regulatory requirements are subject to significant risks and

uncertainties that could cause actual results to be materially different from our estimated results, including, but not limited to, the following:

• The Consolidation of the PEAKS Trust and other factors, among other things:

• have resulted in violations by us of covenants under the Amended Credit Agreement. We have obtained waivers and amendments

relating to those violations;

• have negatively impacted our compliance with:

• the ED’s financial responsibility measurements, primarily our institutions’ composite score; and

• our compliance with the financial requirements of certain state education and professional licensing authorities (“SAs”); and

• have negatively impacted the financial metrics to which we are subject under the PEAKS Program and 2009 RSA.

See Note 13 – Debt and Note 16 – Commitments and Contingencies for additional information.

• We believe that we will be required to consolidate the 2009 Entity into our consolidated financial statements in the foreseeable future,

which could impact our compliance with:

• covenants under the Amended Credit Agreement;

• the ED’s financial responsibility measurements, primarily our institutions’ composite score;

• the financial requirements of certain SAs; and

• the financial metrics to which we are subject under the PEAKS Program and 2009 RSA.

See Note 10 – Variable Interest Entities for additional information.

• Our institutions’ failure to submit their audited consolidated financial statements and Compliance Audits to the ED by the due date

resulted in sanctions imposed by the ED on our institutions that include, among other things, our institutions having to post a letter of

credit, being placed on heightened cash monitoring (“HCM”) and being provisionally certified. We have arranged for the letter of credit

and have implemented procedures to address HCM, which requirements are not expected to significantly impact the timing of receipt of

student financial aid funds. See Note 13 – Debt for additional information.

• We are required to submit the ED Letter of Credit on or before November 4, 2014. The term of the letter of credit is for a period that

ends on November 4, 2019. With respect to any letter of credit issued under the Amended Credit Agreement, we are required to provide

cash collateral in an amount equal to 109% of the face amount of the ED Letter of Credit and 103% of the face amount of all other

letters of credit. Based on the required amount of the ED Letter of Credit and other letters of credit outstanding as of the date

of this filing, the amount of the cash collateral that we will have to provide is approximately $89,300. Such collateral may

be provided from available funds. See Note 13 – Debt for additional information.

• We are subject to various claims and contingencies, including those related to litigation, government investigations,

business transactions, guarantee arrangements and employee-related matters, among others. With regard to these matters,

we cannot provide an estimate of the possible losses, or range of possible losses, in excess of the amounts, if any,

accrued. See the subsections entitled “Litigation” and “Government Investigations” in Note 16 - Commitments and

Contingencies, for a further discussion of certain litigation and government investigations to which we are subject.

• The significant guarantee obligations that we have under the PEAKS Guarantee and 2009 RSA. Based on various

assumptions, including the historical and projected performance and collection of the PEAKS Trust Student Loans, we

believe that we will make payments under the PEAKS Guarantee of approximately $163,966 in 2014 and approximately

$9,165 in 2015. In addition, based upon various assumptions, including the historical and projected performance and

collections of the private education loans under the 2009 Loan Program, we believe that we will make payments under the

2009 RSA of approximately $9,009 in 2014 and $14,251 in 2015. See Note 13 – Debt and Note 16 – Commitments and

Contingencies for a further discussion of the RSAs, estimated payment amounts and contingent liabilities.

• As of December 31, 2013, the outstanding borrowings under the Amended Credit Agreement totaled $50,000 and were

classified as a current liability, because we believe it is probable that we will not be in compliance with certain covenants

under the Amended Credit Agreement during the 12 months following December 31, 2013. If we are not in compliance

with one or more covenants and are unable to obtain a waiver of our noncompliance or an amendment to the Amended

Credit Agreement that would allow us to be in compliance with those covenants or otherwise not be in default under the

Amended Credit Agreement, the lenders would have various remedies, including:

• the lending commitments under the Amended Credit Agreement may be terminated;

59

• our ability to request the issuance of letters of credit and to obtain amendments, extensions or renewals of letters of

credit already issued under the Amended Credit Agreement may be terminated; and

• all then outstanding borrowings and other amounts owed under the Amended Credit Agreement may be declared

immediately due and payable.

In the event that we or our subsidiary guarantor do not pay in full, upon demand, all of our outstanding borrowings and

other amounts owed under the Amended Credit Agreement or we, or our subsidiary guarantor, do not provide, upon

demand, the cash collateral for our letter of credit obligations, the lenders would be entitled to recourse against the

collateral security, including the Mortgaged Property, that we and our subsidiary guarantor have provided, in order to

obtain payment of amounts we owe or are required to provide as cash collateral.

• We incurred a net loss in the year December 31, 2013 and we had negative working capital as of December 31, 2013,

primarily due to the impact of the Consolidation and the loss that we recorded related to our guarantee obligations under

the 2009 RSA.

Based on our current projections, we believe that cash generated from operations will be sufficient for us to satisfy our RSA

payments, letters of credit cash collateralization, working capital, loan repayment and capital expenditure requirements over the 12-

month period following the date that this Annual Report on Form 10-K was filed with the SEC. We also believe that any reduction in

cash and cash equivalents that may result from their use to make payments under the RSAs, provide cash collateral for letters of credit,

construct facilities or repay loans will not have a material adverse effect on our expansion plans, planned capital expenditures, ability

to meet any applicable regulatory financial responsibility standards or ability to conduct normal operations over the 12-month period

following the date that this Annual Report on Form 10-K was filed with the SEC. Accordingly, our consolidated financial statements

contained in this Annual Report on Form 10-K were prepared on the basis that we will continue to operate as a going concern.

However, there can be no assurance that the ultimate outcome of these events individually or in the aggregate will not have a material

adverse effect on our financial condition, results of operations or cash flows.

Appendix 1

60

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over our financial reporting (“ICFR”), as

defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Our ICFR is a process

designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for

external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

• pertain to the maintenance of our records that in reasonable detail accurately and fairly reflect our transactions and asset

dispositions;

• provide reasonable assurance that our transactions are recorded as necessary to permit the preparation of our financial statements

in accordance with generally accepted accounting principles;

• provide reasonable assurance that our receipts and expenditures are being made only in accordance with authorizations of our

management and Board of Directors (as appropriate); and

• provide reasonable assurance regarding the prevention or timely detection of any unauthorized acquisition, use or disposition of

our assets that could have a material effect on our financial statements.

Due to its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition,

projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of

changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Under the supervision and with the participation of our principal executive officer and principal financial officer, our management

assessed the effectiveness of our ICFR as of December 31, 2013. In making this assessment, our management used the criteria described in

the 1992 Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based

on our assessment using these criteria, management concluded that we did not maintain effective ICFR as of December 31, 2013 because of

the material weaknesses described below.

A material weakness is a deficiency, or a combination of deficiencies, in ICFR, such that there is a reasonable possibility that a

material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

Our management has concluded that there were four material weaknesses in our ICFR as of December 31, 2013. Specifically, we did

not maintain effective internal controls related to:

• the assessment of events that could affect the determination of whether we are the primary beneficiary of variable interest entities

in which we hold a variable interest;

• the assessment of the completeness and accuracy of the data maintained by the servicer of the private education loans that are

owned by a variable interest entity that we were required to consolidate;

• the review of assumptions and methodologies developed by third-party consultants to project guarantee obligations under the 2009

RSA; and

• the timely identification and communication of information relevant to the private education loan programs to those members of

our management who are responsible for our financial reporting processes.

Our management determined that these material weaknesses resulted in adjustments to multiple line items on our financial statements

during the preparation of our 2013 annual consolidated financial statements and restatement of our interim consolidated financial statements

as of and for the quarterly periods ended March 31, 2013, June 30, 2013 and September 30, 2013 or could result in a material misstatement of

our annual or interim consolidated financial statements that would not be prevented or detected on a timely basis. As a result, our

management determined that each of these deficiencies constituted a material weakness in our ICFR as of December 31, 2013, and our ICFR

was not effective as of that date.

The control deficiency related to our assessment of events that could affect the determination of whether we are the primary beneficiary

of a variable interest entity affected multiple line items in our financial statements. See Note 10 – Variable Interest Entities of the Notes to

Consolidated Financial Statements for a discussion of the effect that consolidating a variable interest entity beginning February 28, 2013 had

on our consolidated financial statements. The control deficiency related to our failure to maintain effective internal controls over the data

maintained by the servicer of the private education loans could have resulted in misstatements of the fair value of the private education loans

upon consolidation of the variable interest entity and the amount of the allowance for loan losses. The control deficiency related to our review

of assumptions and methodologies developed by consultants to project guarantee obligations under the 2009 RSA resulted in adjustments to

our loss related to loan program guarantees, other liabilities and related financial disclosures during the preparation of our 2013 consolidated

Appendix 1

61

financial statements. The control deficiency related to the identification and communication of information is considered to have contributed

to the other identified material weaknesses, as relevant information related to the private loan programs was not provided timely to those

individuals responsible for our financial reporting processes or our independent registered accountants.

Our management excluded the PEAKS Trust from our assessment of ICFR as of December 31, 2013, because beginning February 28,

2013, we became the primary beneficiary of the PEAKS Trust. The PEAKS Trust is a controlled variable interest entity whose assets and

total revenues represented 11% and 1%, respectively, of the related consolidated financial statement amounts as of and for the year ended

December 31, 2013.

The effectiveness of our ICFR as of December 31, 2013 has been audited by PricewaterhouseCoopers LLP, our independent registered

public accounting firm, as stated in their accompanying report.

COPYRIGHT MATERIAL

92 pages have been withheld

PLEASE NOTE: The responsive information contains copyrighted information that can only be made available to you for viewing in person. Because the

information indicates that it is protected by copyright, you may review this information in person during normal business hours at TEA. If you are

interested in reviewing the copyrighted information, please send an email to [email protected] to schedule an appointment.

mailto:[email protected]

20-13.pdf - Texas Education Agency

Documents

Transcript of 20-13.pdf - Texas Education Agency