1.1                          A bill for an act
  1.2             relating to education; increasing the general 
  1.3             education formula allowance; adding more local control 
  1.4             to the class size reduction program; limiting reserved 
  1.5             revenue for staff development programs to one percent 
  1.6             of the formula allowance; restoring transportation 
  1.7             inflation factors; modifying the debt service 
  1.8             equalization aid program; repealing the referendum 
  1.9             reduction; amending Minnesota Statutes 1994, sections 
  1.10            124.225, subdivisions 7b and 7d; 124.2725, subdivision 
  1.11            16; 124.95, subdivisions 3 and 4; 124A.22, 
  1.12            subdivisions 2 and 8; 124A.225, subdivision 4; 
  1.13            124A.29, subdivision 1; and 298.28, subdivision 4; 
  1.14            repealing Minnesota Statutes 1994, section 124A.03, 
  1.15            subdivision 3b. 
  1.16  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.17     Section 1.  Minnesota Statutes 1994, section 124.225, 
  1.18  subdivision 7b, is amended to read: 
  1.19     Subd. 7b.  [INFLATION FACTORS.] The adjusted predicted base 
  1.20  cost determined for a district under subdivision 7a for the base 
  1.21  year must be increased by 2.35 3.0 percent to determine the 
  1.22  district's regular transportation allowance for the 1993-1994 
  1.23  1995-1996 school year and by 3.425 3.50 percent to determine the 
  1.24  district's regular transportation allowance for the 1994-1995 
  1.25  1996-1997 school year, but the regular transportation allowance 
  1.26  for a district cannot be less than the district's minimum 
  1.27  regular transportation allowance according to Minnesota Statutes 
  1.28  1990, section 124.225, subdivision 1, paragraph (t). 
  1.29     Sec. 2.  Minnesota Statutes 1994, section 124.225, 
  1.30  subdivision 7d, is amended to read: 
  2.1      Subd. 7d.  [TRANSPORTATION REVENUE.] Transportation revenue 
  2.2   for each district equals the sum of the district's regular 
  2.3   transportation revenue and the district's nonregular 
  2.4   transportation revenue. 
  2.5      (a) The regular transportation revenue for each district 
  2.6   equals the district's regular transportation allowance according 
  2.7   to subdivision 7b times the sum of the number of FTE's by the 
  2.8   district in the regular, desegregation, and handicapped 
  2.9   categories in the current school year. 
  2.10     (b) For the 1992-1993 and later school years, the 
  2.11  nonregular transportation revenue for each district equals the 
  2.12  lesser of the district's actual cost in the current school year 
  2.13  for nonregular transportation services or the product of the 
  2.14  district's actual cost in the base year for nonregular 
  2.15  transportation services as defined for the current year in 
  2.16  subdivision 1, paragraph (c), times the ratio of the district's 
  2.17  average daily membership for the current year to the district's 
  2.18  average daily membership for the base year according to section 
  2.19  124.17, subdivision 2, times the nonregular transportation 
  2.20  inflation factor for the current year, minus the amount of 
  2.21  regular transportation revenue attributable to FTE's in the 
  2.22  desegregation and handicapped categories in the current school 
  2.23  year, plus the excess nonregular transportation revenue for the 
  2.24  current year according to subdivision 7e.  The nonregular 
  2.25  transportation inflation factor is 1.0435 1.06 for the 1993-1994 
  2.26  1995-1996 school year and 1.03425 1.065 for the 1994-1995 
  2.27  1996-1997 school year.  
  2.28     Sec. 3.  Minnesota Statutes 1994, section 124.2725, 
  2.29  subdivision 16, is amended to read: 
  2.30     Subd. 16.  [EXCLUSION FROM FUND BALANCE.] Revenue received 
  2.31  by a district under this section for each year of cooperation 
  2.32  and the first three years of combination shall be excluded from 
  2.33  the net unreserved operating fund balance, for the purposes 
  2.34  of sections 124A.03, subdivision 3b, paragraph (c), and section 
  2.35  124A.26.  
  2.36     Sec. 4.  Minnesota Statutes 1994, section 124.95, 
  3.1   subdivision 3, is amended to read: 
  3.2      Subd. 3.  [DEBT SERVICE EQUALIZATION REVENUE.] (a) For 
  3.3   fiscal years 1995 and later, the debt service equalization 
  3.4   revenue of a district equals the eligible debt service revenue 
  3.5   minus the amount raised by a levy of ten percent times the 
  3.6   adjusted net tax capacity of the district. 
  3.7      (b) For fiscal year 1993, debt service equalization revenue 
  3.8   equals one-third of the amount calculated in paragraph (a). 
  3.9      (c) For fiscal year 1994, debt service equalization revenue 
  3.10  equals two-thirds of the amount calculated in paragraph (a). 
  3.11     Sec. 5.  Minnesota Statutes 1994, section 124.95, 
  3.12  subdivision 4, is amended to read: 
  3.13     Subd. 4.  [EQUALIZED DEBT SERVICE LEVY.] To obtain debt 
  3.14  service equalization revenue for fiscal years 1996 and later, a 
  3.15  district must levy an amount not to exceed the sum of: 
  3.16     (1) the lesser of the district's debt service equalization 
  3.17  revenue or an amount equal to ten percent times the adjusted net 
  3.18  tax capacity of the district times the lesser of one or the 
  3.19  ratio of: 
  3.20     (1) (i) the quotient derived by dividing the adjusted net 
  3.21  tax capacity of the district for the year before the year the 
  3.22  levy is certified by the actual pupil units in the district for 
  3.23  the school year ending in the year prior to the year the levy is 
  3.24  certified; to 
  3.25     (2) (ii) 50 percent of the equalizing factor as defined in 
  3.26  section 124A.02, subdivision 8, for the year to which the levy 
  3.27  is attributable; and 
  3.28     (2) the greater of zero or the amount of a district's debt 
  3.29  service equalization revenue exceeding ten percent times the 
  3.30  adjusted net tax capacity of the district times the lesser of 
  3.31  one or the ratio of: 
  3.32     (i) the quotient derived by dividing the adjusted net tax 
  3.33  capacity of the district for the year before the year the levy 
  3.34  is certified by the actual pupil units in the district for the 
  3.35  school year ending in the year prior to the year the levy is 
  3.36  certified; to 
  4.1      (ii) 100 percent of the equalizing factor as defined in 
  4.2   section 124A.02, subdivision 8, for the year to which the levy 
  4.3   is attributable. 
  4.4      Sec. 6.  Minnesota Statutes 1994, section 124A.22, 
  4.5   subdivision 2, is amended to read: 
  4.6      Subd. 2.  [BASIC REVENUE.] The basic revenue for each 
  4.7   district equals the formula allowance times the actual pupil 
  4.8   units for the school year.  The formula allowance for fiscal 
  4.9   years 1993 and 1994 is $3,050.  The formula allowance for fiscal 
  4.10  year 1995 and subsequent fiscal years is $3,150.  The formula 
  4.11  allowance for fiscal year 1996 is $3,250.  The formula allowance 
  4.12  for fiscal year 1997 and subsequent fiscal years is $3,350. 
  4.13     Sec. 7.  Minnesota Statutes 1994, section 124A.22, 
  4.14  subdivision 8, is amended to read: 
  4.15     Subd. 8.  [SUPPLEMENTAL REVENUE.] (a) A district's 
  4.16  supplemental revenue allowance for fiscal year 1994 and later 
  4.17  fiscal years equals the district's supplemental revenue for 
  4.18  fiscal year 1993 divided by the district's 1992-1993 actual 
  4.19  pupil units. 
  4.20     (b) A district's supplemental revenue allowance is reduced 
  4.21  for fiscal year 1995 and later according to subdivision 9. 
  4.22     (c) A district's supplemental revenue equals the 
  4.23  supplemental revenue allowance, if any, times its actual pupil 
  4.24  units for that year.  
  4.25     (d) A school district may cancel its supplemental revenue 
  4.26  by notifying the commissioner of education prior to June 30, 
  4.27  1994.  A school district that is reorganizing under section 
  4.28  122.22, 122.23, or 122.241 may cancel its supplemental revenue 
  4.29  by notifying the commissioner of education prior to July 1 of 
  4.30  the year of the reorganization.  If a district cancels its 
  4.31  supplemental revenue according to this paragraph, its 
  4.32  supplemental revenue allowance for fiscal year 1993 for purposes 
  4.33  of subdivision 9 and section 124A.03, subdivision 3b, equals 
  4.34  zero. 
  4.35     Sec. 8.  Minnesota Statutes 1994, section 124A.225, 
  4.36  subdivision 4, is amended to read: 
  5.1      Subd. 4.  [REVENUE USE.] (a) Revenue must be used according 
  5.2   to either paragraph (b), (c), or (d). 
  5.3      (b) Revenue shall be used to reduce and maintain the 
  5.4   district's instructor to learner ratios in kindergarten through 
  5.5   grade 6 to a level of 1 to 17 on average.  The district must 
  5.6   prioritize the use of the revenue to attain this level initially 
  5.7   in kindergarten and grade 1 and then through the subsequent 
  5.8   grades as revenue is available.  
  5.9      (c) Notwithstanding paragraph (b), for fiscal year 1995, a 
  5.10  district with exceptional need as defined in subdivision 6, 
  5.11  paragraph (a), may use the revenue to reduce and maintain the 
  5.12  district's instructor-to-learner ratios in kindergarten through 
  5.13  grade 6 to a level that is at least 2.0 less than the district's 
  5.14  adopted staffing ratio, if the remaining learning and 
  5.15  development revenue is used to continue or initiate staffing 
  5.16  patterns that meet the needs of a diverse student population.  
  5.17  Programs to meet the needs of a diverse student population may 
  5.18  include programs for at-risk pupils and learning enrichment 
  5.19  programs. 
  5.20     (d) For fiscal year 1995 only, in any school building that 
  5.21  meets the characteristics of exceptional need as defined in 
  5.22  subdivision 6, paragraph (b), a district may use the revenue to 
  5.23  employ education assistants or aides supervised by a learner's 
  5.24  regular instructor to assist learners in those school buildings. 
  5.25     (e) (b) The revenue may be used to prepare and use an 
  5.26  individualized learning plan for each learner.  A district must 
  5.27  not increase the district wide instructor-learner ratios in 
  5.28  other grades as a result of reducing instructor-learner ratios 
  5.29  in kindergarten through grade 6.  Revenue may not be used to 
  5.30  provide instructor preparation time or to provide the district's 
  5.31  share of revenue required under section 124.311.  A school 
  5.32  district may use a portion of the revenue reserved under this 
  5.33  section to employ up to the same number of full-time equivalent 
  5.34  education assistants or aides as the district employed during 
  5.35  the 1992-1993 school year under Minnesota Statutes 1992, section 
  5.36  124.331, subdivision 2. 
  6.1      Sec. 9.  Minnesota Statutes 1994, section 124A.29, 
  6.2   subdivision 1, is amended to read: 
  6.3      Subdivision 1.  [STAFF DEVELOPMENT AND PARENTAL INVOLVEMENT 
  6.4   REVENUE.] (a) Of a district's basic revenue under section 
  6.5   124A.22, subdivision 2, an amount equal to one percent in fiscal 
  6.6   year 1994, two percent in fiscal year 1995, and 2.5 one percent 
  6.7   in fiscal year 1996 and thereafter times the formula allowance 
  6.8   times the number of actual pupil units shall be reserved and may 
  6.9   be used only for in-service education for programs under section 
  6.10  126.77, subdivision 2, or for staff development plans, including 
  6.11  plans for challenging instructional activities and experiences 
  6.12  under section 126.70.  Districts may expend an additional amount 
  6.13  of basic revenue for staff development based on their needs.  
  6.14  The school board shall initially allocate 50 percent of the 
  6.15  revenue to each school site in the district on a per teacher 
  6.16  basis, which shall be retained by the school site until used.  
  6.17  The board may retain 25 percent to be used for district wide 
  6.18  staff development efforts.  The remaining 25 percent of the 
  6.19  revenue shall be used to make grants to school sites that 
  6.20  demonstrate exemplary use of allocated staff development 
  6.21  revenue.  A grant may be used for any purpose authorized under 
  6.22  section 126.70 or 126.77, subdivision 2, and determined by the 
  6.23  site decision-making team.  The site decision-making team must 
  6.24  demonstrate to the school board the extent to which staff at the 
  6.25  site have met the outcomes of the program.  The board may 
  6.26  withhold a portion of initial allocation of revenue if the staff 
  6.27  development outcomes are not being met. 
  6.28     (b) Of a district's basic revenue under section 124A.22, 
  6.29  subdivision 2, an amount equal to $5 times the number of actual 
  6.30  pupil units must be reserved and may be used only to provide 
  6.31  parental involvement programs that implement section 126.69.  
  6.32  Parental involvement programs may include career teacher 
  6.33  programs, programs promoting parental involvement in the PER 
  6.34  process, coordination of volunteer services, participation in 
  6.35  developing, implementing, or evaluating school 
  6.36  desegregation/integration plans, and programs designed to 
  7.1   encourage community involvement. 
  7.2      Sec. 10.  Minnesota Statutes 1994, section 298.28, 
  7.3   subdivision 4, is amended to read: 
  7.4      Subd. 4.  [SCHOOL DISTRICTS.] (a) 27.5 cents per taxable 
  7.5   ton plus the increase provided in paragraph (d) must be 
  7.6   allocated to qualifying school districts to be distributed, 
  7.7   based upon the certification of the commissioner of revenue, 
  7.8   under paragraphs (b) and (c). 
  7.9      (b) 5.5 cents per taxable ton must be distributed to the 
  7.10  school districts in which the lands from which taconite was 
  7.11  mined or quarried were located or within which the concentrate 
  7.12  was produced.  The distribution must be based on the 
  7.13  apportionment formula prescribed in subdivision 2. 
  7.14     (c)(i) 22 cents per taxable ton, less any amount 
  7.15  distributed under paragraph (e), shall be distributed to a group 
  7.16  of school districts comprised of those school districts in which 
  7.17  the taconite was mined or quarried or the concentrate produced 
  7.18  or in which there is a qualifying municipality as defined by 
  7.19  section 273.134 in direct proportion to school district indexes 
  7.20  as follows:  for each school district, its pupil units 
  7.21  determined under section 124.17 for the prior school year shall 
  7.22  be multiplied by the ratio of the average adjusted net tax 
  7.23  capacity per pupil unit for school districts receiving aid under 
  7.24  this clause as calculated pursuant to chapter 124A for the 
  7.25  school year ending prior to distribution to the adjusted net tax 
  7.26  capacity per pupil unit of the district.  Each district shall 
  7.27  receive that portion of the distribution which its index bears 
  7.28  to the sum of the indices for all school districts that receive 
  7.29  the distributions.  
  7.30     (ii) Notwithstanding clause (i), each school district that 
  7.31  receives a distribution under sections 298.018; 298.23 to 
  7.32  298.28, exclusive of any amount received under this clause; 
  7.33  298.34 to 298.39; 298.391 to 298.396; 298.405; or any law 
  7.34  imposing a tax on severed mineral values that is less than the 
  7.35  amount of its levy reduction under section 124.918, subdivision 
  7.36  8, for the second year prior to the year of the distribution 
  8.1   shall receive a distribution equal to the difference; the amount 
  8.2   necessary to make this payment shall be derived from 
  8.3   proportionate reductions in the initial distribution to other 
  8.4   school districts under clause (i).  
  8.5      (d) Any school district described in paragraph (c) where a 
  8.6   levy increase pursuant to section 124A.03, subdivision 2, is 
  8.7   authorized by referendum, shall receive a distribution according 
  8.8   to the following formula.  In 1994, the amount distributed per 
  8.9   ton shall be equal to the amount per ton distributed in 1991 
  8.10  under this paragraph increased in the same proportion as the 
  8.11  increase between the fourth quarter of 1989 and the fourth 
  8.12  quarter of 1992 in the implicit price deflator as defined in 
  8.13  section 298.24, subdivision 1.  On July 15, 1995, and subsequent 
  8.14  years, the increase over the amount established for the prior 
  8.15  year shall be determined according to the increase in the 
  8.16  implicit price deflator as provided in section 298.24, 
  8.17  subdivision 1.  Each district shall receive the product of: 
  8.18     (i) $175 times the pupil units identified in section 
  8.19  124.17, subdivision 1, enrolled in the second previous year or 
  8.20  the 1983-1984 school year, whichever is greater, less the 
  8.21  product of 1.8 percent times the district's taxable net tax 
  8.22  capacity in the second previous year; times 
  8.23     (ii) the lesser of: 
  8.24     (A) one, or 
  8.25     (B) the ratio of the sum of the amount certified pursuant 
  8.26  to section 124A.03, subdivision 1g, in the previous year, plus 
  8.27  the amount certified pursuant to section 124A.03, subdivision 
  8.28  1i, in the previous year, plus the referendum aid according to 
  8.29  section 124A.03, subdivision 1h, for the current year, plus an 
  8.30  amount equal to the reduction under section 124A.03, subdivision 
  8.31  3b, to the product of 1.8 percent times the district's taxable 
  8.32  net tax capacity in the second previous year. 
  8.33     If the total amount provided by paragraph (d) is 
  8.34  insufficient to make the payments herein required then the 
  8.35  entitlement of $175 per pupil unit shall be reduced uniformly so 
  8.36  as not to exceed the funds available.  Any amounts received by a 
  9.1   qualifying school district in any fiscal year pursuant to 
  9.2   paragraph (d) shall not be applied to reduce general education 
  9.3   aid which the district receives pursuant to section 124A.23 or 
  9.4   the permissible levies of the district.  Any amount remaining 
  9.5   after the payments provided in this paragraph shall be paid to 
  9.6   the commissioner of iron range resources and rehabilitation who 
  9.7   shall deposit the same in the taconite environmental protection 
  9.8   fund and the northeast Minnesota economic protection trust fund 
  9.9   as provided in subdivision 11. 
  9.10     Each district receiving money according to this paragraph 
  9.11  shall reserve $25 times the number of pupil units in the 
  9.12  district.  It may use the money for early childhood programs or 
  9.13  for outcome-based learning programs that enhance the academic 
  9.14  quality of the district's curriculum.  The outcome-based 
  9.15  learning programs must be approved by the commissioner of 
  9.16  education.  
  9.17     (e) There shall be distributed to any school district the 
  9.18  amount which the school district was entitled to receive under 
  9.19  section 298.32 in 1975. 
  9.20     Sec. 11.  [REPEALER.] 
  9.21     Minnesota Statutes 1994, section 124A.03, subdivision 3b, 
  9.22  is repealed. 
  9.23     Sec. 12.  [EFFECTIVE DATE.] 
  9.24     Sections 1 to 11 are effective July 1, 1995, and apply to 
  9.25  revenue for 1995-1996 and later school years.