1.1                          A bill for an act 
  1.2             relating to education; providing for statewide 
  1.3             testing; providing for site-based financing and site 
  1.4             merit pay; providing for tax deductions and credit; 
  1.5             providing for expanded charter school law; providing 
  1.6             for expanded interdistrict open enrollment and 
  1.7             post-secondary enrollment options; providing for 
  1.8             technology; providing for finance reform; providing 
  1.9             for school board contracting; providing for a 
  1.10            statewide education information system; modifying 
  1.11            teacher licensure; modifying PELRA; providing for 
  1.12            laboratory schools; providing for education 
  1.13            investment; appropriating money; amending Minnesota 
  1.14            Statutes 1996, sections 16B.465, subdivision 3; 
  1.15            120.062, subdivisions 3, 6, 7, 9, and 11; 120.064, 
  1.16            subdivisions 3, 4, 4a, 5, and 8; 121.611, subdivision 
  1.17            1, and by adding subdivisions; 123.35, by adding 
  1.18            subdivisions; 124.17, subdivisions 1d, 1e, and by 
  1.19            adding subdivisions; 124.175; 124.225, subdivisions 1, 
  1.20            13, 14, 15, 16, and 17; 124.226, subdivision 10; 
  1.21            124.248, subdivisions 1, 1a, 3, 4, and by adding a 
  1.22            subdivision; 124.2727, subdivisions 6a, 6c, and 6d; 
  1.23            124.312, subdivisions 4 and 5; 124.313; 124.314, 
  1.24            subdivisions 1 and 2; 124.3201, subdivisions 1, 2, and 
  1.25            4; 124.323, subdivision 1; 124A.036, subdivisions 5 
  1.26            and 6; 124A.22, subdivisions 1, 2, 3, 13a, 13b, and by 
  1.27            adding a subdivision; 124A.23, subdivision 1; 124A.28; 
  1.28            126.22, subdivisions 3 and 3a; 179A.16, by adding a 
  1.29            subdivision; 179A.17, subdivision 1; 290.01, 
  1.30            subdivisions 19a and 19b; and 290.091, subdivisions 2 
  1.31            and 6; amending Laws 1996 Chapter 412, article 12, 
  1.32            section 8; proposing coding for new law in Minnesota 
  1.33            Statutes, chapters 11A; 121; 123; 124; 136A; 179A; and 
  1.34            290; repealing Minnesota Statutes 1996, sections 
  1.35            121.611, subdivision 3; 123.951; 124.223; 124.225, 
  1.36            subdivisions 3a, 7a, 7b, 7d, 7e, 8a, and 8k; 124.2727, 
  1.37            subdivisions 6a, 6b, 6c, and 9; 124.311; 124.312; 
  1.38            124.313; 124.314; 124.912, subdivisions 2 and 3; 
  1.39            124A.02, subdivision 24; 124A.22, subdivisions 2a, 4, 
  1.40            4a, and 4b; and 134.46; repealing Laws 1995, First 
  1.41            Special Session chapter 3, article 12, section 8. 
  1.42  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.43                             ARTICLE 1 
  2.1                          STATEWIDE TESTING
  2.2      Section 1.  [123.98] [STATEWIDE TESTING.] 
  2.3      Subdivision 1.  [TEST.] Each school year, all school 
  2.4   districts shall give a test selected by the commissioner to all 
  2.5   pupils in grades three, five, and eight.  The test shall be 
  2.6   given in the spring of each year consistent with the guidelines 
  2.7   established by the commissioner.  The test shall measure 
  2.8   academic achievement in core subject areas and shall be 
  2.9   referenced to national achievement standards.  This test shall 
  2.10  be given in addition to the graduation standards test developed 
  2.11  under section 121.11, subdivision 7c.  This test is not a 
  2.12  graduation requirement for a student. 
  2.13     Subd. 2.  [REPORT.] Each year, the results of the testing 
  2.14  shall be reported by site and shall be included in the report 
  2.15  required under section 123.972, subdivision 5. 
  2.16     Sec. 2.  [APPROPRIATION.] 
  2.17     Subdivision 1.  [DEPARTMENT OF CHILDREN, FAMILIES, AND 
  2.18  LEARNING.] The sum indicated in this section is appropriated 
  2.19  from the general fund to the department of children, families, 
  2.20  and learning for the fiscal year designated. 
  2.21     Subd. 2.  [STATEWIDE TESTING.] For the administration of 
  2.22  statewide testing under section 1: 
  2.23       $2,500,000     .....     1998 
  2.24       $2,500,000     .....     1999 
  2.25     The appropriation is available until June 30, 1999.  Of 
  2.26  these amounts, $50,000 each year may be used for statewide 
  2.27  information systems under article 9, section 2. 
  2.28                             ARTICLE 2 
  2.29              SITE-BASED FINANCING AND SITE MERIT PAY 
  2.30     Section 1.  [123.952] [SITE-BASED FINANCING AND SITE MERIT 
  2.31  PAY.] 
  2.32     Subdivision 1.  [DEFINITION.] "Education site" means a 
  2.33  separate facility or program within a facility having a separate 
  2.34  management organization.  This also includes a site with which 
  2.35  the district has a contract as defined in section 123.35, 
  2.36  subdivision 1a. 
  3.1      Subd. 2.  [LEARNING SITE PERFORMANCE EXPECTATION 
  3.2   AGREEMENT.] (a) The school board in every district shall develop 
  3.3   a written learning site performance expectation agreement with 
  3.4   each education site for the purpose of setting learning 
  3.5   performance expectations for that site.  The agreement shall 
  3.6   include: 
  3.7      (1) the previous year baseline information at the site 
  3.8   regarding student achievement based on the graduation standards, 
  3.9   remediation needs, student attendance and behavior patterns, 
  3.10  retention rates, dropout rates where applicable, other 
  3.11  nationally normed standardized tests, and other student 
  3.12  performance indicators at the site; 
  3.13     (2) the expected levels of improvement in each area of 
  3.14  student performance during the next year; 
  3.15     (3) how student performance will be measured including 
  3.16  assessment procedures required by law and rule; 
  3.17     (4) other performance expectations and measures determined 
  3.18  by the board, including, but not limited to, increased parental 
  3.19  involvement in learning activities with students, community 
  3.20  involvement, or other areas; 
  3.21     (5) frequency of site reporting to the board; and 
  3.22     (6) how the performance results will be made available to 
  3.23  parents and to the public. 
  3.24     (b) The board and site shall determine the method of 
  3.25  developing the learning site performance expectations. 
  3.26     (c) The learning site performance expectation agreement 
  3.27  must be completed not later than July prior to the beginning of 
  3.28  the school year. 
  3.29     Subd. 3.  [SITE MERIT PAY.] (a) The school board in any 
  3.30  district may add a provision to the learning site performance 
  3.31  expectation agreement under subdivision 2 which includes the 
  3.32  awarding of additional revenue to the site if the site achieves 
  3.33  or exceeds the expected levels of improvement.  The decision as 
  3.34  to whether to implement a site merit pay system, the operation 
  3.35  of the system, and the determination as to which education sites 
  3.36  shall qualify for site merit pay shall be made solely at the 
  4.1   discretion of the board.  A determination by the board as to 
  4.2   whether to make an award to an education site and the amount of 
  4.3   the award shall be final.  If site merit pay is to be awarded, 
  4.4   the learning site performance expectation agreement shall 
  4.5   include the following provisions in addition to the provisions 
  4.6   of subdivision 2: 
  4.7      (1) the maximum amount of revenue for site merit pay to be 
  4.8   awarded that shall not be less than the revenue generated by the 
  4.9   site under paragraph (d); 
  4.10     (2) the criteria to be used in awarding the site merit pay 
  4.11  based on the learning site performance expectation agreement; 
  4.12     (3) the information necessary to determine the amount of 
  4.13  progress made; 
  4.14     (4) the timeline for making awards to the site; and 
  4.15     (5) other provisions determined by the board or the site. 
  4.16     (b) An education site that receives site merit pay has sole 
  4.17  discretion over the use of the revenue as long as it is used for 
  4.18  an educational purpose for that site.  This may include staff 
  4.19  development, technology, materials or equipment, or other such 
  4.20  educational purposes.  It may also be used for additional 
  4.21  employee compensation to which the employee would not be 
  4.22  entitled to under contract or board policy and shall not be a 
  4.23  mandatory subject of bargaining under chapter 179A or any other 
  4.24  law, and shall not be a term or condition of employment.  A 
  4.25  determination by the education site as to whether to make an 
  4.26  award to any individual or group of individuals and the amount 
  4.27  of any award shall be final and shall not be subject to review 
  4.28  by an arbitrator through any grievance or other process or by a 
  4.29  court through any appeal process. 
  4.30     (c) Districts entering into site merit pay agreements under 
  4.31  this subdivision shall inform the commissioner of this decision 
  4.32  not later than June 1 of the year preceding the effective school 
  4.33  year except that for the 1997-1998 school year, notice must be 
  4.34  submitted by November 1, 1997. 
  4.35     (d) Each school district that has established a site merit 
  4.36  pay program under this subdivision shall receive site merit pay 
  5.1   aid in the amount of $....... times the actual pupil units 
  5.2   enrolled at the sites with a site merit pay program.  The aid 
  5.3   may only be used to establish and operate a site merit pay award 
  5.4   program.  A district is not required to expend any specific 
  5.5   amount of aid in any year.  The district shall deposit the aid 
  5.6   in a separate account in the general fund.  
  5.7      Subd. 4.  [SITE-BASED FINANCING.] (a) Either the school 
  5.8   board or education site decision making team may determine if a 
  5.9   site is to operate under the provisions of this subdivision. 
  5.10     (b) If a site is to operate under this subdivision, the 
  5.11  school board shall enter into an agreement with an education 
  5.12  site decision making team which shall include: 
  5.13     (1) the specific governance, management, and program 
  5.14  responsibilities which will be under the control of the site and 
  5.15  those which will be retained by the district; 
  5.16     (2) the provisions of subdivision 2; 
  5.17     (3) the provisions of subdivision 3, if applicable; 
  5.18     (4) the membership of the education site decision making 
  5.19  team which shall include the principal or other person having 
  5.20  control and supervision of the education site; 
  5.21     (5) the amount of revenue that shall be allocated to the 
  5.22  site; 
  5.23     (6) the reporting from the site which is expected by the 
  5.24  board; 
  5.25     (7) the consequences which may be taken by the school board 
  5.26  if over a three-year period of time, the provisions of the 
  5.27  performance expectations agreement under subdivision 2 are not 
  5.28  satisfactorily met; and 
  5.29     (8) other provisions determined by the board. 
  5.30     (c) The agreement, at the option of the education site, may 
  5.31  include: 
  5.32     (1) a mechanism to implement flexible support systems for 
  5.33  improvement in student achievement of education outcomes and for 
  5.34  implementation of the graduation rule; 
  5.35     (2) a decision making structure that allows teachers to 
  5.36  identify instructional problems and control and apply the 
  6.1   resources needed to solve them; 
  6.2      (3) a mechanism to allow principals or other persons having 
  6.3   general control and supervision of the school, to make decisions 
  6.4   regarding how financial and personnel resources are best 
  6.5   allocated at the site and from whom goods or services are 
  6.6   purchased; 
  6.7      (4) a mechanism to implement parental involvement programs 
  6.8   under section 126.69 and to provide for effective parental 
  6.9   communication and feedback on this involvement at the site 
  6.10  level; 
  6.11     (5) a provision that allows the team to determine who is 
  6.12  hired into licensed and nonlicensed positions; 
  6.13     (6) a provision that allows direct contact with other 
  6.14  agency service providers; 
  6.15     (7) in-service training for site decision making team 
  6.16  members for financial management of school sites; and 
  6.17     (8) any other powers and duties determined appropriate by 
  6.18  an education site. 
  6.19  The school board of the district remains the legal employer 
  6.20  under clauses (5) and (6). 
  6.21     (d) Any powers or duties not delegated to the education 
  6.22  site management team in the site management agreement shall 
  6.23  remain with the school board. 
  6.24     (e) Approved agreements shall be filed with the 
  6.25  commissioner. 
  6.26     (f) Districts entering into site-based financing 
  6.27  agreements, whether at the district or site's request, under 
  6.28  this section shall inform the commissioner of this decision not 
  6.29  later than June 1 of the year preceding the effective school 
  6.30  year, except that for 1997-1998, notice must be submitted by 
  6.31  November 1, 1997. 
  6.32     Subd. 5.  [REVENUE AND COST ALLOCATION.] (a) Revenue for a 
  6.33  fiscal year received or receivable by the district shall be 
  6.34  allocated to education sites under subdivision 1 with a 
  6.35  site-based financing agreement under subdivision 4 according to 
  6.36  this subdivision.  Revenue shall remain allocated to each site 
  7.1   until used by the site.  The district remains responsible for 
  7.2   legally entering into contracts and expending funds. 
  7.3      (b) Except as provided in paragraph (c), not less than 80 
  7.4   percent of the general education and referendum revenue, 
  7.5   excluding total operating capital revenue under section 124A.22, 
  7.6   subdivision 10, and not less than 25 percent of the total 
  7.7   operating capital revenue under section 124A.22, subdivision 10, 
  7.8   shall be allocated to participating education sites in the 
  7.9   district.  The allocation shall be based on the number of pupil 
  7.10  units served at the site as a portion of total pupil units 
  7.11  served in the district. 
  7.12     (c) 100 percent of basic skills education revenue shall be 
  7.13  allocated to the education sites at which qualifying students 
  7.14  were enrolled as determined under sections 124.175, 124.273, and 
  7.15  124.3111.  Revenue received under sections 124.3201, 124.321, 
  7.16  and 124.323 shall be allocated to the sites where the costs are 
  7.17  incurred. 
  7.18     (d) The district must charge each participating site the 
  7.19  actual cost of teachers at the site by category, and actual 
  7.20  costs of goods and services attributable to the general fund, 
  7.21  excluding the reserves defined in section 124A.02, subdivision 
  7.22  25, and a proportionate share of costs attributable to the total 
  7.23  operating capital account incurred at the site. 
  7.24     (e) For the purposes of this subdivision, "allocation" 
  7.25  means that the determination of the use of the revenue shall be 
  7.26  under the control of the site. 
  7.27     (f) A district's site-based financing aid is equal to 
  7.28  $....... times the actual pupil units enrolled at sites 
  7.29  operating under subdivision 4.  If the school board determines 
  7.30  that a site shall be site-based financed, then at least 80 
  7.31  percent of this revenue shall be allocated to the school site 
  7.32  and the board may use the remaining 20 percent at its discretion 
  7.33  for learning improvement.  If a site petitions the board to be 
  7.34  site-based financed, 100 percent of the revenue under this 
  7.35  subdivision shall be allocated to the site. 
  7.36     Sec. 2.  Minnesota Statutes 1996, section 124.175, is 
  8.1   amended to read: 
  8.2      124.175 [AFDC PUPIL COUNT.] 
  8.3      Each year by March January 1, the department of human 
  8.4   services shall certify to the department of children, families, 
  8.5   and learning, for each school district, the number of pupils 
  8.6   from families receiving aid to families with dependent children 
  8.7   who were enrolled in a public school on October 1 of the 
  8.8   preceding year.  The department of children, families, and 
  8.9   learning shall certify to each school district the number of 
  8.10  pupils from families receiving aid to dependent children at each 
  8.11  site in the district by March 1 of each year. 
  8.12     Sec. 3.  [APPROPRIATIONS.] 
  8.13     Subdivision 1.  [DEPARTMENT OF CHILDREN, FAMILIES, AND 
  8.14  LEARNING.] The sums indicated in this section are appropriated 
  8.15  from the general fund to the department of children, families, 
  8.16  and learning for the fiscal years designated. 
  8.17     Subd. 2.  [SITE MERIT PAY AID.] For site merit pay aid 
  8.18  according to section 1: 
  8.19       $7,500,000     .....     1998 
  8.20       $8,333,000     .....     1999 
  8.21     The 1999 appropriation includes $833,000 for fiscal year 
  8.22  1998 and $7,500,000 for fiscal year 1999. 
  8.23     Subd. 3.  [SITE-BASED FINANCING AID.] For site-based 
  8.24  financing aid according to section 1: 
  8.25       $15,000,000     .....     1998 
  8.26       $16,667,000     .....     1999 
  8.27     The 1999 appropriation includes $1,667,000 for fiscal year 
  8.28  1998 and $15,000,000 for fiscal year 1999. 
  8.29     Sec. 4.  [REPEALER.] 
  8.30     Minnesota Statutes 1996, section 123.951, is repealed. 
  8.31                             ARTICLE 3
  8.32                        TAX DEDUCTION/CREDIT
  8.33     Section 1.  Minnesota Statutes 1996, section 290.01, 
  8.34  subdivision 19b, is amended to read: 
  8.35     Subd. 19b.  [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 
  8.36  individuals, estates, and trusts, there shall be subtracted from 
  9.1   federal taxable income: 
  9.2      (1) interest income on obligations of any authority, 
  9.3   commission, or instrumentality of the United States to the 
  9.4   extent includable in taxable income for federal income tax 
  9.5   purposes but exempt from state income tax under the laws of the 
  9.6   United States; 
  9.7      (2) if included in federal taxable income, the amount of 
  9.8   any overpayment of income tax to Minnesota or to any other 
  9.9   state, for any previous taxable year, whether the amount is 
  9.10  received as a refund or as a credit to another taxable year's 
  9.11  income tax liability; 
  9.12     (3) the amount paid to others, less the credit allowed 
  9.13  under section 290.0672, not to exceed $650 $1,950 for each 
  9.14  dependent in grades kindergarten to 6 and $1,000 $3,000 for each 
  9.15  dependent in grades 7 to 12, for tuition, textbooks, and 
  9.16  transportation of each dependent in attending an elementary or 
  9.17  secondary school situated in Minnesota, North Dakota, South 
  9.18  Dakota, Iowa, or Wisconsin, wherein a resident of this state may 
  9.19  legally fulfill the state's compulsory attendance laws, which is 
  9.20  not operated for profit, and which adheres to the provisions of 
  9.21  the Civil Rights Act of 1964 and chapter 363.  For the purposes 
  9.22  of this clause, "tuition" includes not only tuition and fees for 
  9.23  attendance needed to fulfill the requirements of sections 
  9.24  120.101 and 120.102, but also fees and tuition paid for a 
  9.25  dependent in kindergarten through grade 12 for any study 
  9.26  conducted by a person meeting the teaching licensing 
  9.27  requirements of section 120.101, subdivision 7, clauses (1) to 
  9.28  (5), designed to improve the dependents' knowledge of core 
  9.29  curriculum areas and to expand the dependents' knowledge and 
  9.30  skills beyond foundational skills pursuant to the graduation 
  9.31  rule under section 121.11, subdivision 7c.  As used in this 
  9.32  clause, "textbooks" includes books and other instructional 
  9.33  materials and equipment used in elementary and secondary schools 
  9.34  in teaching only those subjects legally and commonly taught in 
  9.35  public elementary and secondary schools in this 
  9.36  state.  Equipment qualifying for deduction includes personal 
 10.1   computer hardware and educational software that assists a 
 10.2   dependent to improve knowledge of core curriculum areas and to 
 10.3   expand knowledge and skills pursuant to the graduation rule 
 10.4   under section 121.11, subdivision 7c, purchased for use in the 
 10.5   taxpayer's home and not used in a trade or business regardless 
 10.6   of whether the computer is required by the dependent's school.  
 10.7   "Textbooks" does not include instructional books and materials 
 10.8   used in the teaching of religious tenets, doctrines, or worship, 
 10.9   the purpose of which is to instill such tenets, doctrines, or 
 10.10  worship, nor does it include books or materials for, or 
 10.11  transportation to, extracurricular activities including sporting 
 10.12  events, musical or dramatic events, speech activities, driver's 
 10.13  education, or similar programs.  In order to qualify for the 
 10.14  subtraction under this clause the taxpayer must elect to itemize 
 10.15  deductions under section 63(e) of the Internal Revenue Code; 
 10.16     (4) to the extent included in federal taxable income, 
 10.17  distributions from a qualified governmental pension plan, an 
 10.18  individual retirement account, simplified employee pension, or 
 10.19  qualified plan covering a self-employed person that represent a 
 10.20  return of contributions that were included in Minnesota gross 
 10.21  income in the taxable year for which the contributions were made 
 10.22  but were deducted or were not included in the computation of 
 10.23  federal adjusted gross income.  The distribution shall be 
 10.24  allocated first to return of contributions until the 
 10.25  contributions included in Minnesota gross income have been 
 10.26  exhausted.  This subtraction applies only to contributions made 
 10.27  in a taxable year prior to 1985; 
 10.28     (5) income as provided under section 290.0802; 
 10.29     (6) the amount of unrecovered accelerated cost recovery 
 10.30  system deductions allowed under subdivision 19g; 
 10.31     (7) to the extent included in federal adjusted gross 
 10.32  income, income realized on disposition of property exempt from 
 10.33  tax under section 290.491; 
 10.34     (8) to the extent not deducted in determining federal 
 10.35  taxable income, the amount paid for health insurance of 
 10.36  self-employed individuals as determined under section 162(l) of 
 11.1   the Internal Revenue Code, except that the 25 percent limit does 
 11.2   not apply.  If the taxpayer deducted insurance payments under 
 11.3   section 213 of the Internal Revenue Code of 1986, the 
 11.4   subtraction under this clause must be reduced by the lesser of: 
 11.5      (i) the total itemized deductions allowed under section 
 11.6   63(d) of the Internal Revenue Code, less state, local, and 
 11.7   foreign income taxes deductible under section 164 of the 
 11.8   Internal Revenue Code and the standard deduction under section 
 11.9   63(c) of the Internal Revenue Code; or 
 11.10     (ii) the lesser of (A) the amount of insurance qualifying 
 11.11  as "medical care" under section 213(d) of the Internal Revenue 
 11.12  Code to the extent not deducted under section 162(1) of the 
 11.13  Internal Revenue Code or excluded from income or (B) the total 
 11.14  amount deductible for medical care under section 213(a); and 
 11.15     (9) the exemption amount allowed under Laws 1995, chapter 
 11.16  255, article 3, section 2, subdivision 3. 
 11.17     Sec. 2.  [290.0672] [MINNESOTA EDUCATION CREDIT.] 
 11.18     Subdivision 1.  [CREDIT ALLOWED.] A taxpayer may take as a 
 11.19  credit against the tax due from the taxpayer and a spouse, if 
 11.20  any, under this chapter in an amount equal to the amount the 
 11.21  taxpayer pays in fees or tuition for a dependent of the taxpayer 
 11.22  in kindergarten through grade 12 for the instruction of the 
 11.23  dependent by a person qualified to be an instructor pursuant to 
 11.24  section 120.101, subdivision 7, clauses (1) to (5), in the 
 11.25  curriculum core areas and knowledge and skills pursuant to the 
 11.26  graduation rule under section 121.11, subdivision 7c. 
 11.27     Subd. 2.  [LIMITATIONS.] The credit is limited to $1,000 
 11.28  per child and $2,000 per family.  No credit is allowed if the 
 11.29  taxpayer's income, as defined in section 290.067, subdivision 
 11.30  2a, exceeds $39,000.  In the case of a married taxpayer, the 
 11.31  credit is not allowed unless a joint income tax return is 
 11.32  filed.  For a nonresident or part-year resident, the credit 
 11.33  determined under subdivision 1 and the $1,000 per child and 
 11.34  $2,000 per family limits are further limited to amounts 
 11.35  determined by multiplying the percentage calculated under 
 11.36  section 290.06, subdivision 2c, paragraph (e), by the credit 
 12.1   determined by subdivision 1 and the $1,000 per child and $2,000 
 12.2   per family limits. 
 12.3      Subd. 3.  [HOME SCHOOL.] If a dependent is educated in a 
 12.4   school where the taxpayer or spouse provides the instruction 
 12.5   necessary to meet the compulsory instruction requirements of 
 12.6   sections 120.101 and 120.102 in the taxpayer's home, the family 
 12.7   of the dependent is deemed to have incurred $1,000 of fees or 
 12.8   tuition qualifying under subdivision 1.  The limit on income 
 12.9   under subdivision 2 does not apply to the credit allowed on the 
 12.10  deemed amount under this subdivision.  A family is limited to 
 12.11  only one deemed amount of $1,000 per year. 
 12.12     Subd. 4.  [CREDIT TO BE REFUNDABLE.] If the amount of 
 12.13  credit which a taxpayer would be eligible to receive pursuant to 
 12.14  this section exceeds the taxpayer's tax liability under this 
 12.15  chapter, the excess amount shall be refunded to the taxpayer by 
 12.16  the commissioner of revenue. 
 12.17     Subd. 5.  [INFLATION ADJUSTMENT.] The dollar amount of the 
 12.18  income threshold in subdivision 2 must be adjusted for 
 12.19  inflation.  The commissioner shall adjust the threshold amount 
 12.20  starting with tax years beginning after December 31, 1997, by 
 12.21  the percentage determined under section 290.06, subdivision 2d, 
 12.22  for the taxable year. 
 12.23     Sec. 3.  [EFFECTIVE DATE.] 
 12.24     Sections 1 and 2 are effective for tax years beginning 
 12.25  after December 31, 1996. 
 12.26                             ARTICLE 4
 12.27                    EXPANDED CHARTER SCHOOL LAW
 12.28     Section 1.  Minnesota Statutes 1996, section 120.064, 
 12.29  subdivision 3, is amended to read: 
 12.30     Subd. 3.  [SPONSOR.] A school board, community college, 
 12.31  state university, technical college, the state board of 
 12.32  education, or the University of Minnesota may sponsor one or 
 12.33  more charter schools.  A private college or university may 
 12.34  sponsor one or more nonsectarian charter schools. 
 12.35     No more than a total of 40 charter schools may be 
 12.36  authorized not more than three of which may be sponsored by 
 13.1   public post-secondary institutions.  The state board of 
 13.2   education shall advise potential sponsors when the maximum 
 13.3   number of charter schools has been authorized. 
 13.4      Sec. 2.  Minnesota Statutes 1996, section 120.064, 
 13.5   subdivision 4, is amended to read: 
 13.6      Subd. 4.  [FORMATION OF SCHOOL.] (a) A sponsor may 
 13.7   authorize one or more licensed teachers under section 125.05, 
 13.8   subdivision 1, or a person, governmental body, or nonprofit 
 13.9   organization, to operate a charter school subject to, for a 
 13.10  sponsor other than the state board, approval by the state board 
 13.11  of education.  If a school board or post-secondary institution 
 13.12  elects not to sponsor a charter school, the applicant may appeal 
 13.13  the school board's that decision to the state board of education 
 13.14  if two members of the school board voted to sponsor the school.  
 13.15  If the state board authorizes the school, the state board shall 
 13.16  sponsor the school according to this section.  The school shall 
 13.17  be organized and operated as a cooperative under chapter 308A or 
 13.18  nonprofit corporation under chapter 317A.  
 13.19     (b) Before the operators may form and operate as a school, 
 13.20  the a sponsor, other than the state board, must file an 
 13.21  affidavit with the state board of education stating its intent 
 13.22  to authorize a charter school.  The affidavit must state the 
 13.23  terms and conditions under which the sponsor would authorize a 
 13.24  charter school.  The state board must approve or disapprove the 
 13.25  sponsor's proposed authorization within 60 days of receipt of 
 13.26  the affidavit.  Failure to obtain state board approval precludes 
 13.27  a sponsor from authorizing the charter school that was the 
 13.28  subject of the affidavit.  
 13.29     (c) The operators authorized to organize and operate a 
 13.30  school shall hold an election for members of the school's board 
 13.31  of directors in a timely manner after the school is operating.  
 13.32  Any staff members who are employed at the school, including 
 13.33  teachers providing instruction under a contract with a 
 13.34  cooperative, and all parents of children enrolled in the school 
 13.35  may participate in the election.  Licensed teachers employed At 
 13.36  least one teacher at the school, including teachers a teacher 
 14.1   providing instruction under a contract with a cooperative, must 
 14.2   be a majority of the members of representative on the board of 
 14.3   directors.  A provisional board may operate before the election 
 14.4   of the school's board of directors.  Board of director meetings 
 14.5   must comply with section 471.705. 
 14.6      (d) The granting or renewal of a charter by a sponsoring 
 14.7   entity shall not be conditioned upon the bargaining unit status 
 14.8   of the employees of the school. 
 14.9      Sec. 3.  Minnesota Statutes 1996, section 120.064, 
 14.10  subdivision 4a, is amended to read: 
 14.11     Subd. 4a.  [CONVERSION OF EXISTING SCHOOLS.] (a) A school 
 14.12  board may, on its own motion, convert one or more, or all, of 
 14.13  its existing schools to charter schools. 
 14.14     (b) A school board may convert one or more of its existing 
 14.15  schools to charter schools under this section if 90 percent a 
 14.16  majority of the full-time teachers at the school sign a petition 
 14.17  seeking conversion.  The conversion must occur at the beginning 
 14.18  of an academic year. 
 14.19     Sec. 4.  Minnesota Statutes 1996, section 120.064, 
 14.20  subdivision 5, is amended to read: 
 14.21     Subd. 5.  [CONTRACT.] The sponsor's authorization for a 
 14.22  charter school shall be in the form of a written contract signed 
 14.23  by the sponsor and the board of directors of the charter 
 14.24  school.  The contract for a charter school shall be in writing 
 14.25  and contain at least the following: 
 14.26     (1) a description of a program that carries out one or more 
 14.27  of the purposes in subdivision 1; 
 14.28     (2) specific outcomes pupils are to achieve under 
 14.29  subdivision 10; 
 14.30     (3) admission policies and procedures; 
 14.31     (4) management and administration of the school; 
 14.32     (5) requirements and procedures for program and financial 
 14.33  audits; 
 14.34     (6) how the school will comply with subdivisions 8, 13, 15, 
 14.35  and 21; 
 14.36     (7) assumption of liability by the charter school; 
 15.1      (8) types and amounts of insurance coverage to be obtained 
 15.2   by the charter school; and 
 15.3      (9) the term of the contract, which may be up to shall be 
 15.4   three years. 
 15.5      Sec. 5.  Minnesota Statutes 1996, section 120.064, 
 15.6   subdivision 8, is amended to read: 
 15.7      Subd. 8.  [REQUIREMENTS.] (a) A charter school shall meet 
 15.8   all applicable state and local health and safety requirements. 
 15.9      (b) The A school must sponsored by a school district may be 
 15.10  located in the sponsoring any district, unless another the 
 15.11  school board agrees to locate a charter school sponsored by 
 15.12  another district in its boundaries of the district of the 
 15.13  proposed location disapproves and has not adopted a resolution 
 15.14  under section 120.062, subdivision 2.  If such a school board 
 15.15  denies a request to locate within its boundaries a charter 
 15.16  school sponsored by another district, the sponsoring district 
 15.17  may appeal to the state board of education.  If the state board 
 15.18  authorizes the school, the state board shall sponsor the 
 15.19  school.  A school sponsored by a post-secondary institution may 
 15.20  be located at any place the institution considers convenient.  
 15.21  Prior to agreeing to sponsor a charter school, a post-secondary 
 15.22  institution which sponsors a charter school shall notify the 
 15.23  school district of its intent to locate a charter school in that 
 15.24  district. 
 15.25     (c) A charter school must be nonsectarian in its programs, 
 15.26  admission policies, employment practices, and all other 
 15.27  operations.  A sponsor may not authorize a charter school or 
 15.28  program that is affiliated with a nonpublic sectarian school or 
 15.29  a religious institution. 
 15.30     (d) Charter schools shall not be used as a method of 
 15.31  providing education or generating revenue for students who are 
 15.32  being home schooled. 
 15.33     (e) The primary focus of a charter school must be to 
 15.34  provide a comprehensive program of instruction for at least one 
 15.35  grade or age group from five through 18 years of age.  
 15.36  Instruction may be provided to people younger than five years 
 16.1   and older than 18 years of age. 
 16.2      (f) A charter school may not charge tuition. 
 16.3      (g) A charter school is subject to and shall comply with 
 16.4   chapter 363 and section 126.21. 
 16.5      (h) A charter school is subject to and shall comply with 
 16.6   the pupil fair dismissal act, sections 127.26 to 127.39, and the 
 16.7   Minnesota public school fee law, sections 120.71 to 120.76. 
 16.8      (i) A charter school is subject to the same financial 
 16.9   audits, audit procedures, and audit requirements as a school 
 16.10  district.  The audit must be consistent with the requirements of 
 16.11  sections 121.904 to 121.917, except to the extent deviations are 
 16.12  necessary because of the program at the school.  The department 
 16.13  of children, families, and learning, state auditor, or 
 16.14  legislative auditor may conduct financial, program, or 
 16.15  compliance audits. 
 16.16     (j) A charter school is a school district for the purposes 
 16.17  of tort liability under chapter 466. 
 16.18     Sec. 6.  Minnesota Statutes 1996, section 124.248, 
 16.19  subdivision 1, is amended to read: 
 16.20     Subdivision 1.  [GENERAL EDUCATION AND REFERENDUM 
 16.21  REVENUE.] (a) General education revenue and referendum revenue 
 16.22  shall be paid to a charter school as though it were a school 
 16.23  district. 
 16.24     (b) The general education revenue for each pupil unit is 
 16.25  the state average general education revenue per pupil unit minus 
 16.26  $170, calculated without compensatory basic skills revenue, 
 16.27  transportation sparsity revenue, and the transportation portion 
 16.28  of the transition revenue adjustment, plus compensatory basic 
 16.29  skills revenue as though the school were a school district. 
 16.30     (c) The referendum revenue for each pupil unit is the 
 16.31  referendum equalization revenue per pupil unit in the resident 
 16.32  district according to section 124A.03, subdivision 1f, if 
 16.33  approved or renewed after July 1, 1997. 
 16.34     Sec. 7.  Minnesota Statutes 1996, section 124.248, is 
 16.35  amended by adding a subdivision to read: 
 16.36     Subd. 2a.  [BUILDING LEASE AID.] When a charter school 
 17.1   finds it economically advantageous to rent or lease a building 
 17.2   or land for any instructional purposes and it determines that 
 17.3   the total operating capital revenue under section 124A.22, 
 17.4   subdivision 10, is insufficient for this purpose, it may apply 
 17.5   to the commissioner for building lease aid for this purpose.  
 17.6   Criteria for aid approval and revenue uses shall be as defined 
 17.7   for the building lease levy in section 124.91, subdivision 1.  
 17.8   The amount of building lease aid per pupil unit for a charter 
 17.9   school for any year shall not exceed the lesser of (a) 80 
 17.10  percent of the approved cost or (b) the product of the actual 
 17.11  pupil units for the current school year times the sum of the 
 17.12  state average debt redemption fund revenue plus capital revenue, 
 17.13  according to section 124.91, per actual pupil unit for the 
 17.14  current fiscal year. 
 17.15     Sec. 8.  Minnesota Statutes 1996, section 124.248, 
 17.16  subdivision 4, is amended to read: 
 17.17     Subd. 4.  [OTHER AID, GRANTS, REVENUE.] (a) A charter 
 17.18  school is eligible to receive other aids, grants, and revenue 
 17.19  according to chapters 120 to 129, as though it were a school 
 17.20  district except that, notwithstanding section 124.195, 
 17.21  subdivision 3, the payments shall be of an equal amount on each 
 17.22  of the 23 payment dates unless a charter school is in its first 
 17.23  year of operation in which case it shall receive on its first 
 17.24  payment date 15 percent of its cumulative amount guaranteed for 
 17.25  the year and 22 payments of an equal amount thereafter the sum 
 17.26  of which shall be 85 percent of the cumulative amount 
 17.27  guaranteed.  However, it may not receive aid, a grant, or 
 17.28  revenue if a levy is required to obtain the money, except as 
 17.29  otherwise provided in this section.  Federal aid received by the 
 17.30  state must be paid to the school, if it qualifies for the aid as 
 17.31  though it were a school district. 
 17.32     (b) Any revenue received from any source, other than 
 17.33  revenue that is specifically allowed for operational, 
 17.34  maintenance, capital facilities revenue under paragraph (c), and 
 17.35  capital expenditure equipment costs under this section, may be 
 17.36  used only for the planning and operational start-up costs of a 
 18.1   charter school.  Any unexpended revenue from any source under 
 18.2   this paragraph must be returned to that revenue source or 
 18.3   conveyed to the sponsoring school district, at the discretion of 
 18.4   the revenue source. 
 18.5      (c) A charter school may receive money from any source for 
 18.6   capital facilities needs.  Any unexpended capital facilities 
 18.7   revenue must be reserved and shall be expended only for future 
 18.8   capital facilities purposes. 
 18.9      Sec. 9.  [124.253] [CHARTER SCHOOL START-UP LOAN FUND.] 
 18.10     (a) A charter school start-up loan fund is created in the 
 18.11  general fund in the state treasury.  $2,600,000 shall be 
 18.12  deposited in the fund on July 1, 1997, for initial 
 18.13  capitalization.  On July 1, 1998, and each year thereafter, an 
 18.14  additional $1,500,000 shall be deposited in the fund.  Any 
 18.15  interest earned on the principal of the fund shall be retained 
 18.16  by the fund and available for distribution.  At the end of every 
 18.17  fiscal year, any balance in the fund in excess of $5,000,000 
 18.18  shall not cancel. 
 18.19     (b) A charter school operating under section 120.064 or a 
 18.20  program which has been granted a charter under section 120.064 
 18.21  may apply to the commissioner of children, families, and 
 18.22  learning for a loan from the charter school facilities fund. 
 18.23     (c) Loans shall be used for curriculum planning, budget 
 18.24  planning, development of information for students and parents, 
 18.25  purchasing equipment and other uses approved by the commissioner 
 18.26  of children, families, and learning.  The funds shall not be 
 18.27  used for acquisition, renting, or leasing of facilities. 
 18.28     (d) All loan agreements between a charter school and the 
 18.29  department of children, families, and learning must include a 
 18.30  plan for repayment of the funds over a maximum period of five 
 18.31  years.  Additional repayment terms shall be determined by the 
 18.32  department of children, families, and learning in consultation 
 18.33  with the department of finance.  
 18.34     (e) In the event that the repayment terms are violated, the 
 18.35  department of children, families, and learning may modify the 
 18.36  terms of repayment and require a plan for repayment under the 
 19.1   procedures specified in section 124.755, subdivision 8, or 
 19.2   recover the funds through the procedures specified in section 
 19.3   124.755, subdivision 5.  In the event that the charter school 
 19.4   ceases to operate, any assets of the charter school may be 
 19.5   claimed and auctioned by the commissioner as payment against the 
 19.6   loan. 
 19.7      Sec. 10.  [124.254] [CHARTER SCHOOL START-UP GRANTS.] 
 19.8      (a) A program that has been granted a charter under section 
 19.9   120.064, but has not yet begun operation, may apply to the 
 19.10  commissioner for a planning grant. 
 19.11     (b) These grants may be used for curriculum planning, 
 19.12  budget planning, development of information for students and 
 19.13  parents, staff recruitment, and other uses approved by the 
 19.14  department.  The funds may not be used for expenses related to 
 19.15  the acquisition, improvement, renting, or leasing of capital 
 19.16  facilities. 
 19.17     (c) Grant criteria and amounts shall be determined by the 
 19.18  commissioner. 
 19.19     Sec. 11.  [APPROPRIATIONS.] 
 19.20     Subdivision 1.  [DEPARTMENT OF CHILDREN, FAMILIES, AND 
 19.21  LEARNING.] The sums indicated in this section are appropriated 
 19.22  from the general fund to the department of children, families, 
 19.23  and learning for the fiscal years designated. 
 19.24     Subd. 2.  [CHARTER SCHOOL BUILDING LEASE AID.] For building 
 19.25  lease aid according to section 124.248, subdivision 2a: 
 19.26       $1,078,000     .....     1998 
 19.27       $1,577,000     .....     1999 
 19.28     The 1999 appropriation includes $120,000 for 1998 and 
 19.29  $1,457,000 for 1999. 
 19.30     Subd. 3.  [CHARTER SCHOOL START-UP GRANTS.] For charter 
 19.31  school start-up grants under Minnesota Statutes, section 124.254:
 19.32       $3,200,000     .....     1998 
 19.33     Any balance in the first year does not cancel but is 
 19.34  available in the second year.  This appropriation may also be 
 19.35  used for grants to convert existing schools into charter schools.
 19.36     Sec. 12.  [EFFECTIVE DATE.] 
 20.1      Section 6 is effective for revenue for fiscal year 1999. 
 20.2                              ARTICLE 5
 20.3              EXPANDED INTERDISTRICT OPEN ENROLLMENT AND
 20.4              POST-SECONDARY ENROLLMENT OPTIONS PROGRAM
 20.5      Section 1.  Minnesota Statutes 1996, section 120.062, 
 20.6   subdivision 3, is amended to read: 
 20.7      Subd. 3.  [CLOSED DISTRICTS LIMITED ENROLLMENT OF 
 20.8   NONRESIDENT PUPILS.] (a) A school board may, by 
 20.9   resolution, determine that limit the enrollment of nonresident 
 20.10  pupils may not attend any of in its schools or programs 
 20.11  according to this section to a number not less than the lesser 
 20.12  of: 
 20.13     (1) one percent of the total enrollment at each grade level 
 20.14  in the district; or 
 20.15     (2) the number of district residents at that grade level 
 20.16  enrolled in a nonresident district according to this section.  
 20.17     (b) A district that limits enrollment of nonresident pupils 
 20.18  under paragraph (a) shall report to the commissioner by July 15 
 20.19  on the number of nonresident pupils denied admission due to the 
 20.20  limitations on the enrollment of nonresident pupils. 
 20.21     Sec. 2.  Minnesota Statutes 1996, section 120.062, 
 20.22  subdivision 6, is amended to read: 
 20.23     Subd. 6.  [NONRESIDENT DISTRICT PROCEDURES.] A district 
 20.24  that does not exclude nonresident pupils, according to 
 20.25  subdivision 3, shall notify the parent or guardian in writing by 
 20.26  February 15 whether the application has been accepted or 
 20.27  rejected.  If an application is rejected, the district must 
 20.28  state in the notification the reason for rejection.  The parent 
 20.29  or guardian shall notify the nonresident district by March 1 
 20.30  whether the pupil intends to enroll in the nonresident 
 20.31  district.  Notice of intent to enroll in the nonresident 
 20.32  district obligates the pupil to attend the nonresident district 
 20.33  during the following school year, unless the school boards of 
 20.34  the resident and the nonresident districts agree in writing to 
 20.35  allow the pupil to transfer back to the resident district, or 
 20.36  the pupil's parents or guardians change residence to another 
 21.1   district.  If a parent or guardian does not notify the 
 21.2   nonresident district, the pupil may not enroll in that 
 21.3   nonresident district during the following school year, unless 
 21.4   the school boards of the resident and nonresident district agree 
 21.5   otherwise.  The nonresident district shall notify the resident 
 21.6   district by March 15 of the pupil's intent to enroll in the 
 21.7   nonresident district.  The same procedures apply to a pupil who 
 21.8   applies to transfer from one participating nonresident district 
 21.9   to another participating nonresident district. 
 21.10     Sec. 3.  Minnesota Statutes 1996, section 120.062, 
 21.11  subdivision 7, is amended to read: 
 21.12     Subd. 7.  [BASIS FOR DECISIONS.] The school board must 
 21.13  adopt, by resolution, specific standards for acceptance and 
 21.14  rejection of applications.  Standards may include the capacity 
 21.15  of a program, class, grade level, or school building.  The 
 21.16  school board may not reject applications for enrollment in a 
 21.17  particular grade level if the nonresident enrollment at that 
 21.18  grade level does not exceed the limit set by the board under 
 21.19  subdivision 3.  Standards may not include previous academic 
 21.20  achievement, athletic or other extracurricular ability, 
 21.21  disabling conditions, proficiency in the English language, or 
 21.22  previous disciplinary proceedings, or the student's district of 
 21.23  residence.  
 21.24     Sec. 4.  Minnesota Statutes 1996, section 120.062, 
 21.25  subdivision 11, is amended to read: 
 21.26     Subd. 11.  [INFORMATION.] A district that does not exclude 
 21.27  nonresident pupils according to subdivision 3 shall make 
 21.28  information about the district, schools, programs, policies, and 
 21.29  procedures available to all interested people.  
 21.30     Sec. 5.  Minnesota Statutes 1996, section 124.17, 
 21.31  subdivision 1d, is amended to read: 
 21.32     Subd. 1d.  [FISCAL YEAR 1998 AFDC PUPIL UNITS.] AFDC pupil 
 21.33  units for fiscal year 1993 and thereafter 1998 must be computed 
 21.34  according to this subdivision.  
 21.35     (a) The AFDC concentration percentage for a district equals 
 21.36  the product of 100 times the ratio of:  
 22.1      (1) the number of pupils enrolled in the district from 
 22.2   families receiving aid to families with dependent children 
 22.3   according to subdivision 1e; to 
 22.4      (2) the number of pupils in average daily membership 
 22.5   according to subdivision 1e enrolled in the district. 
 22.6      (b) The AFDC pupil weighting factor for a district equals 
 22.7   the lesser of one or the quotient obtained by dividing the 
 22.8   district's AFDC concentration percentage by 11.5.  
 22.9      (c) The AFDC pupil units for a district for fiscal year 
 22.10  1993 and thereafter equals the product of:  
 22.11     (1) the number of pupils enrolled in the district from 
 22.12  families receiving aid to families with dependent children 
 22.13  according to subdivision 1e; times 
 22.14     (2) the AFDC pupil weighting factor for the district; times 
 22.15     (3) .67. 
 22.16     Sec. 6.  Minnesota Statutes 1996, section 124.17, 
 22.17  subdivision 1e, is amended to read: 
 22.18     Subd. 1e.  [FISCAL YEAR 1998 AFDC PUPIL COUNTS.] AFDC pupil 
 22.19  counts and average daily membership for subdivisions 1b 
 22.20  and subdivision 1d shall be determined according to this 
 22.21  subdivision: 
 22.22     (a) For districts where the number of pupils from families 
 22.23  receiving aid to families with dependent children has increased 
 22.24  over the preceding year for each of the two previous years, the 
 22.25  number of pupils enrolled in the district from families 
 22.26  receiving aid to families with dependent children shall be those 
 22.27  counted on October 1 of the previous school year.  The average 
 22.28  daily membership used shall be from the previous school year. 
 22.29     (b) For districts that do not meet the requirement of 
 22.30  paragraph (a), the number of pupils enrolled in the district 
 22.31  from families receiving aid to families with dependent children 
 22.32  shall be the average number of pupils on October 1 of the second 
 22.33  previous school year and October 1 of the previous school year.  
 22.34  The average daily membership used shall be the average number 
 22.35  enrolled in the previous school year and the second previous 
 22.36  school year. 
 23.1      (c) Notwithstanding paragraphs (a) and (b), for charter 
 23.2   schools in the first three years of operation, the number of 
 23.3   pupils enrolled from families receiving AFDC shall be those 
 23.4   counted on October 1 of the current school year.  The average 
 23.5   daily membership used shall be from the current school year.  
 23.6      Sec. 7.  Minnesota Statutes 1996, section 124.17, is 
 23.7   amended by adding a subdivision to read: 
 23.8      Subd. 1g.  [AFDC PUPIL UNITS.] AFDC pupil units for fiscal 
 23.9   year 1999 and thereafter must be computed according to this 
 23.10  subdivision. 
 23.11     (a) The AFDC concentration percentage for a district equals 
 23.12  the product of 100 times the ratio of: 
 23.13     (1) the number of pupils residing in the district from 
 23.14  families receiving aid to families with dependent children 
 23.15  according to subdivision 1h, paragraph (a); to 
 23.16     (2) the number of pupils in average daily membership 
 23.17  according to subdivision 1h, paragraph (a), residing in the 
 23.18  district. 
 23.19     (b) The AFDC pupil weighting factor for AFDC pupils 
 23.20  residing in a district equals the lesser of one or the quotient 
 23.21  obtained by dividing the district's AFDC concentration 
 23.22  percentage by 11.5. 
 23.23     (c) The AFDC pupil units for a district for fiscal year 
 23.24  1999 and thereafter for each pupil enrolled in the district from 
 23.25  a family receiving aid to families with dependent children 
 23.26  according to subdivision 1h, paragraph (b), equals the product 
 23.27  of: 
 23.28     (1) the AFDC pupil weighting factor for pupil's district of 
 23.29  residence; times 
 23.30     (2) .67. 
 23.31     Sec. 8.  Minnesota Statutes 1996, section 124.17, is 
 23.32  amended by adding a subdivision to read: 
 23.33     Subd. 1h.  [AFDC PUPIL COUNTS.] (a) AFDC pupil counts and 
 23.34  average daily membership for subdivision 1g, paragraph (a), 
 23.35  shall be determined according to this paragraph. 
 23.36     (i) For districts where the number of resident pupils from 
 24.1   families receiving aid to families with dependent children has 
 24.2   increased over the preceding year for each of the two previous 
 24.3   years, the number of pupils residing in the district from 
 24.4   families receiving aid to families with dependent children shall 
 24.5   be those counted on October 1 of the previous school year.  The 
 24.6   average daily membership used shall be from the previous school 
 24.7   year. 
 24.8      (ii) For districts that do not meet the requirement of 
 24.9   paragraph (i), the number of pupils residing in the district 
 24.10  from families receiving aid to families with dependent children 
 24.11  shall be the average number of pupils on October 1 of the second 
 24.12  previous school year and October 1 of the previous school year.  
 24.13     The average daily membership used shall be the average 
 24.14  number of pupils residing in the district in the previous school 
 24.15  year and the second previous school year. 
 24.16     (b) AFDC pupil counts for subdivision 1g, paragraph (c), 
 24.17  shall be determined according to this paragraph. 
 24.18     (i) For districts where the number of pupils from families 
 24.19  receiving aid to families with dependent children enrolled in 
 24.20  the district has increased over the preceding year for each of 
 24.21  the two previous years, the pupils enrolled in the district from 
 24.22  families receiving aid to families with dependent children shall 
 24.23  be those counted on October 1 of the previous school year. 
 24.24     (ii) For districts that do not meet the requirement of 
 24.25  paragraph (i), pupils enrolled in the district from families 
 24.26  receiving aid to families with dependent children shall be those 
 24.27  counted on October 1 of the previous school year times one-half, 
 24.28  plus those counted on October 1 of the second previous school 
 24.29  year times one-half.  
 24.30     Notwithstanding clauses (i) and (ii), for charter schools 
 24.31  in the first three years of operation, the number of pupils 
 24.32  enrolled from families receiving aid to families with dependent 
 24.33  children shall be those counted on October 1 of the current 
 24.34  school year. 
 24.35     Sec. 9.  Minnesota Statutes 1996, section 124A.036, 
 24.36  subdivision 5, is amended to read: 
 25.1      Subd. 5.  [ALTERNATIVE ATTENDANCE PROGRAMS.] The general 
 25.2   education aid for districts must be adjusted for each pupil 
 25.3   attending a nonresident district under sections 120.062, 
 25.4   120.075, 120.0751, 120.0752, 124C.45 to 124C.48, and 126.22.  
 25.5   The adjustments must be made according to this subdivision. 
 25.6      (a) General education aid paid to a resident district must 
 25.7   be reduced by an amount equal to the sum of: 
 25.8      (1) the general education revenue exclusive of compensatory 
 25.9   basic skills revenue; and 
 25.10     (2) the referendum equalization revenue approved or renewed 
 25.11  after July 1, 1997, attributable to the pupil in the resident 
 25.12  district. 
 25.13     (b) General education aid paid to a district serving a 
 25.14  pupil in programs listed in this subdivision shall be increased 
 25.15  by an amount equal to the sum of: 
 25.16     (1) the general education revenue exclusive of compensatory 
 25.17  basic skills revenue; and 
 25.18     (2) the referendum equalization revenue approved or renewed 
 25.19  after July 1, 1997, attributable to the pupil in the nonresident 
 25.20  district.  
 25.21     (c) If the amount of the reduction to be made from the 
 25.22  general education aid of the resident district is greater than 
 25.23  the amount of general education aid otherwise due the district, 
 25.24  the excess reduction must be made from other state aids due the 
 25.25  district. 
 25.26     (d) The district of residence shall pay tuition to a 
 25.27  district or an area learning center, operated according to 
 25.28  paragraph (e), providing special instruction and services to a 
 25.29  pupil with a disability, as defined in section 120.03, or a 
 25.30  pupil, as defined in section 120.181, who is enrolled in a 
 25.31  program listed in this subdivision.  The tuition shall be equal 
 25.32  to (1) the actual cost of providing special instruction and 
 25.33  services to the pupil, including a proportionate amount for debt 
 25.34  service and for capital expenditure facilities and equipment, 
 25.35  and debt service but not including any amount for 
 25.36  transportation, minus (2) the amount of general education aid, 
 26.1   the amount of capital expenditure facilities aid and capital 
 26.2   expenditure equipment aid received under section 124.245, 
 26.3   subdivision 6, and special education aid, attributable to that 
 26.4   pupil, that is received by the district providing special 
 26.5   instruction and services. 
 26.6      (e) An area learning center operated by a service 
 26.7   cooperative, intermediate district, education district, or a 
 26.8   joint powers cooperative may elect through the action of the 
 26.9   constituent boards to charge tuition for pupils rather than to 
 26.10  calculate general education aid adjustments under paragraph (a), 
 26.11  (b), or (c).  The tuition must be equal to the greater of the 
 26.12  average general education revenue per pupil unit attributable to 
 26.13  the pupil, or the actual cost of providing the instruction, 
 26.14  excluding transportation costs, if the pupil meets the 
 26.15  requirements of section 120.03 or 120.181. 
 26.16     Sec. 10.  Minnesota Statutes 1996, section 124A.036, 
 26.17  subdivision 6, is amended to read: 
 26.18     Subd. 6.  [CHARTER SCHOOLS.] (a) The general education aid 
 26.19  for districts must be adjusted for each pupil attending a 
 26.20  charter school under section 120.064.  The adjustments must be 
 26.21  made according to this subdivision. 
 26.22     (b) General education aid paid to a resident district must 
 26.23  be reduced by an amount equal to the sum of: 
 26.24     (1) the general education revenue exclusive of compensatory 
 26.25  basic skills revenue; and 
 26.26     (2) the referendum equalization revenue approved or renewed 
 26.27  after July 1, 1997. 
 26.28     (c) General education aid paid to a district in which a 
 26.29  charter school not providing transportation according to section 
 26.30  120.064, subdivision 15, is located shall be increased by an 
 26.31  amount equal to the product of:  (1) the sum of $170, plus the 
 26.32  transportation sparsity allowance for the district, plus the 
 26.33  transportation transition allowance for the district; times (2) 
 26.34  the pupil units attributable to the pupil.  
 26.35     (d) If the amount of the reduction to be made from the 
 26.36  general education aid of the resident district is greater than 
 27.1   the amount of general education aid otherwise due the district, 
 27.2   the excess reduction must be made from other state aids due the 
 27.3   district. 
 27.4                              ARTICLE 6 
 27.5                              TECHNOLOGY
 27.6      Section 1.  Minnesota Statutes 1996, section 16B.465, 
 27.7   subdivision 3, is amended to read: 
 27.8      Subd. 3.  [DUTIES.] The commissioner, after consultation 
 27.9   with the council, shall: 
 27.10     (1) provide voice, data, video, and other 
 27.11  telecommunications transmission services to the state and to 
 27.12  political subdivisions through an account in the 
 27.13  intertechnologies revolving fund; 
 27.14     (2) manage vendor relationships, network function, and 
 27.15  capacity planning in order to be responsive to the needs of the 
 27.16  system users; 
 27.17     (3) set rates and fees for services; 
 27.18     (4) approve contracts relating to the system; 
 27.19     (5) develop the system plan, including plans for the 
 27.20  phasing of its implementation and maintenance of the initial 
 27.21  system, and the annual program and fiscal plans for the system; 
 27.22  and 
 27.23     (6) develop a plan for interconnection of the network with 
 27.24  private colleges and public and private schools in the state.; 
 27.25  and 
 27.26     (7) establish technical standards for all Minnesota schools 
 27.27  and libraries to ensure interoperability of hardware, software, 
 27.28  and telecommunications; and develop technical standards for the 
 27.29  operation and maintenance of all Minnesota interactive 
 27.30  television cooperatives. 
 27.31     Sec. 2.  [121.97] [LEARNING ACADEMY.] 
 27.32     Subdivision 1.  [ESTABLISHMENT.] The Minnesota learning 
 27.33  academy is established to provide teachers, principals, school 
 27.34  district administrators, community education directors, and 
 27.35  librarians, training opportunities in technology use and its 
 27.36  integration into learning activities.  In the establishment and 
 28.1   governance of the academy, the commissioner shall consult with:  
 28.2   representatives of public schools, higher education, teacher 
 28.3   organizations, students, private business, state agencies, 
 28.4   libraries, and political subdivisions. 
 28.5      Subd. 3.  [DUTIES OF LEARNING ACADEMY.] The learning 
 28.6   academy shall: 
 28.7      (1) set measures for teacher training opportunities on 
 28.8   technical skills and technology integration skills; 
 28.9      (2) identify and establish outcomes for a series of 
 28.10  training courses that provide for technical skills and 
 28.11  technology classroom integration skills; 
 28.12     (3) recommend tuition costs for participation in training 
 28.13  courses; 
 28.14     (4) identify existing public or private institutions to 
 28.15  develop and provide training courses; 
 28.16     (5) establish procedures for school districts to purchase a 
 28.17  computer for the use of each teacher during school and nonschool 
 28.18  hours who completes the classroom integration skills courses; 
 28.19  and 
 28.20     (6) consider establishing prerequisites for the classroom 
 28.21  integration skills courses. 
 28.22     Sec. 3.  Laws 1996, chapter 412, article 12, section 8, is 
 28.23  amended to read: 
 28.24     Sec. 8.  [TECHNOLOGY; TECHNICAL ASSISTANCE.] 
 28.25     The commissioner of the department of children, families, 
 28.26  and learning shall work with interested and involved 
 28.27  organizations including, but not limited to, representatives of 
 28.28  school districts, service cooperatives, TIES, education 
 28.29  districts, higher education institutions, public libraries, and 
 28.30  other government agencies to develop a technology planning guide 
 28.31  for school districts.  The department must distribute the guides 
 28.32  to school districts and hold regional meetings to discuss the 
 28.33  planning process.  The commissioner may consider a school 
 28.34  district's technology plan in making technology-related funding 
 28.35  decisions. and the degree to which it meets the technical 
 28.36  standards established by the Minnesota education 
 29.1   telecommunication council under Minnesota Statutes, section 
 29.2   16B.465 in making technology-related funding decisions. 
 29.3      Sec. 4.  [LEARNING RESOURCE NETWORK.] 
 29.4      A learning resource network shall be used by school sites 
 29.5   to align curriculum with the graduation standards and assist 
 29.6   teachers in delivery, assessment, curriculum integration, and 
 29.7   recordkeeping.  The network shall also be available to students 
 29.8   and parents to enhance the learning experience.  The learning 
 29.9   network of Minnesota shall serve as the conduit for the learning 
 29.10  resource network.  The commissioner shall consult with 
 29.11  representatives from the public and private sector in the use 
 29.12  and operation of the learning resource network. 
 29.13     Sec. 5.  [SITE-BASED LEARNING GRANTS.] 
 29.14     To be eligible for a site-based learning grant, a school 
 29.15  site must: 
 29.16     (1) be a public school site or partnership of school sites; 
 29.17     (2) have each dollar of grant money matched by at least one 
 29.18  dollar of school site money, including in-kind contributions; 
 29.19     (3) have each dollar of grant money matched by at least one 
 29.20  dollar of nonstate and nonschool site money, including in-kind 
 29.21  contributions; 
 29.22     (4) agree to disseminate and share information about its 
 29.23  project; 
 29.24     (5) benefit the greater community; and 
 29.25     (6) maintain its ongoing costs of technology support after 
 29.26  its initial funding under the learning grant program in this 
 29.27  section. 
 29.28     The commissioner shall make awards directly to a school 
 29.29  site or its designated fiscal agent.  The commissioner shall 
 29.30  consult with representatives of the public and private sectors 
 29.31  in awarding the grants. 
 29.32     Sec. 6.  [LIBRARY SITE GRANT PROGRAM.] 
 29.33     To be eligible for a grant under this section, a library 
 29.34  site must: 
 29.35     (1) be a community library, a school library, or a 
 29.36  partnership of community and school libraries; 
 30.1      (2) have each dollar of grant money matched by at least one 
 30.2   dollar of library site money, including in-kind contributions; 
 30.3      (3) have each dollar of grant money matched by at least one 
 30.4   dollar of nonstate and nonlibrary site money, including in-kind 
 30.5   contributions; 
 30.6      (4) agree to disseminate and share information about its 
 30.7   project; 
 30.8      (5) benefit the community; and 
 30.9      (6) maintain its ongoing costs of technology support after 
 30.10  its initial funding under this section. 
 30.11     The commissioner shall make awards directly to the library 
 30.12  site or school district containing a library site.  In awarding 
 30.13  the grants, the commissioner shall consult with representatives 
 30.14  of the public and private sector. 
 30.15     Sec. 7.  [APPROPRIATIONS.] 
 30.16     Subdivision 1.  [DEPARTMENT OF CHILDREN, FAMILIES, AND 
 30.17  LEARNING.] The sums indicated in this section are appropriated 
 30.18  from the general fund to the department of children, families, 
 30.19  and learning for the fiscal years designated. 
 30.20     Subd. 2.  [TELECOMMUNICATION ACCESS GRANTS.] For one-time 
 30.21  grants to school districts and regional public library systems 
 30.22  to establish connections to MNet according to Minnesota 
 30.23  Statutes, section 124C.74:  
 30.24       $7,750,000   .....     1998 
 30.25     Any balance in the first year does not cancel but is 
 30.26  available in the second year. 
 30.27     This amount is in addition to the amount already included 
 30.28  in the 1998-1999 base for the telecommunication access grants.  
 30.29  This amount shall not be included as part of the base for fiscal 
 30.30  year 2000-2001.  Up to $3,000,000 in 1998 is for completion of 
 30.31  district connections.  
 30.32     Before a district can receive a grant under this 
 30.33  subdivision in fiscal year 1999, the district must submit, to 
 30.34  the commissioner, evidence that it has pursued all possible 
 30.35  funding options, including ITV revenue under Minnesota Statutes, 
 30.36  section 124.91, subdivision 5.  Notwithstanding Minnesota 
 31.1   Statutes, section 124.91, subdivision 5, ITV revenue may also be 
 31.2   used for telecommunication access grants under Minnesota 
 31.3   Statutes, section 124C.74.  This amount shall not be included as 
 31.4   part of the base for fiscal year 2000-2001. 
 31.5      Subd. 3.  [TECHNOLOGY INITIATIVES.] For department support 
 31.6   of technology initiatives: 
 31.7        $   500,000    .....     1998 
 31.8        $   500,000    .....     1999 
 31.9      Subd. 4.  [LEARNING ACADEMY.] For learning academies under 
 31.10  section 2: 
 31.11       $ 2,000,000    .....     1998 
 31.12     This appropriation is available until expended. 
 31.13     The commissioner may work with private business partners to 
 31.14  facilitate the purchase of computers for teachers who complete 
 31.15  the classroom technology integration skills courses.  The 
 31.16  commissioner shall use these funds to offset financing charges 
 31.17  on the computer purchases by school districts. 
 31.18     Subd. 5.  [LEARNING RESOURCE NETWORK.] For the learning 
 31.19  resource network in section 4: 
 31.20       $ 7,000,000    .....     1998
 31.21     This appropriation is available until June 30, 1999.  These 
 31.22  funds are one time. 
 31.23     The commissioner shall be responsible for the initial cost 
 31.24  of establishing the learning resource network.  A school site 
 31.25  choosing to be part of the network shall be responsible for the 
 31.26  ongoing costs. 
 31.27     Subd. 6.  [SITE-BASED LEARNING GRANTS.] For one-time 
 31.28  site-based learning grants under section 5: 
 31.29       $50,000,000    .....     1998 
 31.30     This appropriation is available until June 30, 1999. 
 31.31     Subd. 7.  [LIBRARY SITE GRANT PROGRAM.] For one-time 
 31.32  library site grants under section 6: 
 31.33       $ 4,650,000    .....     1998 
 31.34     This appropriation is available until June 30, 1999. 
 31.35     Sec. 8.  [REPEALER.] 
 31.36     Minnesota Statutes 1996, section 134.46, is repealed.  Laws 
 32.1   1995, First Special Session chapter 3, article 12, section 8, is 
 32.2   repealed. 
 32.3                              ARTICLE 7 
 32.4                            FINANCE REFORM 
 32.5      Section 1.  Minnesota Statutes 1996, section 120.062, 
 32.6   subdivision 9, is amended to read: 
 32.7      Subd. 9.  [TRANSPORTATION.] (a) If requested by the parent 
 32.8   of a pupil, the nonresident district shall provide 
 32.9   transportation within the district.  The state shall pay 
 32.10  transportation aid to the district according to section 124.225. 
 32.11     The resident district is not required to provide or pay for 
 32.12  transportation between the pupil's residence and the border of 
 32.13  the nonresident district.  A parent may be reimbursed by the 
 32.14  nonresident district for the costs of transportation from the 
 32.15  pupil's residence to the border of the nonresident district if 
 32.16  the pupil is from a family whose income is at or below the 
 32.17  poverty level, as determined by the federal government.  The 
 32.18  reimbursement may not exceed the pupil's actual cost of 
 32.19  transportation or 15 cents per mile traveled, whichever is 
 32.20  less.  Reimbursement may not be paid for more than 250 miles per 
 32.21  week.  
 32.22     At the time a nonresident district notifies a parent or 
 32.23  guardian that an application has been accepted under subdivision 
 32.24  5 or 6, the nonresident district must provide the parent or 
 32.25  guardian with the following information regarding the 
 32.26  transportation of nonresident pupils under this section: 
 32.27     (1) a nonresident district may transport a pupil within the 
 32.28  pupil's resident district under this section only with the 
 32.29  approval of the resident district; and 
 32.30     (2) a parent or guardian of a pupil attending a nonresident 
 32.31  district under this section may appeal under section 123.39, 
 32.32  subdivision 6, the refusal of the resident district to allow the 
 32.33  nonresident district to transport the pupil within the resident 
 32.34  district. 
 32.35     (b) Notwithstanding paragraph (a) and section 124.225, 
 32.36  subdivision 8l, transportation provided by a nonresident 
 33.1   district between home and school for a pupil attending school 
 33.2   under this section is authorized for nonregular transportation 
 33.3   revenue under section 124.225, if the following criteria are met:
 33.4      (1) the school that the pupil was attending prior to 
 33.5   enrolling in the nonresident district under this section was 
 33.6   closed; 
 33.7      (2) the distance from the closed school to the next nearest 
 33.8   school in the district that the student could attend is at least 
 33.9   20 miles; 
 33.10     (3) the pupil's residence is at least 20 miles from any 
 33.11  school that the pupil could attend in the resident district; and 
 33.12     (4) the pupil's residence is closer to the school of 
 33.13  attendance in the nonresident district than to any school the 
 33.14  pupil could attend in the resident district. 
 33.15     Sec. 2.  Minnesota Statutes 1996, section 124.225, 
 33.16  subdivision 1, is amended to read: 
 33.17     Subdivision 1.  [DEFINITIONS.] For purposes of this section 
 33.18  and section 124.3201, the terms defined in this subdivision have 
 33.19  the meanings given to them. 
 33.20     (a) "FTE" means a full-time equivalent pupil whose 
 33.21  transportation is authorized for aid purposes by section 124.223.
 33.22     (b) "Authorized cost for regular transportation" 
 33.23  means "Actual expenditure per pupil transported in the regular 
 33.24  and excess transportation categories" means the quotient 
 33.25  obtained by dividing: 
 33.26     (1) the sum of: 
 33.27     (1) (i) all expenditures for transportation in the regular 
 33.28  category, as defined in paragraph (c) (b), clause (1), for which 
 33.29  aid is authorized in section 124.223 and the excess category, as 
 33.30  defined in paragraph (b), clause (2), plus 
 33.31     (2) (ii) an amount equal to one year's depreciation on the 
 33.32  district's school bus fleet and mobile units computed on a 
 33.33  straight line basis at the rate of 15 percent per year for 
 33.34  districts operating a program under section 121.585 for grades 1 
 33.35  to 12 for all students in the district and 12-1/2 percent per 
 33.36  year for other districts of the cost of the fleet, plus 
 34.1      (3) an amount equal to one year's depreciation on district 
 34.2   school buses reconditioned by the department of corrections 
 34.3   computed on a straight line basis at the rate of 33-1/3 percent 
 34.4   per year of the cost to the district of the reconditioning, plus 
 34.5      (4) (iii) an amount equal to one year's depreciation on the 
 34.6   district's type three school buses, as defined in section 
 34.7   169.01, subdivision 6, clause (5), which must be used a majority 
 34.8   of the time for the pupil transportation purposes in sections 
 34.9   124.223 and 124.226, subdivisions 5, 8, and 9, and were 
 34.10  purchased after July 1, 1982, for authorized transportation of 
 34.11  pupils, computed on a straight line basis at the rate of 20 
 34.12  percent per year of the cost of the type three school buses by: 
 34.13     (2) the number of pupils eligible for transportation in the 
 34.14  regular category, as defined in paragraph (b), clause (1), and 
 34.15  the excess category, as defined in paragraph (b), clause (2).  
 34.16     (c) (b) "Transportation category" means a category of 
 34.17  transportation service provided to pupils as follows:  
 34.18     (1) Regular transportation is transportation services 
 34.19  provided during the regular school year under section 124.223, 
 34.20  subdivisions 1 and 2, excluding the following transportation 
 34.21  services provided under section 124.223, subdivision 1:  
 34.22  transportation between schools; transportation to and from 
 34.23  service-learning programs; noon transportation to and from 
 34.24  school for kindergarten pupils attending half-day sessions; 
 34.25  transportation of pupils to and from schools located outside 
 34.26  their normal attendance areas under the provisions of a plan for 
 34.27  desegregation mandated by the state board of education or under 
 34.28  court order; and transportation of elementary pupils to and from 
 34.29  school within a mobility zone.: 
 34.30     (i) transportation to and from school during the regular 
 34.31  school year for resident elementary pupils residing one mile or 
 34.32  more from the public or nonpublic school they attend, and 
 34.33  resident secondary pupils residing two miles or more from the 
 34.34  public or nonpublic school they attend, excluding desegregation 
 34.35  transportation and noon kindergarten transportation; but with 
 34.36  respect to transportation of pupils to and from nonpublic 
 35.1   schools, only to the extent permitted by sections 123.76 to 
 35.2   123.79; 
 35.3      (ii) transportation of resident pupils to and from language 
 35.4   immersion programs; 
 35.5      (iii) transportation of a pupil who is a custodial parent 
 35.6   and that pupil's child between the pupil's home and the child 
 35.7   care provider and between the provider and the school, if the 
 35.8   home and provider are within the attendance area of the school; 
 35.9      (iv) transportation to and from or board and lodging in 
 35.10  another district, of resident pupils of a district without a 
 35.11  secondary school. 
 35.12     For the purposes of this paragraph, a district may 
 35.13  designate a licensed day care facility, respite care facility, 
 35.14  the residence of a relative, or the residence of a person chosen 
 35.15  by the pupil's parent or guardian as the home of a pupil for 
 35.16  part or all of the day, if requested by the pupil's parent or 
 35.17  guardian, and if that facility or residence is within the 
 35.18  attendance area of the school the pupil attends. 
 35.19     (2) Nonregular transportation is transportation services 
 35.20  provided under section 124.223, subdivision 1, that are excluded 
 35.21  from the regular category and transportation services provided 
 35.22  under section 124.223, subdivisions 3, 4, 5, 6, 7, 8, 9, and 10. 
 35.23     (3) Excess transportation is transportation to and from 
 35.24  school during the regular school year for secondary pupils 
 35.25  residing at least one mile but less than two miles from the 
 35.26  public school they could attend or from the nonpublic school 
 35.27  actually attended they attend, and transportation to and from 
 35.28  school for pupils residing less than one mile from school who 
 35.29  are transported because of extraordinary traffic, drug, or crime 
 35.30  hazards. 
 35.31     (4) (3) Desegregation transportation is transportation 
 35.32  within and outside of the district during the regular school 
 35.33  year of pupils to and from schools located outside their normal 
 35.34  attendance areas under a plan for desegregation mandated by the 
 35.35  state board or under court order.  
 35.36     (5) Handicapped transportation is transportation provided 
 36.1   under section 124.223, subdivision 4, for pupils with a 
 36.2   disability between home or a respite care facility and school or 
 36.3   other buildings where special instruction required by sections 
 36.4   120.17 and 120.1701 is provided. 
 36.5      (4) "Transportation services for pupils with disabilities" 
 36.6   is: 
 36.7      (i) transportation of pupils with disabilities who cannot 
 36.8   be transported on a regular school bus between home or a respite 
 36.9   care facility and school; 
 36.10     (ii) necessary transportation of pupils with disabilities 
 36.11  from home or from school to other buildings, including centers 
 36.12  such as developmental achievement centers, hospitals, and 
 36.13  treatment centers where special instruction or services required 
 36.14  by sections 120.17 and 120.1701 are provided, within or outside 
 36.15  the district where services are provided; 
 36.16     (iii) necessary transportation for resident pupils with 
 36.17  disabilities required by sections 120.17, subdivision 4a, and 
 36.18  120.1701; 
 36.19     (iv) board and lodging for pupils with disabilities in a 
 36.20  district maintaining special classes; 
 36.21     (v) transportation from one educational facility to another 
 36.22  within the district for resident pupils enrolled on a 
 36.23  shared-time basis in educational programs, and necessary 
 36.24  transportation required by sections 120.17, subdivision 9, and 
 36.25  120.1701, for resident pupils with disabilities who are provided 
 36.26  special instruction and services on a shared-time basis; 
 36.27     (vi) transportation for resident pupils with disabilities 
 36.28  to and from board and lodging facilities when the pupil is 
 36.29  boarded and lodged for educational purposes; and 
 36.30     (vii) services described in clauses (i) to (vi), when 
 36.31  provided for pupils with disabilities in conjunction with a 
 36.32  summer instructional program that relates to the pupil's 
 36.33  individual education plan or in conjunction with a learning year 
 36.34  program established under section 121.585. 
 36.35     (5) "Nonpublic nonregular transportation" is: 
 36.36     (i) transportation from one educational facility to another 
 37.1   within the district for resident pupils enrolled on a 
 37.2   shared-time basis in educational programs, excluding 
 37.3   transportation for nonpublic pupils with disabilities under 
 37.4   clause (4); 
 37.5      (ii) transportation within district boundaries between a 
 37.6   nonpublic school and a public school or a neutral site for 
 37.7   nonpublic school pupils who are provided pupil support services 
 37.8   pursuant to section 123.935; and 
 37.9      (iii) late transportation home from school or between 
 37.10  schools within a district for nonpublic school pupils involved 
 37.11  in after-school activities. 
 37.12     (d) (c) "Mobile unit" means a vehicle or trailer designed 
 37.13  to provide facilities for educational programs and services, 
 37.14  including diagnostic testing, guidance and counseling services, 
 37.15  and health services.  A mobile unit located off nonpublic school 
 37.16  premises is a neutral site as defined in section 123.932, 
 37.17  subdivision 9. 
 37.18     (e) "Current year" means the school year for which aid will 
 37.19  be paid.  
 37.20     (f) "Base year" means the second school year preceding the 
 37.21  school year for which aid will be paid.  
 37.22     (g) "Base cost" means the ratio of: 
 37.23     (1) the sum of the authorized cost in the base year for 
 37.24  regular transportation as defined in paragraph (b) plus the 
 37.25  actual cost in the base year for excess transportation as 
 37.26  defined in paragraph (c); 
 37.27     (2) to the sum of the number of weighted FTE's in the 
 37.28  regular and excess categories in the base year. 
 37.29     (h) "Pupil weighting factor" for the excess transportation 
 37.30  category for a school district means the lesser of one, or the 
 37.31  result of the following computation: 
 37.32     (1) Divide the square mile area of the school district by 
 37.33  the number of FTE's in the regular and excess categories in the 
 37.34  base year. 
 37.35     (2) Raise the result in clause (1) to the one-fifth power. 
 37.36     (3) Divide four-tenths by the result in clause (2). 
 38.1      The pupil weighting factor for the regular transportation 
 38.2   category is one.  
 38.3      (i) "Weighted FTE's"  means the number of FTE's in each 
 38.4   transportation category multiplied by the pupil weighting factor 
 38.5   for that category. 
 38.6      (j) "Sparsity index" for a school district means the 
 38.7   greater of .005 or the ratio of the square mile area of the 
 38.8   school district to the sum of the number of weighted FTE's by 
 38.9   the district in the regular and excess categories in the base 
 38.10  year. 
 38.11     (k) "Density index" for a school district means the greater 
 38.12  of one or the result obtained by subtracting the product of the 
 38.13  district's sparsity index times 20 from two. 
 38.14     (l) "Contract transportation index" for a school district 
 38.15  means the greater of one or the result of the following 
 38.16  computation: 
 38.17     (1) Multiply the district's sparsity index by 20. 
 38.18     (2) Select the lesser of one or the result in clause (1). 
 38.19     (3) Multiply the district's percentage of regular FTE's in 
 38.20  the current year using vehicles that are not owned by the school 
 38.21  district by the result in clause (2). 
 38.22     (m) "Adjusted predicted base cost" means the predicted base 
 38.23  cost as computed in subdivision 3a as adjusted under subdivision 
 38.24  7a. 
 38.25     (n) "Regular transportation allowance" means the adjusted 
 38.26  predicted base cost, inflated and adjusted under subdivision 7b. 
 38.27     Sec. 3.  Minnesota Statutes 1996, section 124.225, 
 38.28  subdivision 13, is amended to read: 
 38.29     Subd. 13.  [TARGETED NEEDS TRANSPORTATION REVENUE.] A 
 38.30  district's targeted needs transportation revenue for the 
 38.31  1996-1997 and later 1997-1998 school years equals the sum of the 
 38.32  special programs transportation revenue according to subdivision 
 38.33  14, the integration transportation revenue according to 
 38.34  subdivision 15, and the nonpublic pupil transportation revenue 
 38.35  aid according to subdivision 16. 
 38.36     Sec. 4.  Minnesota Statutes 1996, section 124.225, 
 39.1   subdivision 14, is amended to read: 
 39.2      Subd. 14.  [SPECIAL PROGRAMS TRANSPORTATION REVENUE.] A 
 39.3   district's special programs transportation revenue for the 
 39.4   1996-1997 and later 1997-1998 school years equals the sum of: 
 39.5      (a) the district's actual cost in the base year for 
 39.6   transportation services for children with disabilities under 
 39.7   section 124.223, subdivisions 4, 5, 7, and 8 subdivision 1, 
 39.8   paragraph (b), clause (4), times the ratio of the district's 
 39.9   average daily membership for the current school year to the 
 39.10  district's average daily membership for the base year; plus 
 39.11     (b) the greater of zero or 80 percent of the difference 
 39.12  between: 
 39.13     (1) the district's actual cost in the current year for 
 39.14  transportation services for children with disabilities under 
 39.15  section 124.223, subdivisions 4, 5, 7, and 8 subdivision 1, 
 39.16  paragraph (b), clause (4); and 
 39.17     (2) the amount computed in paragraph (a). 
 39.18     Sec. 5.  Minnesota Statutes 1996, section 124.225, 
 39.19  subdivision 15, is amended to read: 
 39.20     Subd. 15.  [INTEGRATION TRANSPORTATION REVENUE.] A 
 39.21  district's integration transportation revenue for the 1996-1997 
 39.22  and later 1997-1998 school years equals the following amounts: 
 39.23     (a) for independent school district No. 709, Duluth, $4 
 39.24  times the actual pupil units for the school year; 
 39.25     (b) for independent school district No. 625, St. Paul, $73 
 39.26  times the actual pupil units for the school year; and 
 39.27     (c) for special school district No. 1, Minneapolis, $158 
 39.28  times the actual pupil units for the school year. 
 39.29     Sec. 6.  Minnesota Statutes 1996, section 124.225, 
 39.30  subdivision 16, is amended to read: 
 39.31     Subd. 16.  [NONPUBLIC PUPIL TRANSPORTATION REVENUE AID.] 
 39.32  (a) A district's nonpublic pupil transportation revenue aid for 
 39.33  the 1996-1997 and later school years for transportation services 
 39.34  for nonpublic school pupils according to sections 123.39, 123.76 
 39.35  to 123.78, 124.223, and 124.226 this section, equals the sum of 
 39.36  the amounts computed in paragraphs (b) and (c).  This revenue 
 40.1   aid does not limit the obligation to transport pupils under 
 40.2   sections 123.76 to 123.79. 
 40.3      (b) For regular and excess transportation according to 
 40.4   section 124.225, subdivision 1, paragraph (c) (b), clauses (1) 
 40.5   and (3) (2), an amount equal to the product of: 
 40.6      (1) the district's actual expenditure per pupil transported 
 40.7   in the regular and excess transportation categories during the 
 40.8   second preceding school year; times 
 40.9      (2) the number of nonpublic school pupils residing in the 
 40.10  district who receive regular or excess transportation service or 
 40.11  reimbursement for the current school year; times 
 40.12     (3) the ratio of the formula allowance pursuant to section 
 40.13  124A.22, subdivision 2, for the current school year to the 
 40.14  formula allowance pursuant to section 124A.22, subdivision 2, 
 40.15  for the second preceding school year. 
 40.16     (c) For nonpublic nonregular transportation according to 
 40.17  section 124.225, subdivision 1, paragraph (c) (b), 
 40.18  clause (2) (5), excluding transportation services for children 
 40.19  with disabilities under section 124.223, subdivisions 4, 5, 7, 
 40.20  and 8, and late activity transportation according to section 
 40.21  124.226, subdivision 9, an amount equal to the product of: 
 40.22     (1) the district's actual expenditure for nonpublic 
 40.23  nonregular and late activity transportation for nonpublic school 
 40.24  pupils during the second preceding school year; times 
 40.25     (2) the ratio of the formula allowance pursuant to section 
 40.26  124A.22, subdivision 2, for the current school year to the 
 40.27  formula allowance pursuant to section 124A.22, subdivision 2, 
 40.28  for the second preceding school year. 
 40.29     (d) Notwithstanding the amount of the formula allowance for 
 40.30  fiscal years 1997 and 1998 in section 124A.22, subdivision 2, 
 40.31  the commissioner shall use the amount of the formula allowance 
 40.32  less $300 in determining the nonpublic pupil transportation 
 40.33  revenue in paragraphs (b) and (c) for fiscal years 1997 and 1998.
 40.34     Sec. 7.  Minnesota Statutes 1996, section 124.225, 
 40.35  subdivision 17, is amended to read: 
 40.36     Subd. 17.  [TARGETED NEEDS TRANSPORTATION AID.] (a) For 
 41.1   fiscal years 1997 and 1998, a district's targeted needs 
 41.2   transportation aid is the difference between its targeted needs 
 41.3   transportation revenue under subdivision 13 and its targeted 
 41.4   needs transportation levy under section 124.226, subdivision 10. 
 41.5      (b) If a district does not levy the entire amount 
 41.6   permitted, aid must be reduced in proportion to the actual 
 41.7   amount levied. 
 41.8      Sec. 8.  Minnesota Statutes 1996, section 124.226, 
 41.9   subdivision 10, is amended to read: 
 41.10     Subd. 10.  [TARGETED NEEDS TRANSPORTATION LEVY.] A school 
 41.11  district may make a levy for targeted needs transportation costs 
 41.12  according to this subdivision.  The amount of the levy shall be 
 41.13  the result of the following computation: 
 41.14     (1) For fiscal year years 1997 and later 1998, targeted 
 41.15  needs transportation levy equalization revenue equals 28 percent 
 41.16  of the sum of the district's special programs transportation 
 41.17  revenue under section 124.225, subdivision 14, and the 
 41.18  district's integration transportation revenue under section 
 41.19  124.225, subdivision 15. 
 41.20     (2) The targeted needs transportation levy equals the 
 41.21  result in clause (1) times the lesser of one or the ratio of (i) 
 41.22  the quotient derived by dividing the adjusted net tax capacity 
 41.23  of the district for the year before the year the levy is 
 41.24  certified by the actual pupil units in the district for the 
 41.25  school year to which the levy is attributable, to (ii) $3,540. 
 41.26     Sec. 9.  Minnesota Statutes 1996, section 124.248, 
 41.27  subdivision 1a, is amended to read: 
 41.28     Subd. 1a.  [TRANSPORTATION REVENUE.] Transportation revenue 
 41.29  shall be paid to a charter school that provides transportation 
 41.30  services according to section 120.064, subdivision 15, according 
 41.31  to this subdivision.  Transportation aid shall equal 
 41.32  transportation revenue.  
 41.33     (a) In addition to the revenue under subdivision 1, a 
 41.34  charter school providing transportation services shall receive 
 41.35  general education aid for each pupil unit equal to the sum of 
 41.36  $170, plus the transportation sparsity allowance for the school 
 42.1   district in which the charter school is located, plus the 
 42.2   transportation transition allowance for the school district in 
 42.3   which the charter school is located.  
 42.4      (b) For the first two years that a charter school is 
 42.5   providing transportation services, the adjusted special programs 
 42.6   transportation education base revenue equals according to 
 42.7   section 124.3202, subdivision 3, shall be increased by the 
 42.8   amount of the charter school's actual cost in the current school 
 42.9   year for transportation services for children with disabilities 
 42.10  under section 124.223, subdivisions 4, 5, 7, and 8.  For the 
 42.11  third year of transportation services and later fiscal years, 
 42.12  the special programs transportation revenue shall be computed 
 42.13  according to section 124.225, subdivision 14 1, paragraph (b), 
 42.14  clause (4).  
 42.15     Sec. 10.  Minnesota Statutes 1996, section 124.248, 
 42.16  subdivision 3, is amended to read: 
 42.17     Subd. 3.  [SPECIAL EDUCATION AND LIMITED ENGLISH 
 42.18  PROFICIENCY AID.] Except as provided in subdivision 1a, 
 42.19  paragraph (b), special education aid shall be paid to a charter 
 42.20  school according to sections 124.3201 and 124.3202, as though it 
 42.21  were a school district.  The charter school may charge tuition 
 42.22  to the district of residence as provided in section 120.17, 
 42.23  subdivision 4.  Limited English proficiency programs aid shall 
 42.24  be paid to a charter school according to section 124.273 as 
 42.25  though it were a school district.  The charter school shall 
 42.26  allocate its special education levy equalization revenue to the 
 42.27  resident districts of the pupils attending the charter school.  
 42.28  The districts of residence shall levy as though they were 
 42.29  participating in a cooperative, as provided in section 124.321, 
 42.30  subdivision 3. 
 42.31     Sec. 11.  Minnesota Statutes 1996, section 124.2727, 
 42.32  subdivision 6a, is amended to read: 
 42.33     Subd. 6a.  [FISCAL YEAR 1998 DISTRICT COOPERATION REVENUE.] 
 42.34  A district's cooperation revenue for fiscal year 1998 is equal 
 42.35  to the greater of $67 times the actual pupil units or $25,000. 
 42.36     Sec. 12.  Minnesota Statutes 1996, section 124.2727, 
 43.1   subdivision 6c, is amended to read: 
 43.2      Subd. 6c.  [FISCAL YEAR 1998 DISTRICT COOPERATION AID.] A 
 43.3   district's cooperation aid for fiscal year 1998 is the 
 43.4   difference between its district cooperation revenue and its 
 43.5   district cooperation levy.  If a district does not levy the 
 43.6   entire amount permitted, aid must be reduced in proportion to 
 43.7   the actual amount levied. 
 43.8      Sec. 13.  Minnesota Statutes 1996, section 124.2727, 
 43.9   subdivision 6d, is amended to read: 
 43.10     Subd. 6d.  [REVENUE USES.] (a) A district must place its 
 43.11  district cooperation revenue in a reserved account and may only 
 43.12  use the revenue to purchase goods and services from entities 
 43.13  formed for cooperative purposes or to otherwise provide 
 43.14  educational services in a cooperative manner. 
 43.15     (b) A district that was a member of an intermediate school 
 43.16  district organized pursuant to chapter 136D on July 1, 1994, 
 43.17  must place its district cooperation revenue in a reserved 
 43.18  account and must allocate a portion of the reserved revenue for 
 43.19  instructional services from entities formed for cooperative 
 43.20  services for special education programs and secondary vocational 
 43.21  programs.  The allocated amount is equal to the levy made 
 43.22  according to section 124.2727, subdivision 6, for taxes payable 
 43.23  in 1994 divided by the actual pupil units in the intermediate 
 43.24  school district for fiscal year 1995 times the number of actual 
 43.25  pupil units in the school district in 1995.  The district must 
 43.26  use 5/11 of the revenue for special education and 6/11 of the 
 43.27  revenue for secondary vocational education.  The district must 
 43.28  demonstrate that the revenue is being used to provide each child 
 43.29  has available the full range of special education and secondary 
 43.30  vocational programs and services available to each child served 
 43.31  by the intermediate.  The secondary vocational programs and 
 43.32  service must meet the requirements established in an 
 43.33  articulation agreement developed between the state board of 
 43.34  education and the board of trustees of the Minnesota state 
 43.35  colleges and universities. 
 43.36     (c) A district that was not a member of an intermediate 
 44.1   district organized under chapter 136D on July 1, 1994, must 
 44.2   spend at least $9 per pupil unit of its district cooperation 
 44.3   revenue on secondary vocational programs. 
 44.4      Sec. 14.  [124.3111] [ASSURANCE OF MASTERY PROGRAMS.] 
 44.5      Subdivision 1.  [ELIGIBLE DISTRICTS.] A district with a 
 44.6   local process to review curriculum and instruction may provide 
 44.7   an assurance of mastery program to eligible pupils. 
 44.8      Subd. 2.  [ELIGIBLE PUPILS.] A pupil is eligible to receive 
 44.9   services through an assurance of mastery program if the pupil 
 44.10  has not demonstrated progress toward mastering the required 
 44.11  graduation standards, after receiving instruction that was 
 44.12  designed to enable the pupil to make progress toward mastering 
 44.13  the required graduation standards in a regular classroom 
 44.14  setting.  To determine pupil eligibility, a district must use a 
 44.15  process adopted by the school board to review curriculum and 
 44.16  instruction, for the subjects and at the grade level at which 
 44.17  the district uses the revenue. 
 44.18     Subd. 3.  [ELIGIBLE SERVICES.] (a) Assurance of mastery 
 44.19  programs may provide direct instructional services to an 
 44.20  eligible pupil, or a group of eligible pupils, under the 
 44.21  following conditions in paragraphs (b) to (d). 
 44.22     (b) Instruction may be provided at one or more grade levels 
 44.23  from kindergarten to grade 8.  If an assessment of pupils' needs 
 44.24  within a district demonstrates that the eligible pupils in 
 44.25  grades kindergarten to grade 8 are being appropriately served, a 
 44.26  district may serve eligible pupils in grades 9 to 12. 
 44.27     (c) Instruction must be provided under the supervision of 
 44.28  the eligible pupil's regular classroom teacher.  Instruction may 
 44.29  be provided by the eligible pupil's classroom teacher, by 
 44.30  another teacher, by a team of teachers, or by an education 
 44.31  assistant or aide.  A special education teacher may provide 
 44.32  instruction, but instruction that is provided under this section 
 44.33  is not eligible for aid under section 124.3201. 
 44.34     (d) The instruction that is provided must differ from the 
 44.35  initial instruction the pupil received in the regular classroom 
 44.36  setting.  The instruction may differ by presenting different 
 45.1   curriculum than was initially presented in the regular classroom 
 45.2   or by presenting the same curriculum: 
 45.3      (1) at a different rate or in a different sequence than it 
 45.4   was initially presented; 
 45.5      (2) using different teaching methods or techniques than 
 45.6   were used initially; or 
 45.7      (3) using different instructional materials than were used 
 45.8   initially. 
 45.9      Sec. 15.  Minnesota Statutes 1996, section 124.312, 
 45.10  subdivision 4, is amended to read: 
 45.11     Subd. 4.  [INTEGRATION REVENUE.] For fiscal year years 
 45.12  1996, 1997, and later fiscal years 1998, integration revenue 
 45.13  equals the sum of integration aid and integration levy under 
 45.14  section 124.912, subdivision 2. 
 45.15     Sec. 16.  Minnesota Statutes 1996, section 124.312, 
 45.16  subdivision 5, is amended to read: 
 45.17     Subd. 5.  [INTEGRATION AID.] For fiscal year years 1996, 
 45.18  1997, and later fiscal years 1998, integration aid equals the 
 45.19  following amounts: 
 45.20     (1) for independent school district No. 709, Duluth, 
 45.21  $1,385,000; 
 45.22     (2) for independent school district No. 625, St. Paul, 
 45.23  $8,090,700; and 
 45.24     (3) for special school district No. 1, Minneapolis, 
 45.25  $9,368,300. 
 45.26     Sec. 17.  Minnesota Statutes 1996, section 124.313, is 
 45.27  amended to read: 
 45.28     124.313 [TARGETED NEEDS REVENUE.] 
 45.29     For fiscal year years 1996, 1997, and thereafter 1998, a 
 45.30  school district's targeted needs revenue equals the sum of: 
 45.31     (1) assurance of mastery revenue according to section 
 45.32  124.311; plus 
 45.33     (2) the district's limited English proficiency revenue 
 45.34  computed according to section 124.273, subdivision 1d; plus 
 45.35     (3) integration revenue computed according to section 
 45.36  124.312, subdivision 4. 
 46.1      Sec. 18.  Minnesota Statutes 1996, section 124.314, 
 46.2   subdivision 1, is amended to read: 
 46.3      Subdivision 1.  [AID.] For fiscal year years 1996, 1997, 
 46.4   and thereafter 1998, a school district's targeted needs aid 
 46.5   equals the sum of its assurance of mastery aid according to 
 46.6   section 124.311, its limited English proficiency aid according 
 46.7   to section 124.273, subdivision 1e, and its integration aid 
 46.8   according to section 124.312, subdivision 5. 
 46.9      Sec. 19.  Minnesota Statutes 1996, section 124.314, 
 46.10  subdivision 2, is amended to read: 
 46.11     Subd. 2.  [LEVY.] For fiscal year years 1996, 1997, and 
 46.12  thereafter 1998, a school district's targeted needs levy equals 
 46.13  the sum of its integration levy under section 124.912, 
 46.14  subdivision 2, and that portion of its special education levy 
 46.15  attributed to the limited English proficiency program. 
 46.16     Sec. 20.  [124.315] [INTEGRATION REVENUE.] 
 46.17     Subdivision 1.  [USE OF THE REVENUE.] Integration revenue 
 46.18  under this section must be used for programs established under a 
 46.19  desegregation plan mandated by the state board or under court 
 46.20  order, to increase learning opportunities and reduce the 
 46.21  learning gap between learners living in high concentrations of 
 46.22  poverty and their peers. 
 46.23     Subd. 2.  [SEPARATE ACCOUNT.] Integration revenue shall be 
 46.24  maintained in a separate account to identify expenditures for 
 46.25  salaries and programs related to this revenue. 
 46.26     Subd. 3.  [INTEGRATION REVENUE.] For fiscal year 1999 and 
 46.27  later fiscal years, integration revenue equals the following 
 46.28  amounts: 
 46.29     (1) for independent school district No. 709, Duluth, $191 
 46.30  times the actual pupil units for the school year; 
 46.31     (2) for independent school district No. 625, St. Paul, $429 
 46.32  times the actual pupil units for the school year; 
 46.33     (3) for special school district No. 1, Minneapolis, $530 
 46.34  times the actual pupil units for the school year; and 
 46.35     (4) for a district not listed in clause (1), (2), or (3) 
 46.36  that is required to implement a plan according to the 
 47.1   requirements of Minnesota Rules, parts 3535.0200 to 3535.2200, 
 47.2   the lesser of the actual cost of implementing the plan during 
 47.3   the fiscal year or $.... times the actual pupil units for the 
 47.4   school year. 
 47.5      Subd. 4.  [INTEGRATION LEVY.] A district may levy an amount 
 47.6   equal to 47 percent of the district's integration revenue as 
 47.7   defined in subdivision 3. 
 47.8      Subd. 5.  [INTEGRATION AID.] A district's integration aid 
 47.9   equals 53 percent of the district's integration revenue as 
 47.10  defined in subdivision 3. 
 47.11     Subd. 6.  [ALTERNATIVE ATTENDANCE PROGRAMS.] (a) The 
 47.12  integration aid under subdivision 5 must be adjusted for each 
 47.13  pupil attending a nonresident district under sections 120.062, 
 47.14  120.075, 120.0751, 120.0752, 124C.45 to 124C.48, and 126.22.  
 47.15  The adjustments must be made according to this subdivision.  
 47.16     (b) Aid paid to the district of the pupil's residence must 
 47.17  be reduced by an amount equal to the revenue per actual pupil 
 47.18  unit of the resident district times the number of actual pupil 
 47.19  units attributable to the pupil for the time the pupil is 
 47.20  enrolled in a nonresident district. 
 47.21     (c) Aid paid to a district serving nonresidents must be 
 47.22  increased by an amount equal to the aid reduction to the 
 47.23  resident district under paragraphs (b) and (d).  
 47.24     (d) If the amount of the reduction to be made from the aid 
 47.25  of a district is greater than the amount of aid otherwise due 
 47.26  the district, the excess reduction must be made from other state 
 47.27  aids due the district. 
 47.28     Sec. 21.  Minnesota Statutes 1996, section 124.3201, 
 47.29  subdivision 1, is amended to read: 
 47.30     Subdivision 1.  [DEFINITIONS.] For the purposes of this 
 47.31  section and sections 124.3202 and 124.321, the definitions in 
 47.32  this subdivision apply. 
 47.33     (a) "Base year" for fiscal year 1996 and fiscal year 1997 
 47.34  means the 1994 summer program and the 1994-1995 school year.  
 47.35  Base year for 1998 and later fiscal years means the second 
 47.36  fiscal year preceding the fiscal year for which aid will be paid.
 48.1      (b) "Basic revenue" has the meaning given it in section 
 48.2   124A.22, subdivision 2.  For the purposes of computing basic 
 48.3   revenue pursuant to this section, each child with a disability 
 48.4   shall be counted as prescribed in section 124.17, subdivision 1. 
 48.5      (c) "Essential personnel" means teachers, related services, 
 48.6   and support services staff providing direct services to students.
 48.7      (d) "Average daily membership" has the meaning given it in 
 48.8   section 124.17. 
 48.9      (e) "Program growth factor" means 1.00 for fiscal year 1998 
 48.10  2000 and later. 
 48.11     (f) "Aid percentage factor" means 60 percent for fiscal 
 48.12  year 1996, 70 percent for fiscal year 1997, 80 percent for 
 48.13  fiscal year 1998, 90 percent for fiscal year 1999, and 100 
 48.14  percent for fiscal years 2000 and later. 
 48.15     (g) "Levy percentage factor" means 100 minus the aid 
 48.16  percentage factor for that year. 
 48.17     Sec. 22.  Minnesota Statutes 1996, section 124.3201, 
 48.18  subdivision 2, is amended to read: 
 48.19     Subd. 2.  [SPECIAL EDUCATION BASE REVENUE.] The special 
 48.20  education base revenue equals the sum of the following amounts 
 48.21  computed using base year data: 
 48.22     (1) 68 percent of the salary of each essential person 
 48.23  employed in the district's program for children with a 
 48.24  disability during the regular school year, whether the person is 
 48.25  employed by one or more districts; 
 48.26     (2) for the Minnesota state academy for the deaf or the 
 48.27  Minnesota state academy for the blind, 68 percent of the salary 
 48.28  of each instructional aide assigned to a child attending the 
 48.29  academy, if that aide is required by the child's individual 
 48.30  education plan; 
 48.31     (3) for special instruction and services provided to any 
 48.32  pupil by contracting with public, private, or voluntary agencies 
 48.33  other than school districts, in place of special instruction and 
 48.34  services provided by the district, 52 percent of the difference 
 48.35  between the amount of the contract and the basic revenue of the 
 48.36  district for that pupil for the fraction of the school day the 
 49.1   pupil receives services under the contract; 
 49.2      (4) for special instruction and services provided to any 
 49.3   pupil by contracting for services with public, private, or 
 49.4   voluntary agencies other than school districts, that are 
 49.5   supplementary to a full educational program provided by the 
 49.6   school district, 52 percent of the amount of the contract for 
 49.7   that pupil; 
 49.8      (5) for supplies and equipment purchased or rented for use 
 49.9   in the instruction of children with a disability an amount equal 
 49.10  to 47 percent of the sum actually expended by the district but 
 49.11  not to exceed an average of $47 in any one school year for each 
 49.12  child with a disability receiving instruction; and 
 49.13     (6) for fiscal years 1997 and later, special education base 
 49.14  revenue shall include amounts under clauses (1) to (5) for 
 49.15  special education summer programs provided during the base year 
 49.16  for that fiscal year; and 
 49.17     (7) for fiscal years 1999 and later, the cost of providing 
 49.18  transportation services for children with disabilities under 
 49.19  section 124.225, subdivision 1, paragraph (b), clause (4). 
 49.20     Sec. 23.  Minnesota Statutes 1996, section 124.3201, 
 49.21  subdivision 4, is amended to read: 
 49.22     Subd. 4.  [STATE TOTAL SPECIAL EDUCATION REVENUE.] The 
 49.23  state total special education revenue for fiscal year 1996 1998 
 49.24  equals $327,846,000 $358,542,000.  The state total special 
 49.25  education revenue for fiscal year 1997 1999 equals 
 49.26  $347,810,000 $435,322,000.  The state total special education 
 49.27  revenue for later fiscal years equals:  
 49.28     (1) the state total special education revenue for the 
 49.29  preceding fiscal year; times 
 49.30     (2) the program growth factor; times 
 49.31     (3) the ratio of the state total average daily membership 
 49.32  for the current fiscal year to the state total average daily 
 49.33  membership for the preceding fiscal year. 
 49.34     Sec. 24.  Minnesota Statutes 1996, section 124.323, 
 49.35  subdivision 1, is amended to read: 
 49.36     Subdivision 1.  [DEFINITIONS.] In this section, the 
 50.1   definitions in this subdivision apply. 
 50.2      (a) "Unreimbursed special education cost" means the sum of 
 50.3   the following: 
 50.4      (1) expenditures for teachers' salaries, contracted 
 50.5   services, supplies, and equipment, and transportation services 
 50.6   eligible for revenue under sections 124.3201 and 124.3202; plus 
 50.7      (2) expenditures for tuition bills received under section 
 50.8   120.17 for services eligible for revenue under sections 
 50.9   124.3201, subdivision 2, and 124.3202, subdivision 1; minus 
 50.10     (3) revenue for teachers' salaries, contracted services, 
 50.11  supplies, and equipment under sections 124.3201 and 124.3202; 
 50.12  minus 
 50.13     (4) tuition receipts under section 120.17 for services 
 50.14  eligible for revenue under sections 124.3201, subdivision 2, and 
 50.15  124.3202, subdivision 1. 
 50.16     (b) "General revenue," for fiscal year 1996, means the sum 
 50.17  of the general education revenue according to section 124A.22, 
 50.18  subdivision 1, as adjusted according to section 124A.036, 
 50.19  subdivision 5, plus the total referendum revenue according to 
 50.20  section 124A.03, subdivision 1e.  For fiscal years 1997 and 
 50.21  later, "general revenue" means the sum of the general education 
 50.22  revenue according to section 124A.22, subdivision 1, as adjusted 
 50.23  according to section 124A.036, subdivision 5, plus the total 
 50.24  referendum revenue minus transportation sparsity revenue minus 
 50.25  total operating capital revenue. 
 50.26     Sec. 25.  Minnesota Statutes 1996, section 124A.22, 
 50.27  subdivision 1, is amended to read: 
 50.28     Subdivision 1.  [GENERAL EDUCATION REVENUE.] (a) For fiscal 
 50.29  year 1996, the general education revenue for each district 
 50.30  equals the sum of the district's basic revenue, compensatory 
 50.31  education revenue, training and experience revenue, secondary 
 50.32  sparsity revenue, elementary sparsity revenue, and supplemental 
 50.33  revenue. 
 50.34     (b) (a) For fiscal year years 1997 and thereafter 1998, 
 50.35  the general education revenue for each district equals the sum 
 50.36  of the district's basic revenue, compensatory education revenue, 
 51.1   secondary sparsity revenue, elementary sparsity revenue, 
 51.2   transportation sparsity, total operating capital revenue, 
 51.3   transition revenue, and supplemental revenue. 
 51.4      (b) For fiscal year 1999 and thereafter, the general 
 51.5   education revenue for each district equals the sum of the 
 51.6   district's basic revenue, basic skills revenue, training and 
 51.7   experience revenue, secondary sparsity revenue, elementary 
 51.8   sparsity revenue, transportation sparsity, total operating 
 51.9   capital revenue, transition revenue, and supplemental revenue. 
 51.10     Sec. 26.  Minnesota Statutes 1996, section 124A.22, 
 51.11  subdivision 2, is amended to read: 
 51.12     Subd. 2.  [BASIC REVENUE.] The basic revenue for each 
 51.13  district equals the formula allowance times the actual pupil 
 51.14  units for the school year.  The formula allowance for fiscal 
 51.15  year 1995 is $3,150.  The formula allowance for fiscal year 1996 
 51.16  is $3,205.  The formula allowance for fiscal year 1997 is $3,505 
 51.17  and.  The formula allowance for fiscal year 1998 and subsequent 
 51.18  fiscal years the formula allowance is $3,430.  The formula 
 51.19  allowance for fiscal year 1999 and subsequent fiscal years is 
 51.20  $3,367. 
 51.21     Sec. 27.  Minnesota Statutes 1996, section 124A.22, 
 51.22  subdivision 3, is amended to read: 
 51.23     Subd. 3.  [FISCAL YEAR 1998 COMPENSATORY EDUCATION 
 51.24  REVENUE.] The compensatory education revenue for each 
 51.25  district for fiscal year 1998 equals the formula allowance less 
 51.26  $300 times the AFDC pupil units computed according to section 
 51.27  124.17, subdivision 1d. 
 51.28     Sec. 28.  Minnesota Statutes 1996, section 124A.22, is 
 51.29  amended by adding a subdivision to read: 
 51.30     Subd. 3a.  [BASIC SKILLS REVENUE.] For fiscal year 1999 and 
 51.31  thereafter, a school district's basic skills revenue equals the 
 51.32  sum of: 
 51.33     (1) the formula allowance less $237 times the AFDC pupil 
 51.34  units computed according to section 124.17, subdivision 1g; plus 
 51.35     (2) the limited English proficiency revenue according to 
 51.36  section 124.273, subdivision 1g; plus 
 52.1      (3) the lesser of:  (i) $22.50 times the number of fund 
 52.2   balance pupil units in kindergarten to grade 8; or (ii) the 
 52.3   amount of district money provided to match basic skills revenue 
 52.4   for the purposes described in section 124A.28. 
 52.5      Sec. 29.  Minnesota Statutes 1996, section 124A.22, 
 52.6   subdivision 13a, is amended to read: 
 52.7      Subd. 13a.  [TRANSPORTATION SPARSITY REVENUE ALLOWANCE.] 
 52.8   (a) A district's transportation sparsity allowance equals the 
 52.9   greater of zero or the result of the following computation: 
 52.10     (i) Multiply the formula allowance according to section 
 52.11  124A.22, subdivision 2, by .1469 .1496. 
 52.12     (ii) Multiply the result in clause (i) by the district's 
 52.13  sparsity index raised to the 26/100 power. 
 52.14     (iii) Multiply the result in clause (ii) by the district's 
 52.15  density index raised to the 13/100 power. 
 52.16     (iv) Multiply the formula allowance according to section 
 52.17  124A.22, subdivision 2, by .0485 .0494. 
 52.18     (v) Subtract the result in clause (iv) from the result in 
 52.19  clause (iii). 
 52.20     (b) Transportation sparsity revenue is equal to the 
 52.21  transportation sparsity allowance times the actual pupil units. 
 52.22     Sec. 30.  Minnesota Statutes 1996, section 124A.22, 
 52.23  subdivision 13b, is amended to read: 
 52.24     Subd. 13b.  [TRANSITION ALLOWANCE.] (a) A district's 
 52.25  transportation transition allowance for fiscal year 1997 equals 
 52.26  the result of the following computation: 
 52.27     (1) if the result in subdivision 13a, paragraph (a), clause 
 52.28  (iii), for fiscal year 1997 is less than the fiscal year 1996 
 52.29  base allowance, the transportation transition allowance equals 
 52.30  the fiscal year 1996 base allowance minus the result in 
 52.31  subdivision 13a, paragraph (a), clause (iii). 
 52.32     (2) if the result in subdivision 13a, paragraph (b), for 
 52.33  fiscal year 1997 is greater than the fiscal year 1996 base 
 52.34  allowance and less than 110 percent of the fiscal year 1996 base 
 52.35  allowance, the transportation transition allowance equals zero. 
 52.36     (3) if the result in subdivision 13a, paragraph (b), for 
 53.1   fiscal year 1997 is greater than 110 percent of the fiscal year 
 53.2   1996 base allowance, the transportation transition allowance 
 53.3   equals 110 percent of the fiscal year 1996 base allowance minus 
 53.4   the result in subdivision 13a, paragraph (a), clause (iii). 
 53.5      (b) A district's transportation transition allowance for 
 53.6   fiscal year 1998 and thereafter equals the result of the 
 53.7   following: 
 53.8      (1) if the result in subdivision 13a, paragraph (a), clause 
 53.9   (iii), for fiscal year 1998 is less than the fiscal year 1996 
 53.10  base allowance, the transportation transition allowance equals 
 53.11  the fiscal year 1996 base allowance minus the result in 
 53.12  subdivision 13a, paragraph (a), clause (iii); or 
 53.13     (2) if the result in subdivision 13a, paragraph (a), clause 
 53.14  (iii), for fiscal year 1998 is greater than or equal to the 
 53.15  fiscal year 1996 base allowance, the transportation transition 
 53.16  allowance equals zero. 
 53.17     (c) (b) For fiscal years 1997 and 1998, a district's 
 53.18  training and experience transition allowance is equal to the 
 53.19  training and experience revenue the district would have received 
 53.20  for fiscal year 1997 under Minnesota Statutes 1994, section 
 53.21  124A.22, subdivision 4, divided by the actual pupil units for 
 53.22  fiscal year 1997 minus $130.  For fiscal year 1999 and later, a 
 53.23  district's training and experience transition allowance equals 
 53.24  zero.  
 53.25     If the training and experience transition allowance is less 
 53.26  than zero, the reduction shall be determined according to the 
 53.27  following schedule: 
 53.28     (i) for fiscal year 1997, the reduction is equal to .9 
 53.29  times the amount initially determined; and 
 53.30     (ii) for fiscal year 1998, the reduction is equal to .75 
 53.31  times the amount initially determined; 
 53.32     (iii) for fiscal year 1999, the reduction is equal to .50 
 53.33  times the amount initially determined; 
 53.34     (iv) for fiscal year 2000, the reduction is equal to .25 
 53.35  times the amount initially determined; and 
 53.36     (v) for fiscal year 2001 and thereafter, the transition 
 54.1   allowance shall not be less than zero.  
 54.2      (c) A district's district cooperation transition allowance 
 54.3   for fiscal year 1999 and thereafter is equal to the district 
 54.4   cooperation revenue the district would have received for fiscal 
 54.5   year 1999 under Minnesota Statutes 1996, section 124.2727, 
 54.6   divided by the actual pupil units for fiscal year 1999, minus 
 54.7   $67. 
 54.8      (d) A district's transition allowance for fiscal year years 
 54.9   1997 and thereafter 1998 is equal to the sum of its 
 54.10  transportation transition allowance and its training and 
 54.11  experience transition allowance.  A district's transition 
 54.12  allowance for fiscal year 1999 and thereafter is equal to the 
 54.13  sum of its transportation transition allowance and its district 
 54.14  cooperation transition allowance. 
 54.15     Sec. 31.  Minnesota Statutes 1996, section 124A.23, 
 54.16  subdivision 1, is amended to read: 
 54.17     Subdivision 1.  [GENERAL EDUCATION TAX RATE.] The 
 54.18  commissioner shall establish the general education tax rate by 
 54.19  July 1 of each year for levies payable in the following year.  
 54.20  The general education tax capacity rate shall be a rate, rounded 
 54.21  up to the nearest tenth of a percent, that, when applied to the 
 54.22  adjusted net tax capacity for all districts, raises the amount 
 54.23  specified in this subdivision.  The general education tax rate 
 54.24  shall be the rate that raises $1,054,000,000 for fiscal year 
 54.25  1996 and $1,359,000,000 for fiscal year 1997 1998 and 
 54.26  $1,417,000,000 for fiscal year 1999 and later fiscal years.  The 
 54.27  general education tax rate may not be changed due to changes or 
 54.28  corrections made to a district's adjusted net tax capacity after 
 54.29  the tax rate has been established.  
 54.30     Sec. 32.  Minnesota Statutes 1996, section 124A.28, is 
 54.31  amended to read: 
 54.32     124A.28 [COMPENSATORY EDUCATION BASIC SKILLS REVENUE.] 
 54.33     Subdivision 1.  [USE OF THE REVENUE.] The compensatory 
 54.34  education basic skills revenue under section 124A.22, 
 54.35  subdivision 3 3a, must be used to meet the educational needs of 
 54.36  pupils whose educational achievement progress toward meeting 
 55.1   state or local content or performance standards is below the 
 55.2   level that is appropriate for pupils learners of their age.  
 55.3   These needs may be met by providing the Any of the following may 
 55.4   be provided to meet these learners' needs: 
 55.5      (1) direct instructional services under the assurance of 
 55.6   mastery program according to section 124.311; 
 55.7      (2) remedial instruction in reading, language arts, and 
 55.8   mathematics, other content areas, or study skills to improve the 
 55.9   achievement level of these pupils learners; 
 55.10     (3) additional teachers and teacher aides to provide more 
 55.11  individualized instruction to these pupils learners through 
 55.12  individual tutoring, lower instructor-to-learner ratios, or team 
 55.13  teaching; 
 55.14     (4) summer programs that enable these pupils to improve 
 55.15  their achievement or that reemphasize material taught during the 
 55.16  regular school year; 
 55.17     (5) in-service education comprehensive and ongoing staff 
 55.18  development consistent with district and site plans according to 
 55.19  section 126.70, for teachers, teacher aides, principals, and 
 55.20  other personnel to improve their ability to recognize identify 
 55.21  the needs of these pupils learners and provide 
 55.22  appropriate responses to the pupils' needs remediation, 
 55.23  intervention, accommodations, or modifications; 
 55.24     (6) for instructional material for these pupils including:  
 55.25  textbooks, workbooks, periodicals, pamphlets, photographs, 
 55.26  reproductions, filmstrips, prepared slides, prerecorded video 
 55.27  programs, sound recordings, desk charts, games, study prints and 
 55.28  pictures, desk maps, models, learning kits, blocks and cubes, 
 55.29  flashcards, instructional computer software programs, pencils, 
 55.30  pens, crayons, notebooks, duplicating fluids, and 
 55.31  papers materials and technology appropriate for meeting the 
 55.32  individual needs of these learners; 
 55.33     (7) programs to reduce truancy, encourage completion of 
 55.34  high school, enhance self-concept, provide health services, 
 55.35  provide nutrition services, provide a safe and secure learning 
 55.36  environment, provide coordination for pupils receiving services 
 56.1   from other governmental agencies, provide psychological services 
 56.2   to determine the level of social, emotional, cognitive, and 
 56.3   intellectual development, and provide counseling services, 
 56.4   guidance services, and social work services; 
 56.5      (8) bilingual programs, bicultural programs, and programs 
 56.6   for pupils learners of limited English proficiency; 
 56.7      (9) all day kindergarten; 
 56.8      (10) extended school day and extended school year programs; 
 56.9   and 
 56.10     (11) substantial parent involvement in developing and 
 56.11  implementing remedial education or intervention plans for a 
 56.12  learner, including learning contracts between the school, the 
 56.13  learner, and the parent that establish achievement goals and 
 56.14  responsibilities of the learner and the learner's parent or 
 56.15  guardian; and 
 56.16     (12) other methods to increase achievement, as needed.  
 56.17     Subd. 1a.  [BUILDING ALLOCATION.] A district must consider 
 56.18  the concentration of children from low-income families, children 
 56.19  with limited English proficiency, and children whose progress 
 56.20  toward meeting state or local content or performance standards 
 56.21  is below the level that is appropriate for learners of their age 
 56.22  in each school building in the district when allocating 
 56.23  compensatory basic skills revenue. 
 56.24     Subd. 2.  [SEPARATE ACCOUNTS.] Each district that 
 56.25  receives compensatory education basic skills revenue shall 
 56.26  maintain separate accounts to identify expenditures for salaries 
 56.27  and programs related to this revenue. 
 56.28     Subd. 3.  [ANNUAL EXPENDITURE REPORT.] Each year a district 
 56.29  that receives compensatory education basic skills revenue shall 
 56.30  submit a report identifying the expenditures it incurred in 
 56.31  providing compensatory education to the pupils described in to 
 56.32  meet the needs of eligible learners under subdivision 1.  The 
 56.33  report must conform to uniform financial and reporting standards 
 56.34  established for this purpose. 
 56.35     Sec. 33.  [BUS PURCHASE LEVY.] 
 56.36     For 1997 taxes payable in 1998, a school district may levy 
 57.1   the amount necessary to eliminate the deficit in the reserved 
 57.2   fund balance account for bus purchases in its transportation 
 57.3   fund as of June 30, 1996. 
 57.4      Sec. 34.  [REPEALER.] 
 57.5      Subdivision 1.  [JULY 1, 1997.] Minnesota Statutes 1996, 
 57.6   sections 124.223; 124.225, subdivisions 3a, 7a, 7b, 7d, 7e, 8a, 
 57.7   and 8k; 124A.02, subdivision 24; and 124A.22, subdivisions 4, 
 57.8   4a, and 4b, are repealed effective July 1, 1997. 
 57.9      Subd. 2.  [REVENUE FOR FISCAL YEAR 1999.] Minnesota 
 57.10  Statutes 1996, sections 124.2727, subdivisions 6a, 6b, 6c, and 
 57.11  9; 124.311; 124.312; 124.313; and 124.314, are repealed 
 57.12  effective for revenue for fiscal year 1999. 
 57.13     Subd. 3.  [TAXES PAYABLE IN 1998.] Minnesota Statutes 1996, 
 57.14  section 124.912, subdivisions 2 and 3, are repealed effective 
 57.15  for taxes payable in 1998. 
 57.16     Sec. 35.  [EFFECTIVE DATE.] 
 57.17     Sections 9, 10, 24, and 32 are effective July 1, 1998. 
 57.18                             ARTICLE 8 
 57.19                      SCHOOL BOARD CONTRACTING 
 57.20     Section 1.  Minnesota Statutes 1996, section 123.35, is 
 57.21  amended by adding a subdivision to read: 
 57.22     Subd. 1a.  [CONTRACTS FOR SERVICES.] Notwithstanding any 
 57.23  law to the contrary, a school board may contract with a public 
 57.24  or private entity to provide instructional and noninstructional 
 57.25  services.  The board may reduce its administration accordingly.  
 57.26  The board shall not enter into an agreement restricting the 
 57.27  powers provided in this subdivision.  
 57.28     Sec. 2.  Minnesota Statutes 1996, section 123.35, is 
 57.29  amended by adding a subdivision to read: 
 57.30     Subd. 1b.  [REORGANIZATION AS A NONPROFIT ENTITY.] A school 
 57.31  board may reorganize its school district administration under 
 57.32  chapter 317A.  The board and the reorganized administration 
 57.33  shall contract for the administration to provide instructional 
 57.34  and noninstructional services.  The board shall not enter any 
 57.35  agreement restricting the powers provided in this subdivision. 
 57.36     Sec. 3.  Minnesota Statutes 1996, section 126.22, 
 58.1   subdivision 3, is amended to read: 
 58.2      Subd. 3.  [ELIGIBLE PROGRAMS.] (a) A pupil who is eligible 
 58.3   according to subdivision 2 may enroll in area learning centers 
 58.4   under sections 124C.45 to 124C.48, or according to section 
 58.5   121.11, subdivision 12. 
 58.6      (b) A pupil who is eligible according to subdivision 2 and 
 58.7   who is between the ages of 16 and 21 may enroll in 
 58.8   post-secondary courses under section 123.3514. 
 58.9      (c) A pupil who is eligible under subdivision 2, may enroll 
 58.10  in any public elementary or secondary education program.  
 58.11  However, a person who is eligible according to subdivision 2, 
 58.12  clause (b), may enroll only if the school board has adopted a 
 58.13  resolution approving the enrollment. 
 58.14     (d) A pupil who is eligible under subdivision 2, may enroll 
 58.15  in any nonprofit, nonpublic, nonsectarian school that has 
 58.16  contracted with the serving school district to provide 
 58.17  educational services. 
 58.18     (e) A pupil who is between the ages of 16 and 21 may enroll 
 58.19  in any adult basic education programs approved under section 
 58.20  124.26 and operated under the community education program 
 58.21  contained in section 121.88. 
 58.22     Sec. 4.  Minnesota Statutes 1996, section 126.22, 
 58.23  subdivision 3a, is amended to read: 
 58.24     Subd. 3a.  [ADDITIONAL ELIGIBLE PROGRAM.] A pupil who is at 
 58.25  least 16 years of age, who is eligible under subdivision 2, 
 58.26  clause (a), and who has been enrolled only in a public school, 
 58.27  if the pupil has been enrolled in any school, during the year 
 58.28  immediately before transferring under this subdivision, may 
 58.29  transfer to any nonprofit, nonpublic school that has contracted 
 58.30  with the serving school district to provide nonsectarian 
 58.31  educational services.  Such a school must enroll every eligible 
 58.32  pupil who seeks to transfer to the school under this program 
 58.33  subject to available space. 
 58.34                             ARTICLE 9 
 58.35                  WAIVER OF STATUTES AND STATEWIDE 
 58.36                    EDUCATION INFORMATION SYSTEM 
 59.1      Section 1.  [121.115] [WAIVER OF STATUTORY REQUIREMENTS.] 
 59.2      (a) Notwithstanding any law to the contrary, a school 
 59.3   district may petition the commissioner in writing to waive or 
 59.4   modify any statutory requirement.  
 59.5      (b) Before a school district submits its application to the 
 59.6   commissioner, the school board of the school district must hold 
 59.7   a public hearing to approve or disapprove the application.  
 59.8   During the hearing, educators, parents, and students must have 
 59.9   an opportunity to testify.  At least seven calendar days before 
 59.10  the hearing, the school district must publish notice of the 
 59.11  hearing in at least one newspaper of general circulation within 
 59.12  the school district.  The notice must set forth the time, date, 
 59.13  place, and general subject matter of the hearing. 
 59.14     (c) A school district must submit an approved application 
 59.15  to the commissioner within 15 days of the date of the district 
 59.16  hearing on the application.  The commissioner must review and 
 59.17  approve or disapprove the application within 45 days of 
 59.18  receipt.  The commissioner may disapprove any application that 
 59.19  contains unsound educational practices, endangers the health or 
 59.20  safety of students or staff, compromises equal opportunities for 
 59.21  learning, or does not remove an impediment to the achievement of 
 59.22  educational outcomes.  The commissioner's decision must be in 
 59.23  writing and include specific reasons for the approval or 
 59.24  disapproval.  If the commissioner fails to act within the 45-day 
 59.25  period, the school district may submit the application to the 
 59.26  state board for consideration under paragraph (d). 
 59.27     (d) The school district may appeal a disapproved 
 59.28  application or submit an application the commissioner failed to 
 59.29  act on to the state board within 15 days of (1) the date on 
 59.30  which the commissioner disapproves the application, or (2) the 
 59.31  end of the commissioner's 45-day period for consideration of the 
 59.32  application if the commissioner has not made a decision on the 
 59.33  application.  The state board must review the application and 
 59.34  commissioner's decision, when a decision has been made, within 
 59.35  45 days of receipt.  The state board's decision shall be final.  
 59.36  If the state board fails to act within the 45-day period, the 
 60.1   application shall be regarded as approved. 
 60.2      Sec. 2.  [121.973] [STATEWIDE INFORMATION SYSTEM.] 
 60.3      (a) The commissioner of children, families, and learning 
 60.4   shall annually collect information regarding the performance of 
 60.5   Minnesota's learners and other student and system performance 
 60.6   indicators at the discretion of the commissioner.  To the extent 
 60.7   feasible, the commissioner shall collect the data electronically 
 60.8   through the UFARS, MARSS, and STARS reporting systems. 
 60.9      (b) The governor and legislature shall appoint an 
 60.10  independent entity to report annually to the public on the 
 60.11  performance of Minnesota learners and other student and system 
 60.12  performance indicators identified in paragraph (a) and on the 
 60.13  effectiveness of various enrollment options and learning methods.
 60.14     (c) The commissioner shall provide information to the 
 60.15  public regarding the various education enrollment options, 
 60.16  including but not limited to the following:  post-secondary 
 60.17  enrollment options, open enrollment, charter schools and use of 
 60.18  tax credits and deductions to enhance learning, ways for parents 
 60.19  to effectively be involved with their child's learning to 
 60.20  improve performance, and other information to assist parents. 
 60.21     Sec. 3.  [EFFECTIVE DATE.] 
 60.22     Section 1 is effective for the 1997-1998 school year and 
 60.23  thereafter. 
 60.24                             ARTICLE 10 
 60.25                         TEACHER LICENSURE 
 60.26     Section 1.  Minnesota Statutes 1996, section 121.611, 
 60.27  subdivision 1, is amended to read: 
 60.28     Subdivision 1.  [AUTHORIZATION.] Notwithstanding any law 
 60.29  or, state board of education rule or state board of teaching 
 60.30  rule to the contrary, the board of teaching may allow school 
 60.31  districts to may hire nonlicensed community experts to teach in 
 60.32  the public schools on a limited basis according to this section. 
 60.33     Sec. 2.  Minnesota Statutes 1996, section 121.611, is 
 60.34  amended by adding a subdivision to read: 
 60.35     Subd. 4.  [REPORT.] A school district shall report the name 
 60.36  of a teacher hired under subdivision 1 within two weeks of the 
 61.1   date of hire to the board of teaching.  Within two weeks of the 
 61.2   last date of the teacher's term of employment, the school 
 61.3   district shall provide a report on the teacher's performance to 
 61.4   the state board of teaching.  These reports shall be made 
 61.5   available to school districts for the purposes of subdivision 1. 
 61.6      Sec. 3.  Minnesota Statutes 1996, section 121.611, is 
 61.7   amended by adding a subdivision to read: 
 61.8      Subd. 5.  [BACKGROUND CHECK.] Before hiring a nonlicensed 
 61.9   community expert, the school district shall conduct a criminal 
 61.10  background check of the applicant.  The school district may also 
 61.11  conduct the check at any time while the person is an employee of 
 61.12  the district.  The check shall consist of a criminal records 
 61.13  check of the state criminal records repository.  If the 
 61.14  applicant has resided in Minnesota for less than five years, the 
 61.15  check shall also include a criminal records check of information 
 61.16  from the state law enforcement agencies in the states where the 
 61.17  person resided during the five years before moving to Minnesota, 
 61.18  and of the national criminal records repository, including the 
 61.19  criminal justice data communications network.  The applicant's 
 61.20  failure to cooperate with the school district in conducting the 
 61.21  records check is reasonable cause to deny an application.  The 
 61.22  school district may not release the results of the records check 
 61.23  to any person except the applicant. 
 61.24     Sec. 4.  [REPEALER.] 
 61.25     Minnesota Statutes 1996, section 121.611, subdivision 3, is 
 61.26  repealed. 
 61.27                             ARTICLE 11
 61.28                               PELRA
 61.29     Section 1.  Minnesota Statutes 1996, section 179A.16, is 
 61.30  amended by adding a subdivision to read: 
 61.31     Subd. 1a.  [TEACHERS.] (a) For contracts between exclusive 
 61.32  representatives of teachers and public employers of teachers 
 61.33  other than the state, procedures for negotiation of agreements, 
 61.34  mediation and interest arbitration must be as otherwise provided 
 61.35  in this chapter until August 15 of the odd-numbered year.  If 
 61.36  either the public employer or the exclusive representative of 
 62.1   the teachers requests interest arbitration after August 15 of 
 62.2   the odd-numbered year, the commissioner shall request necessary 
 62.3   information from the parties, shall determine the matters not 
 62.4   agreed upon based on the efforts to mediate the dispute and the 
 62.5   positions submitted by the parties during negotiations or 
 62.6   mediation, and shall prepare a list of the items to be decided 
 62.7   by an arbitration panel.  The commissioner shall submit the list 
 62.8   of items to be decided by an arbitration panel to the parties.  
 62.9   Within 15 days of its receipt of the list of items to be decided 
 62.10  by an arbitration panel, the public employer shall notify the 
 62.11  commissioner whether it agrees to submission of those items to 
 62.12  interest arbitration. 
 62.13     (b) If the public employer agrees to submission of those 
 62.14  items to interest arbitration, those items must be submitted to 
 62.15  final-offer total-package interest arbitration and the result is 
 62.16  final and binding on the parties.  The parties may mutually 
 62.17  stipulate items to be excluded from arbitration. 
 62.18     (c) If the public employer does not respond to the 
 62.19  commissioner within 15 days of its receipt of the list of items 
 62.20  to be decided by an arbitration panel or if it rejects 
 62.21  submission of those items to interest arbitration, the teachers 
 62.22  may strike if they have complied with the following: 
 62.23     (1) the exclusive representative of the teachers has 
 62.24  submitted the last offer of the public employer to a secret vote 
 62.25  by the membership of the teacher bargaining unit and it has been 
 62.26  rejected; and 
 62.27     (2) after the rejection of the public employer's last 
 62.28  offer, the teachers have complied with the notice procedures of 
 62.29  section 179A.18, subdivision 3. 
 62.30     (d) If neither the public employer nor the exclusive 
 62.31  representative of the teachers requests interest arbitration, 
 62.32  this chapter applies. 
 62.33     Sec. 2.  Minnesota Statutes 1996, section 179A.17, 
 62.34  subdivision 1, is amended to read: 
 62.35     Subdivision 1.  [FOR TEACHERS.] If a new or different 
 62.36  exclusive representative of teachers employed by a local school 
 63.1   district is certified by the commissioner at any time other than 
 63.2   the period between 120 days before the termination date of a 
 63.3   contract and the termination date of the contract, or if on July 
 63.4   1 of any odd-numbered year a representation proceeding involving 
 63.5   the employer and the employer's teachers is before the 
 63.6   commissioner, section 179A.18, subdivision 2, clause (1), shall 
 63.7   apply.  In those cases, however, the employer and the exclusive 
 63.8   representative of the teachers shall execute a written contract 
 63.9   or memorandum of contract no later than 60 days after a 
 63.10  certification by the commissioner of a new or different 
 63.11  exclusive representative or the resolution by the commissioner 
 63.12  of a representation proceeding.  Either party may petition the 
 63.13  commissioner for assistance in reaching an agreement.  If the 
 63.14  employer and the exclusive representative of the teachers fail 
 63.15  to execute a contract by 60 days after the certification of a 
 63.16  new or different exclusive representative or the resolution by 
 63.17  the commissioner of a representation proceeding, they shall be 
 63.18  conclusively presumed to be at an impasse after having 
 63.19  participated in mediation as specified in section 179A.18, 
 63.20  subdivision 2, clause (1)(b).  After the 60 days, section 
 63.21  179A.16, subdivision 1a, applies as though agreement had not 
 63.22  been reached by August 15 of the odd-numbered year. 
 63.23     Sec. 3.  [179A.32] [NOTICE OF LAYOFFS.] 
 63.24     Notwithstanding any law to the contrary or governing 
 63.25  collective bargaining agreements, school districts and school 
 63.26  boards shall not be required to notify teachers or their 
 63.27  exclusive representatives of layoffs until 30 days prior to the 
 63.28  beginning of the school year. 
 63.29     Sec. 4.  [REPEALER.] 
 63.30     Minnesota Statutes 1996, section 124A.22, subdivision 2a, 
 63.31  is repealed. 
 63.32     Sec. 5.  [EFFECTIVE DATE.] 
 63.33     Sections 1, 2, and 4 are effective July 1, 1997. 
 63.34                             ARTICLE 12 
 63.35                         LABORATORY SCHOOLS 
 63.36     Section 1.  [LABORATORY SCHOOL GRANTS.] 
 64.1      Subdivision 1.  [ESTABLISHMENT.] The commissioner of 
 64.2   children, families, and learning shall make grants to 
 64.3   post-secondary institutions to establish at least three 
 64.4   laboratory schools that develop innovative teaching techniques 
 64.5   to enhance students' learning experiences.  At least one 
 64.6   laboratory school must be located in the seven-county 
 64.7   metropolitan area and at least one laboratory school must be 
 64.8   located in greater Minnesota. 
 64.9      Subd. 2.  [GRANT APPLICATION.] An application for a grant 
 64.10  may be submitted by a public or private post-secondary 
 64.11  institution located in the state.  Each grant application must 
 64.12  include: 
 64.13     (1) the location of the laboratory school determined in 
 64.14  collaboration with a school district or proposed as a charter 
 64.15  school; and 
 64.16     (2) a five-year fiscal plan demonstrating that the school 
 64.17  shall operate with no additional state revenue except for 
 64.18  revenue received under Minnesota Statutes, chapters 124 and 
 64.19  124A, and the grant money awarded under this section.  
 64.20     The commissioner of children, families, and learning shall 
 64.21  establish guidelines and an application process for the grants. 
 64.22     Subd. 3.  [GRANT MONEY.] The grant money may be used for: 
 64.23     (1) transportation of students; 
 64.24     (2) technology; 
 64.25     (3) equipment; 
 64.26     (4) teacher mentorships; 
 64.27     (5) building remodeling, renovation, and repair; 
 64.28     (6) the dissemination of innovative and effective teaching 
 64.29  techniques; 
 64.30     (7) education research for the development of teaching 
 64.31  methods, assessments, and curriculum design; 
 64.32     (8) the development of creative opportunities for parental 
 64.33  involvement; and 
 64.34     (9) other inventive teaching and learning practices 
 64.35  designed to implement the graduation standards.  
 64.36     Sec. 2.  [APPROPRIATION.] 
 65.1      $10,000,000 is appropriated from the general fund in fiscal 
 65.2   year 1998 to the department of children, families, and learning 
 65.3   for laboratory school grants under section 1.  Any balance in 
 65.4   the first year does not cancel but is available in the second 
 65.5   year. 
 65.6                              ARTICLE 13
 65.7                         EDUCATION INVESTMENT 
 65.8      Section 1.  [11A.165] [EDUCATION INVESTMENT FUND.] 
 65.9      Subdivision 1.  [ESTABLISHMENT.] A fund called the 
 65.10  education investment fund is established in the state treasury 
 65.11  for the purpose of investing money for grants to post-secondary 
 65.12  students under section 136A.123.  Accounts may be established 
 65.13  within the fund for specific fields of study or geographical 
 65.14  areas to which a corporation or individual wishes to 
 65.15  contribute.  Accounts may not be established that discriminate 
 65.16  on the basis of race, ethnicity, or gender. 
 65.17     Subd. 2.  [ASSETS.] The assets of the education investment 
 65.18  fund shall consist of money contributed by private corporations, 
 65.19  foundations, or individuals, and all income from the investment 
 65.20  of contributions to the fund.  All assets of the fund are 
 65.21  appropriated for the purpose of supporting grants under section 
 65.22  136A.123. 
 65.23     Subd. 3.  [MANAGEMENT.] The education investment fund shall 
 65.24  be managed by the board. 
 65.25     Subd. 4.  [INVESTMENTS.] The education investment fund 
 65.26  shall be invested subject to the provisions of section 11A.24. 
 65.27     Subd. 5.  [DISTRIBUTION OF ASSETS.] The board shall 
 65.28  annually transfer appropriations from the fund to the higher 
 65.29  education services office for distribution to eligible students 
 65.30  under section 136A.123.  Appropriations transferred to the 
 65.31  higher education services office which are not spent do not 
 65.32  cancel but are available for grants in the following fiscal year.
 65.33     Sec. 2.  [136A.123] [EDUCATION INVESTMENT GRANT PROGRAM.] 
 65.34     Subdivision 1.  [ESTABLISHMENT.] An education investment 
 65.35  grant program is established to provide grants to low-income 
 65.36  students who withdraw funds from a qualified savings plan to pay 
 66.1   for their post-secondary education. 
 66.2      Subd. 2.  [ELIGIBILITY.] To be eligible to receive a grant 
 66.3   from an account within the fund, a student must be: 
 66.4      (1) a resident of the state of Minnesota; 
 66.5      (2) enrolled at least half time in an undergraduate program 
 66.6   of instruction at a public or private post-secondary 
 66.7   institution; and 
 66.8      (3) expend funds withdrawn from a savings plan under 
 66.9   section 290.0803 to pay for post-secondary education expenses in 
 66.10  the award year. 
 66.11     Subd. 3.  [ALLOCATION; AWARDS.] Grants must be awarded on a 
 66.12  funds available basis from appropriations transferred to the 
 66.13  office by the state board of investment under section 11A.165.  
 66.14  The office shall establish rules to govern the size and 
 66.15  distribution of grant awards.  If insufficient funds are 
 66.16  available to award grants to all eligible applicants, the office 
 66.17  shall give priority to applicants who demonstrate the greatest 
 66.18  savings effort relative to income.  A grant awarded under this 
 66.19  section does not affect a recipient's eligibility for a state 
 66.20  grant under section 136A.121. 
 66.21     Sec. 3.  Minnesota Statutes 1996, section 290.01, 
 66.22  subdivision 19a, is amended to read: 
 66.23     Subd. 19a.  [ADDITIONS TO FEDERAL TAXABLE INCOME.] For 
 66.24  individuals, estates, and trusts, there shall be added to 
 66.25  federal taxable income: 
 66.26     (1)(i) interest income on obligations of any state other 
 66.27  than Minnesota or a political or governmental subdivision, 
 66.28  municipality, or governmental agency or instrumentality of any 
 66.29  state other than Minnesota exempt from federal income taxes 
 66.30  under the Internal Revenue Code or any other federal statute, 
 66.31  and 
 66.32     (ii) exempt-interest dividends as defined in section 
 66.33  852(b)(5) of the Internal Revenue Code, except the portion of 
 66.34  the exempt-interest dividends derived from interest income on 
 66.35  obligations of the state of Minnesota or its political or 
 66.36  governmental subdivisions, municipalities, governmental agencies 
 67.1   or instrumentalities, but only if the portion of the 
 67.2   exempt-interest dividends from such Minnesota sources paid to 
 67.3   all shareholders represents 95 percent or more of the 
 67.4   exempt-interest dividends that are paid by the regulated 
 67.5   investment company as defined in section 851(a) of the Internal 
 67.6   Revenue Code, or the fund of the regulated investment company as 
 67.7   defined in section 851(h) of the Internal Revenue Code, making 
 67.8   the payment; and 
 67.9      (iii) for the purposes of items (i) and (ii), interest on 
 67.10  obligations of an Indian tribal government described in section 
 67.11  7871(c) of the Internal Revenue Code shall be treated as 
 67.12  interest income on obligations of the state in which the tribe 
 67.13  is located; 
 67.14     (2) the amount of income taxes paid or accrued within the 
 67.15  taxable year under this chapter and income taxes paid to any 
 67.16  other state or to any province or territory of Canada, to the 
 67.17  extent allowed as a deduction under section 63(d) of the 
 67.18  Internal Revenue Code, but the addition may not be more than the 
 67.19  amount by which the itemized deductions as allowed under section 
 67.20  63(d) of the Internal Revenue Code exceeds the amount of the 
 67.21  standard deduction as defined in section 63(c) of the Internal 
 67.22  Revenue Code.  For the purpose of this paragraph, the 
 67.23  disallowance of itemized deductions under section 68 of the 
 67.24  Internal Revenue Code of 1986, income tax is the last itemized 
 67.25  deduction disallowed; 
 67.26     (3) the capital gain amount of a lump sum distribution to 
 67.27  which the special tax under section 1122(h)(3)(B)(ii) of the Tax 
 67.28  Reform Act of 1986, Public Law Number 99-514, applies; and 
 67.29     (4) the amount of income taxes paid or accrued within the 
 67.30  taxable year under this chapter and income taxes paid to any 
 67.31  other state or any province or territory of Canada, to the 
 67.32  extent allowed as a deduction in determining federal adjusted 
 67.33  gross income.  For the purpose of this paragraph, income taxes 
 67.34  do not include the taxes imposed by sections 290.0922, 
 67.35  subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729; 
 67.36  and 
 68.1      (5) the amount provided by section 290.0803, subdivision 3. 
 68.2      Sec. 4.  Minnesota Statutes 1996, section 290.01, 
 68.3   subdivision 19b, is amended to read: 
 68.4      Subd. 19b.  [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 
 68.5   individuals, estates, and trusts, there shall be subtracted from 
 68.6   federal taxable income: 
 68.7      (1) interest income on obligations of any authority, 
 68.8   commission, or instrumentality of the United States to the 
 68.9   extent includable in taxable income for federal income tax 
 68.10  purposes but exempt from state income tax under the laws of the 
 68.11  United States; 
 68.12     (2) if included in federal taxable income, the amount of 
 68.13  any overpayment of income tax to Minnesota or to any other 
 68.14  state, for any previous taxable year, whether the amount is 
 68.15  received as a refund or as a credit to another taxable year's 
 68.16  income tax liability; 
 68.17     (3) the amount paid to others not to exceed $650 for each 
 68.18  dependent in grades kindergarten to 6 and $1,000 for each 
 68.19  dependent in grades 7 to 12, for tuition, textbooks, and 
 68.20  transportation of each dependent in attending an elementary or 
 68.21  secondary school situated in Minnesota, North Dakota, South 
 68.22  Dakota, Iowa, or Wisconsin, wherein a resident of this state may 
 68.23  legally fulfill the state's compulsory attendance laws, which is 
 68.24  not operated for profit, and which adheres to the provisions of 
 68.25  the Civil Rights Act of 1964 and chapter 363.  As used in this 
 68.26  clause, "textbooks" includes books and other instructional 
 68.27  materials and equipment used in elementary and secondary schools 
 68.28  in teaching only those subjects legally and commonly taught in 
 68.29  public elementary and secondary schools in this state.  
 68.30  "Textbooks" does not include instructional books and materials 
 68.31  used in the teaching of religious tenets, doctrines, or worship, 
 68.32  the purpose of which is to instill such tenets, doctrines, or 
 68.33  worship, nor does it include books or materials for, or 
 68.34  transportation to, extracurricular activities including sporting 
 68.35  events, musical or dramatic events, speech activities, driver's 
 68.36  education, or similar programs.  In order to qualify for the 
 69.1   subtraction under this clause the taxpayer must elect to itemize 
 69.2   deductions under section 63(e) of the Internal Revenue Code; 
 69.3      (4) to the extent included in federal taxable income, 
 69.4   distributions from a qualified governmental pension plan, an 
 69.5   individual retirement account, simplified employee pension, or 
 69.6   qualified plan covering a self-employed person that represent a 
 69.7   return of contributions that were included in Minnesota gross 
 69.8   income in the taxable year for which the contributions were made 
 69.9   but were deducted or were not included in the computation of 
 69.10  federal adjusted gross income.  The distribution shall be 
 69.11  allocated first to return of contributions until the 
 69.12  contributions included in Minnesota gross income have been 
 69.13  exhausted.  This subtraction applies only to contributions made 
 69.14  in a taxable year prior to 1985; 
 69.15     (5) income as provided under section 290.0802; 
 69.16     (6) the amount of unrecovered accelerated cost recovery 
 69.17  system deductions allowed under subdivision 19g; 
 69.18     (7) to the extent included in federal adjusted gross 
 69.19  income, income realized on disposition of property exempt from 
 69.20  tax under section 290.491; 
 69.21     (8) to the extent not deducted in determining federal 
 69.22  taxable income, the amount paid for health insurance of 
 69.23  self-employed individuals as determined under section 162(l) of 
 69.24  the Internal Revenue Code, except that the 25 percent limit does 
 69.25  not apply.  If the taxpayer deducted insurance payments under 
 69.26  section 213 of the Internal Revenue Code of 1986, the 
 69.27  subtraction under this clause must be reduced by the lesser of: 
 69.28     (i) the total itemized deductions allowed under section 
 69.29  63(d) of the Internal Revenue Code, less state, local, and 
 69.30  foreign income taxes deductible under section 164 of the 
 69.31  Internal Revenue Code and the standard deduction under section 
 69.32  63(c) of the Internal Revenue Code; or 
 69.33     (ii) the lesser of (A) the amount of insurance qualifying 
 69.34  as "medical care" under section 213(d) of the Internal Revenue 
 69.35  Code to the extent not deducted under section 162(1) of the 
 69.36  Internal Revenue Code or excluded from income or (B) the total 
 70.1   amount deductible for medical care under section 213(a); and 
 70.2      (9) the exemption amount allowed under Laws 1995, chapter 
 70.3   255, article 3, section 2, subdivision 3; and 
 70.4      (10) the subtraction provided by section 290.0803, 
 70.5   subdivision 2. 
 70.6      Sec. 5.  [290.0803] [HIGHER EDUCATION TRUSTS.] 
 70.7      Subdivision 1.  [DEFINITIONS.] (a) For the purposes of this 
 70.8   section, the following terms have the meanings given them.  
 70.9      (b) "Higher education trust" means a grantor trust created 
 70.10  or organized in Minnesota for the purpose of funding the 
 70.11  qualified education expenses of the grantor, but only if the 
 70.12  written governing instrument creating the trust meets the 
 70.13  following requirements: 
 70.14     (1) No contributions shall be accepted unless it is in 
 70.15  cash, and contributions shall not be accepted for the taxable 
 70.16  year in excess of $2,000. 
 70.17     (2) The trustee is a bank or other person who demonstrates 
 70.18  to the satisfaction of the commissioner that the manner in which 
 70.19  the other person will administer the trust will be consistent 
 70.20  with the requirements of this section. 
 70.21     (3) No part of the trust funds shall be invested in life 
 70.22  insurance contracts. 
 70.23     (4) The interest of an individual in the balance of the 
 70.24  individual's account is nonforfeitable. 
 70.25     (5) The assets of the trust shall not be commingled with 
 70.26  other property except in a common trust fund or common 
 70.27  investment fund. 
 70.28     (6) The trust is not taxed for federal tax purposes as an 
 70.29  individual retirement account under section 408 of the Internal 
 70.30  Revenue Code. 
 70.31     (c) "Qualified education expense of the grantor" means 
 70.32  tuition, books, and fees required for the enrollment or 
 70.33  attendance at an eligible education institution of the grantor; 
 70.34  the grantor's spouse; or any child, grandchild, or ancestor of 
 70.35  the grantor or grantor's spouse.  A qualified education expense 
 70.36  of the grantor does not include expenses with respect to any 
 71.1   course or other education involving sports, games, or hobbies 
 71.2   other than as part of a degree program. 
 71.3      The amount of qualified higher education expenses otherwise 
 71.4   taken into account under this paragraph with respect to the 
 71.5   education of an individual shall be reduced, before the 
 71.6   application of this paragraph, by the sum of the amounts 
 71.7   received with respect to the individual for the taxable year as: 
 71.8      (1) a qualified scholarship which under section 117 of the 
 71.9   Internal Revenue Code of 1986 is not includable in gross income; 
 71.10     (2) an educational assistance allowance under United States 
 71.11  Code, title 38, chapter 30, 31, 32, 34, or 35; 
 71.12     (3) a payment, other than a gift, bequest, devise, or 
 71.13  inheritance within the meaning of section 102(a) of the Internal 
 71.14  Revenue Code for educational expenses, or attributable to 
 71.15  attendance at an eligible educational institution, which is 
 71.16  exempt from income taxation by any law of the United States; or 
 71.17     (4) amounts excluded from federal taxable income under 
 71.18  section 135 of the Internal Revenue Code. 
 71.19     (d) For the purposes of paragraph (c), "eligible 
 71.20  educational institution" means: 
 71.21     (1) an institution described in section 1201(a) or 
 71.22  subparagraph (C) or (D) of section 481(a)(1) of the Higher 
 71.23  Education Act of 1965; or 
 71.24     (2) an area vocational education school, as defined in 
 71.25  subparagraph (C) or (D) of section 521(3) of the Carl D. 
 71.26  Perkins' Vocational Education Act, that is in any state, as 
 71.27  defined in section 521(27) of the Carl D. Perkins' Vocational 
 71.28  Education Act. 
 71.29     Subd. 2.  [SUBTRACTION.] The grantor is allowed a 
 71.30  subtraction from federal taxable income in the amount of (1) the 
 71.31  contribution made by the grantor to a higher education trust in 
 71.32  the grantor's taxable year, and (2) any net income or net 
 71.33  capital gain other than income which is excluded from Minnesota 
 71.34  tax by section 290.01, subdivision 19b, clause (1), generated by 
 71.35  the higher education trust that is included in the grantor's 
 71.36  federal taxable income for the year. 
 72.1      Subd. 3.  [ADDITION.] The net income or capital loss of a 
 72.2   higher education trust for a tax year which is included in the 
 72.3   computation of the grantor's federal taxable income must be 
 72.4   added to federal taxable income to the extent the loss is 
 72.5   included in the grantor's computation of federal taxable income. 
 72.6      Subd. 4.  [TAX ON DISTRIBUTION FROM A HIGHER EDUCATION 
 72.7   TRUST.] In the event of distribution from a higher education 
 72.8   trust within five years of the establishment of the higher 
 72.9   education trust or in a year in which the distribution exceeds 
 72.10  the qualified education expense of the grantor for the year 
 72.11  notwithstanding any provision to the contrary, there is imposed 
 72.12  on the grantor or the grantor's estate an additional tax in the 
 72.13  amount of (1) two percent plus the highest marginal tax rate 
 72.14  applicable to the grantor's net income in the year of 
 72.15  distribution under section 290.06, subdivision 2c, paragraph 
 72.16  (a), multiplied by the amount of the distribution if the 
 72.17  distribution is made within five years of the establishment of 
 72.18  the trust; or (2) the percentage determined under clause (1) 
 72.19  multiplied by the amount of the distribution which exceeds the 
 72.20  qualified education expense of the grantor for the year for 
 72.21  distributions from a trust in existence for more than five years.
 72.22     This tax applies regardless of whether the true grantor is 
 72.23  a resident or nonresident of Minnesota in the year of 
 72.24  distribution. 
 72.25     In no event shall the cumulative distributions subject to 
 72.26  the tax in this subdivision exceed the cumulative amount of 
 72.27  subtractions less cumulative additions claimed by the grantor on 
 72.28  the grantor's Minnesota individual income tax returns for tax 
 72.29  years prior to the year of distribution.  Notwithstanding the 
 72.30  filing requirements of section 289A.08, subdivision 1, a grantor 
 72.31  is required to file a Minnesota individual tax return for any 
 72.32  year in which the tax provided by this subdivision is imposed. 
 72.33     Subd. 5.  [RETURNS OF HIGHER EDUCATION TRUSTS.] For each 
 72.34  year a higher education trust is in existence, the grantor of 
 72.35  the trust is required to file a return with the commissioner by 
 72.36  October 15 of the year following the tax year.  The return must 
 73.1   include the social security number of the grantor, the amount of 
 73.2   the contributions made to the trust by the grantor in the year, 
 73.3   the amount of net income or loss of the trust for the year, the 
 73.4   amount of distributions made in the year, and the amount of the 
 73.5   qualified higher education expense incurred by the grantor in 
 73.6   the year. 
 73.7      Subd. 6.  [SUNSET OF THE SUBTRACTION AND ADDITION.] If the 
 73.8   federal government enacts an income tax provision providing for 
 73.9   nondeductible individual retirement accounts similar to the 
 73.10  provision proposed by Congress in section 11015 of Revenue 
 73.11  Reconciliation and Tax Simplification Provisions from Conference 
 73.12  Report on HR 2491, Seven-Year Balanced Budget Reconciliation Act 
 73.13  of 1995, filed November 16, 1995, the subtraction and additions 
 73.14  provided by subdivisions 2 and 3 will not be allowed for tax 
 73.15  years beginning after the year of federal enactment. 
 73.16     Subd. 7.  [ROLL-OVER OF DISTRIBUTIONS FROM HIGHER EDUCATION 
 73.17  TRUSTS MADE AFTER THE YEAR OF THE SUNSET OF SUBDIVISION 2.] If 
 73.18  the federal government enacts a tax provision as provided in 
 73.19  subdivision 6, the tax imposed by subdivision 4 will be reduced 
 73.20  by 8.5 percent of the amount contributed by the grantor to the 
 73.21  nondeductible individual retirement account established by the 
 73.22  grantor, other than the roll-over proceeds from an individual 
 73.23  retirement account governed by section 407 of the Internal 
 73.24  Revenue Code, in the year of distribution. 
 73.25     Sec. 6.  Minnesota Statutes 1996, section 290.091, 
 73.26  subdivision 2, is amended to read: 
 73.27     Subd. 2.  [DEFINITIONS.] For purposes of the tax imposed by 
 73.28  this section, the following terms have the meanings given: 
 73.29     (a) "Alternative minimum taxable income" means the sum of 
 73.30  the following for the taxable year: 
 73.31     (1) the taxpayer's federal alternative minimum taxable 
 73.32  income as defined in section 55(b)(2) of the Internal Revenue 
 73.33  Code; 
 73.34     (2) the taxpayer's itemized deductions allowed in computing 
 73.35  federal alternative minimum taxable income, but excluding the 
 73.36  Minnesota charitable contribution deduction and the medical 
 74.1   expense deduction; 
 74.2      (3) for depletion allowances computed under section 613A(c) 
 74.3   of the Internal Revenue Code, with respect to each property (as 
 74.4   defined in section 614 of the Internal Revenue Code), to the 
 74.5   extent not included in federal alternative minimum taxable 
 74.6   income, the excess of the deduction for depletion allowable 
 74.7   under section 611 of the Internal Revenue Code for the taxable 
 74.8   year over the adjusted basis of the property at the end of the 
 74.9   taxable year (determined without regard to the depletion 
 74.10  deduction for the taxable year); 
 74.11     (4) to the extent not included in federal alternative 
 74.12  minimum taxable income, the amount of the tax preference for 
 74.13  intangible drilling cost under section 57(a)(2) of the Internal 
 74.14  Revenue Code determined without regard to subparagraph (E); 
 74.15     (5) to the extent not included in federal alternative 
 74.16  minimum taxable income, the amount of interest income as 
 74.17  provided by section 290.01, subdivision 19a, clause (1); 
 74.18     less the sum of the amounts determined under the following 
 74.19  clauses (1) to (3): 
 74.20     (1) interest income as defined in section 290.01, 
 74.21  subdivision 19b, clause (1); 
 74.22     (2) an overpayment of state income tax as provided by 
 74.23  section 290.01, subdivision 19b, clause (2), to the extent 
 74.24  included in federal alternative minimum taxable income; and 
 74.25     (3) the amount of investment interest paid or accrued 
 74.26  within the taxable year on indebtedness to the extent that the 
 74.27  amount does not exceed net investment income, as defined in 
 74.28  section 163(d)(4) of the Internal Revenue Code.  Interest does 
 74.29  not include amounts deducted in computing federal adjusted gross 
 74.30  income. 
 74.31     In the case of an estate or trust, alternative minimum 
 74.32  taxable income must be computed as provided in section 59(c) of 
 74.33  the Internal Revenue Code. 
 74.34     (b) "Investment interest" means investment interest as 
 74.35  defined in section 163(d)(3) of the Internal Revenue Code. 
 74.36     (c) "Tentative minimum tax" equals seven percent of 
 75.1   alternative minimum taxable income after subtracting the 
 75.2   exemption amount determined under subdivision 3. 
 75.3      (d) "Regular tax" means the tax that would be imposed under 
 75.4   this chapter (without regard to this section and section 
 75.5   290.032), reduced by the sum of the nonrefundable credits 
 75.6   allowed under this chapter.  
 75.7      (e) "Net minimum tax" means the minimum tax imposed by this 
 75.8   section. 
 75.9      (f) "Minnesota charitable contribution deduction" means a 
 75.10  charitable contribution deduction under section 170 of the 
 75.11  Internal Revenue Code to or for the use of an entity described 
 75.12  in section 290.21, subdivision 3, clauses (a) to (e).  When the 
 75.13  federal deduction for charitable contributions is limited under 
 75.14  section 170(b) of the Internal Revenue Code, the allowable 
 75.15  contributions in the year of contribution are deemed to be first 
 75.16  contributions to entities described in section 290.21, 
 75.17  subdivision 3, clauses (a) to (e). 
 75.18     Sec. 7.  Minnesota Statutes 1996, section 290.091, 
 75.19  subdivision 6, is amended to read: 
 75.20     Subd. 6.  [CREDIT FOR PRIOR YEARS' LIABILITY.] (a) A credit 
 75.21  is allowed against the tax imposed by this chapter on 
 75.22  individuals, trusts, and estates equal to the minimum tax credit 
 75.23  for the taxable year.  The minimum tax credit equals the 
 75.24  adjusted net minimum tax for taxable years beginning after 
 75.25  December 31, 1988, reduced by the minimum tax credits allowed in 
 75.26  a prior taxable year.  The credit may not exceed the excess (if 
 75.27  any) for the taxable year of 
 75.28     (1) the regular tax, over 
 75.29     (2) the greater of (i) the tentative alternative minimum 
 75.30  tax, or (ii) zero. 
 75.31     (b) The adjusted net minimum tax for a taxable year equals 
 75.32  the lesser of the net minimum tax or the excess (if any) of 
 75.33     (1) the tentative minimum tax, over 
 75.34     (2) seven percent of the sum of 
 75.35     (i) adjusted gross income as defined in section 62 of the 
 75.36  Internal Revenue Code, 
 76.1      (ii) interest income as defined in section 290.01, 
 76.2   subdivision 19a, clause (1), 
 76.3      (iii) interest on specified private activity bonds, as 
 76.4   defined in section 57(a)(5) of the Internal Revenue Code, to the 
 76.5   extent not included under clause (ii), 
 76.6      (iv) depletion as defined in section 57(a)(1), determined 
 76.7   without regard to the last sentence of paragraph (1), of the 
 76.8   Internal Revenue Code, less 
 76.9      (v) the deductions provided in subdivision 2, paragraph 
 76.10  (a), clauses clause (5), items (i), (ii), and (iii) (1) to (4), 
 76.11  and 
 76.12     (vi) the exemption amount determined under subdivision 3. 
 76.13     In the case of an individual who is not a Minnesota 
 76.14  resident for the entire year, adjusted net minimum tax must be 
 76.15  multiplied by the fraction defined in section 290.06, 
 76.16  subdivision 2c, paragraph (e).  In the case of a trust or 
 76.17  estate, adjusted net minimum tax must be multiplied by the 
 76.18  fraction defined under subdivision 4, paragraph (b). 
 76.19     Sec. 8.  [EFFECTIVE DATE.] 
 76.20     Sections 3 to 7 are effective for tax years beginning after 
 76.21  December 31, 1996.