(1) The state board, subject to available appropriations, shall award school transformation grants to one or more school districts or charter schools or to the institute to use in:

(a) Identifying and recruiting practicing and aspiring school turnaround leaders;

(b) Subsidizing the costs incurred for school turnaround leaders and their leadership staff, if appropriate, to participate in turnaround leadership development programs offered by identified providers;

(c) Reimbursing school turnaround leaders for the costs they incur in completing turnaround leadership development programs offered by identified providers;

(d) Providing educator professional development for educators working in public schools that are implementing priority improvement or turnaround plans;

(e) Providing services, support, and materials to transform instruction in public schools that are implementing priority improvement or turnaround plans; and

(f) Planning for and implementing one or more of the following rigorous school redesign strategies:

(I) Converting a district public school to a charter school if it is not already authorized as a charter school;

(II) Granting innovation school status to a district public school pursuant to section 22-32.5-104;

(III) With regard to a district or institute charter school, replacing the school's operator or governing board;

(IV) Contracting with a public or private entity other than the school district to partially or wholly manage a district public school, which entity is accepted by the department and the local school board as using research-based strategies and having a proven record of success working with schools under similar circumstances; or

(V) Closing a public school or revoking the charter for a district or institute charter school.

(2) A school district, the institute, or a charter school that seeks a school transformation grant must apply to the department as provided by rule of the state board. The department shall review all of the applications received and, based on the criteria adopted by rule, recommend to the state board the applicants that may receive school transformation grants and the grant amounts. Subject to available appropriations, the state board, taking into account the department's recommendations, shall award school transformation grants from money appropriated by the general assembly to the department for the program.

(3) Each school transformation grant may continue for up to three budget years. The department shall annually review each grant recipient's use of the grant money and may rescind the grant if the department finds that the grant recipient is not making adequate progress toward achieving the goals identified in the grant application.

(4) During the term of the grant, each grant recipient shall annually report to the department the information requested by the department to monitor the effectiveness of the school transformation grants, which must include consideration of the impact that the use of each grant makes on raising student achievement and establishing a positive school culture. Notwithstanding section 24-1-136 (11)(a)(I), the department shall analyze and summarize the reports received from grant recipients and annually submit to the state board, the governor, and the education committees of the senate and the house of representatives, or any successor committees, a report of the effectiveness of the school transformation grants awarded pursuant to this section. The department shall also post the annual report on its website.

(5) The department may expend up to five percent of the money annually appropriated for the program to offset the costs incurred in implementing the program.