1. By October 1, 2012, and by each October first thereafter, the sponsor of each charter school shall review the information submitted on the report required by section 162.821 to identify charter schools experiencing financial stress. The department of elementary and secondary education shall be authorized to obtain such additional information from a charter school as may be necessary to determine the financial condition of the charter school. Annually, a listing of charter schools identified as experiencing financial stress according to the provisions of this section shall be provided to the governor, speaker of the house of representatives, and president pro tempore of the senate by the department of elementary and secondary education.

2. For the purposes of this section, a charter school shall be identified as experiencing financial stress if it:

(1) At the end of its most recently completed fiscal year:

(a) Has a negative balance in its operating funds; or

(b) Has a combined balance of less than three percent of the amount expended from such funds during the previous fiscal year;

(2) For the most recently completed fiscal year expenditures, exceeded receipts for any of its funds because of recurring costs; or

(3) Due to insufficient fund balances or reserves, incurred debt after January thirty-first and before July first during the most recently completed fiscal year in order to meet expenditures of the charter school.

3. The sponsor shall notify by November first the governing board of the charter school identified as experiencing financial stress. Upon receiving the notification, the governing board shall develop, or cause to have developed, and shall approve a budget and education plan on forms provided by the sponsor. The budget and education plan shall be submitted to the sponsor, signed by the officers of the charter school, within forty-five calendar days of notification that the charter school has been identified as experiencing financial stress. Minimally, the budget and education plan shall:

(1) Give assurances that adequate educational services to students of the charter school shall continue uninterrupted for the remainder of the current school year and that the charter school can provide the minimum amount of school time required by section 171.031;

(2) Outline a procedure to be followed by the charter school to report to charter school patrons about the financial condition of the charter school; and

(3) Detail the expenditure reduction measures, revenue increases, or other actions to be taken by the charter school to address its condition of financial stress.

4. Upon receipt and following review of any budget and education plan, the sponsor may make suggestions to improve the plan. Nothing in sections 160.400 to 160.425 or section 167.349 shall exempt a charter school from submitting a budget and education plan to the sponsor according to the provisions of this section following each such notification that a charter school has been identified as experiencing financial stress, except that the sponsor may permit a charter school’s governing board to make amendments to or update a budget and education plan previously submitted to the sponsor.

5. The department may withhold any payment of financial aid otherwise due to the charter school until such time as the sponsor and the charter school have fully complied with this section.