1.1 	A bill for an act
1.2 	relating to education finance; establishing prekindergarten allowances; increasing 
1.3 	the basic general education formula allowance; increasing funding for the 
1.4 	Board of Trustees of the Minnesota State Colleges and Universities; increasing 
1.5 	funding for the Board of Regents of the University of Minnesota; increasing 
1.6 	funding for the Office of Higher Education; appropriating money;amending 
1.7 	Minnesota Statutes 2006, sections 126C.10, subdivision 2; 127A.45, subdivision 
1.8 	12; 136A.121, subdivision 5; 270B.14, subdivision 1, by adding a subdivision; 
1.9 	proposing coding for new law in Minnesota Statutes, chapters 124D; 270C.
1.10 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.11 	ARTICLE 1
1.12 	EARLY CHILDHOOD THROUGH GRADE 12 EDUCATION

1.13	Section 1.  SUMMARY OF APPROPRIATIONS.
 	
1.14 	The amounts shown in this section summarize direct appropriations, by fund, made 
1.15 	in this article.

1.16			2008
		2009
		Total
	
1.17	General
	$
	95,390,000
	$
	255,347,000
	$
	350,737,000

1.18 	Sec. 2. [124D.332] PREKINDERGARTEN EDUCATION ACT.
1.19 		Subdivision 1.Allowance; establishment; purpose. A prekindergarten education 
1.20 	allowance finance system is established to provide choices for families of young children, 
1.21 	close the achievement gap in kindergarten through grade 12 public education; improve 
1.22 	learning preparedness, and promote healthy development and school readiness through 
1.23 	quality early care and education settings.
2.1 		Subd. 2.Eligibility; allowance amount. A parent or legal guardian of a child 
2.2 	domiciled in this state who will be at least age three and has not reached the age of five on 
2.3 	August 31 is eligible to receive a prekindergarten education allowance of $200 for each 
2.4 	eligible child. In addition, the prekindergarten education allowance for each eligible child 
2.5 	must be increased according to the following:

2.6
2.7	Federal Adjusted Gross Income
	Additional Prekindergarten Allowance 
Amount
	
2.8	Under $10,000
	$3,800
	
2.9	$10,000 - $19,999
	$3,300
	
2.10	$20,000 - $29,999
	$2,800
	
2.11	$30,000 - $39,999
	$1,800
	
2.12	$40,000 - $49,999
	$800
	
2.13	$50,000 - $74,999
	$300
	
2.14	$75,000 - $99,999
	$0
	
2.15	$100,000 - $149,999
	$0
	
2.16	$150,000 - $249,999
	$0
	
2.17	$250,000 and over
	$0
	
2.18 	As used in this section, "federal adjusted gross income" means the federal adjusted 
2.19 	gross income as defined in section 62 of the Internal Revenue Code of 1986 of the parent 
2.20 	or legal guardian of the child who has physical custody of the child for more than half 
2.21 	the tax year. Federal adjusted gross income is calculated for the purposes of this section 
2.22 	as the tax year beginning two years before the year in which the eligible parent or legal 
2.23 	guardian is notified of the prekindergarten allowance. For the purposes of this section a 
2.24 	custodial parent's adjusted gross income includes the adjusted gross income of the parent's 
2.25 	spouse if the parent is considered to be married for income tax purposes under section 
2.26 	7703 of the Internal Revenue Code of 1986.
2.27 		Subd. 3.Commissioner of education duties. (a) The commissioner of education 
2.28 	shall review the data provided by the Department of Revenue under section 270C.135. 
2.29 	By January 31, 2008, and each subsequent year, the commissioner shall submit the 
2.30 	prekindergarten education allowance to each eligible recipient. The commissioner shall 
2.31 	notify the parent or legal guardian of an eligible child of the amount of the prekindergarten 
2.32 	education allowance available. Notification must include instructions on how to use the 
2.33 	allowance to obtain eligible services and a list of approved providers in the area.
2.34 	(b) The commissioner of education must align the data provided by the Department 
2.35 	of Revenue with the applications received according to subdivision 4 to ensure that 
2.36 	persons eligible to receive a prekindergarten education allowance are not counted more 
2.37 	than once. In the event that an eligible recipient is included in the Department of Revenue 
2.38 	data and the alternative process under subdivision 4, the commissioner shall use the 
3.1 	data from the Department of Revenue for the purposes of establishing prekindergarten 
3.2 	education allowance eligibility and amount.
3.3 	(c) The commissioner shall establish a process to transfer the prekindergarten 
3.4 	education allowance to recipients. The department may utilize technology to transfer the 
3.5 	prekindergarten education allowance through e-mail or other methods to reduce costs. 
3.6 	Recipients may not transfer allowances to another person.
3.7 	(d) Each prekindergarten education allowance shall have the monetary value stated 
3.8 	for each eligible child. The prekindergarten allowance may not be used to purchase 
3.9 	services until September 1 of the year in which the allowance is issued following its 
3.10 	transmission to eligible recipients. In the event that a recipient moves during the year in 
3.11 	which a prekindergarten education allowance is valid, the recipient may apply to the 
3.12 	department to split or divide the prekindergarten education allowance among two or 
3.13 	more providers.
3.14 	(e) The commissioner must review and approve work plan amendments from 
3.15 	federally designated Head Start grantees and school district programs that meet the 
3.16 	criteria in subdivision 8 and state the methods in which the grantees or programs will 
3.17 	expand or enhance services beyond levels that are funded through specific state or federal 
3.18 	appropriations for these purposes.
3.19 		Subd. 4.Alternative process. The commissioner of education, in conjunction with 
3.20 	the commissioner of human services, shall establish a method to locate potential recipients 
3.21 	who do not file income taxes and inform them of the availability of the prekindergarten 
3.22 	education allowance. For the purpose of establishing eligibility for the prekindergarten 
3.23 	education allowance, the commissioners of education and human services must accept 
3.24 	recipients identified in other public funding eligibility processes, including, but not 
3.25 	limited to, public school programs, Head Start, and child care assistance programs. In 
3.26 	addition, the commissioners of education and human services must make a sample form 
3.27 	available to providers that can be used to determine eligibility of potential recipients. The 
3.28 	commissioner must submit a prekindergarten education allowance to an eligible recipient 
3.29 	who used the alternative processes.
3.30 		Subd. 5.Redeeming an allowance. (a) A recipient who has received a 
3.31 	prekindergarten education allowance may transmit the allowance provided in subdivision 
3.32 	3 or subdivision 4 to pay for services provided to the recipient's eligible dependent child 
3.33 	from September 1 of that year through August 31 of the following year in an approved 
3.34 	early childhood education and care program or by an approved early childhood education 
3.35 	and care provider as defined in subdivision 8.
4.1 	(b) An eligible provider or program that has provided services under subdivision 
4.2 	7 to an eligible child whose parent or guardian received a prekindergarten education 
4.3 	allowance, must remit the allowance to the Department of Education in a manner 
4.4 	determined by the commissioner of education.
4.5 		Subd. 6.Payments to approved programs. The commissioner shall reimburse 
4.6 	providers or programs that received a prekindergarten education allowance from a 
4.7 	recipient on behalf of an eligible three- or four-year-old child on a reimbursement basis 
4.8 	for services provided from September 1 to August 31. An eligible provider that accepts 
4.9 	prekindergarten education allowance as a form of payment for services must maintain 
4.10 	documentation of services provided and the commissioner must verify information 
4.11 	submitted by eligible providers to ensure appropriate services were provided to eligible 
4.12 	recipients for whom the early childhood allowances were used as a form of payment. 
4.13 		Subd. 7.Use of allowance. The prekindergarten education allowance may only 
4.14 	be used for services designed to promote school readiness in an approved quality early 
4.15 	childhood care and education setting according to subdivision 8, that are provided to an 
4.16 	eligible child who is at least age three and has not yet reached age five on August 31 of 
4.17 	the year in which the allowance is issued.
4.18 		Subd. 8.Provider certification. (a) A quality early care and education setting is any 
4.19 	service or program that receives a quality rating from the Department of Human Services 
4.20 	under the Minnesota Early Learning Foundation quality rating system administered by 
4.21 	the Department of Human Services and agrees to accept a prekindergarten education 
4.22 	allowance to pay for services. For allowances issued in 2008 only, a provider may satisfy 
4.23 	the quality rating system requirements and be deemed eligible to participate in this 
4.24 	program if the provider has received a provisional quality rating system approved from 
4.25 	either the Department of Education or the Department of Human Services.
4.26 	(b) For the purposes of receiving a provisional quality rating, a child care program 
4.27 	or provider must be approved by the commissioner of human services and a school 
4.28 	district or a Head Start program must be approved by the commissioner of education. 
4.29 	Programs and providers must apply for approval in the form and manner prescribed by the 
4.30 	commissioners. To receive approval, the commissioners must determine that applicants:
4.31 	(1) use research-based curricula that are aligned with the education standards, 
4.32 	under section 120B.021, instruction and child assessment instruments approved by the 
4.33 	Departments of Education and Human Services, in consultation with the Minnesota Early 
4.34 	Learning Foundation;
4.35 	(2) provide a program of sufficient intensity and duration to improve the school 
4.36 	readiness of participating children;
5.1 	(3) provide opportunities for parent involvement; and 
5.2 	(4) meet other research-based criteria determined necessary by the commissioners.
5.3 	(c) Notwithstanding paragraph (b), for allowances issued in 2008 only, Head Start 
5.4 	programs meeting Head Start performance standards and accredited child care centers 
5.5 	are granted a provisional quality rating for the purposes of receiving a prekindergarten 
5.6 	education allowance under this section.
5.7 	(d) A provider deemed eligible to receive a prekindergarten education allowance 
5.8 	under paragraphs (a) to (c) may use the allowance to enhance services above the current 
5.9 	quality levels, increase the duration of services provided, or expand the number of children 
5.10 	to whom services are provided beyond levels that are funded through specific state or 
5.11 	federal appropriations for these purposes.
5.12 	(e) For allowances issued in 2008 and 2009 only, when no quality program is 
5.13 	available, a recipient may direct the prekindergarten education allowance to a provider 
5.14 	or program for school readiness quality improvements that will make the provider or 
5.15 	program eligible for a quality rating according to the quality rating system. Allowable 
5.16 	expenditures that will increase the capacity of the provider or program to help children to 
5.17 	be ready for kindergarten include purchase of curricula and assessment tools, as described 
5.18 	in paragraph (b), clause (1), professional development and training on the area of curricula 
5.19 	and assessment tools, purchase of materials to improve the learning environment, and 
5.20 	other expenditures preapproved by the commissioner of human services for child care 
5.21 	providers and the commissioner of education for school district programs.
5.22 		Subd. 9.Allowance not income for purposes of other publicly funded programs.
 5.23 	Notwithstanding any law to the contrary, the prekindergarten education allowance issued 
5.24 	to the parent or guardian of an eligible child does not count as earned income for purposes 
5.25 	of the medical assistance, MinnesotaCare, MFIP, school readiness, Head Start, or child 
5.26 	care assistance programs.

5.27 	EFFECTIVE DATE. This section is effective July 1, 2007.

5.28 	Sec. 3. Minnesota Statutes 2006, section 126C.10, subdivision 2, is amended to read:
5.29 		Subd. 2.Basic revenue. The basic revenue for each district equals the formula 
5.30 	allowance times the adjusted marginal cost pupil units for the school year. The formula 
5.31 	allowance for fiscal year 2005 is $4,601. The formula allowance for fiscal year 2006 is 
5.32 	$4,783. The formula allowance for fiscal year 2007 and subsequent years is $4,974.
5.33 	The formula allowance for fiscal year 2008 is $5,074. The formula allowance for fiscal 
5.34 	year 2009 and subsequent years is $5,176.

6.1 	Sec. 4. Minnesota Statutes 2006, section 127A.45, subdivision 12, is amended to read:
6.2 		Subd. 12.Payment percentage for certain aids. (a) One hundred percent of the 
6.3 	aid for the current fiscal year must be paid for the following aids: reimbursement for 
6.4 	enrollment options transportation, according to sections 124D.03, subdivision 8, 124D.09, 
6.5 	subdivision 22, and 124D.10; school lunch aid, according to section 124D.111; and
6.6 	hearing impaired support services aid, according to section 124D.57; and prekindergarten 
6.7 	education allowance aid, according to section 124D.332.
6.8 	(b) One hundred percent of the aid for the current fiscal year, based on enrollment 
6.9 	in the previous year, must be paid for the first grade preparedness program according to 
6.10 	section 124D.081.

6.11 	Sec. 5. Minnesota Statutes 2006, section 270B.14, subdivision 1, is amended to read:
6.12 		Subdivision 1.Disclosure to commissioner of human services. (a) On the request 
6.13 	of the commissioner of human services, the commissioner shall disclose return information 
6.14 	regarding taxes imposed by chapter 290, and claims for refunds under chapter 290A, to 
6.15 	the extent provided in paragraph (b) and for the purposes set forth in paragraph (c).
6.16 	(b) Data that may be disclosed are limited to data relating to the identity, 
6.17 	whereabouts, employment, income, and property of a person owing or alleged to be owing 
6.18 	an obligation of child support.
6.19 	(c) The commissioner of human services may request data only for the purposes of 
6.20 	carrying out the child support enforcement program and to assist in the location of parents 
6.21 	who have, or appear to have, deserted their children. Data received may be used only 
6.22 	as set forth in section 256.978. 
6.23 	(d) The commissioner shall provide the records and information necessary to 
6.24 	administer the supplemental housing allowance to the commissioner of human services.
6.25 	(e) At the request of the commissioner of human services, the commissioner of 
6.26 	revenue shall electronically match the Social Security numbers and names of participants 
6.27 	in the telephone assistance plan operated under sections 237.69 to 237.711, with those of 
6.28 	property tax refund filers, and determine whether each participant's household income is 
6.29 	within the eligibility standards for the telephone assistance plan. 
6.30 	(f) The commissioner may provide records and information collected under sections 
6.31 	295.50 to 295.59 to the commissioner of human services for purposes of the Medicaid 
6.32 	Voluntary Contribution and Provider-Specific Tax Amendments of 1991, Public Law 
6.33 	102-234. Upon the written agreement by the United States Department of Health and 
6.34 	Human Services to maintain the confidentiality of the data, the commissioner may provide 
6.35 	records and information collected under sections 295.50 to 295.59 to the Centers for 
7.1 	Medicare and Medicaid Services section of the United States Department of Health and 
7.2 	Human Services for purposes of meeting federal reporting requirements. 
7.3 	(g) The commissioner may provide records and information to the commissioner of 
7.4 	human services as necessary to administer the early refund of refundable tax credits.
7.5 	(h) The commissioner may disclose information to the commissioner of human 
7.6 	services necessary to verify income for eligibility and premium payment under the 
7.7 	MinnesotaCare program, under section 256L.05, subdivision 2. 
7.8 	(i) The commissioner may disclose information to the commissioner of human 
7.9 	services necessary to verify whether applicants or recipients for the Minnesota family 
7.10 	investment program, general assistance, food support, and Minnesota supplemental aid 
7.11 	program have claimed refundable tax credits under chapter 290 and the property tax 
7.12 	refund under chapter 290A, and the amounts of the credits.
7.13 	(j) The commissioner may disclose information in the time and manner described in 
7.14 	section 270C.135 to the commissioner of human services to administer the prekindergarten 
7.15 	education allowance under section 124D.332.

7.16 	Sec. 6. Minnesota Statutes 2006, section 270B.14, is amended by adding a subdivision 
7.17 	to read:
7.18 		Subd. 19.Disclosure to Department of Education. The commissioner may 
7.19 	disclose information in the time and manner described in section 270C.135 to the 
7.20 	commissioner of education to administer the prekindergarten education allowance under 
7.21 	section 124D.332.

7.22 	Sec. 7. [270C.135] PREKINDERGARTEN EDUCATION ALLOWANCE 
7.23 	ELIGIBLE CLAIMANT DATA.
7.24 	By October 31, 2008, and each subsequent year, the commissioner must review 
7.25 	returns from the most recent year for which data are available and provide to the 
7.26 	commissioners of education and human services, the names, addresses, and amount 
7.27 	of prekindergarten education allowance due to each eligible claimant under section 
7.28 	124D.332.

7.29 	Sec. 8. ALLOWANCE PAYMENT SYSTEM RECOMMENDATION.
 7.30 	The commissioners of education and human services, in conjunction with 
7.31 	the Minnesota Early Learning Foundation and early childhood stakeholders, shall 
7.32 	work together to recommend necessary modifications for full implementation of the 
7.33 	prekindergarten education allowance finance system. The commissioners of education and 
8.1 	human services shall report to the legislature by January 15, 2008, any legislative changes 
8.2 	needed to improve the prekindergarten education allowance finance system.

8.3 	Sec. 9. 2007 DATA TRANSMISSION, DEPARTMENT OF REVENUE.
 8.4 	By December 15, 2007, the commissioner of revenue must review returns from 
8.5 	the most recent year for which data are available and provide to the commissioners of 
8.6 	education and human services, the names, addresses, and amount of the prekindergarten 
8.7 	education allowance due to each eligible claimant under Minnesota Statutes, section 
8.8 	124D.332.

8.9 	Sec. 10. APPROPRIATIONS; DEPARTMENT OF EDUCATION.
 8.10 		Subdivision 1.Department of Education. The sums indicated in this section are 
8.11 	appropriated from the general fund to the Department of Education. These appropriations 
8.12 	are added to any appropriations for the same purpose in 2007 S.F. No. 2095 for the fiscal 
8.13 	years indicated.
8.14 		Subd. 2.General education aid. For general education aid under Minnesota 
8.15 	Statutes, section 126C.13, subdivision 4:

8.16		$
	93,424,000
	.....
	2008
	
8.17		$
	199,294,000
	.....
	2009
	
8.18 	The 2008 appropriation includes $0 for fiscal year 2007 and $93,424,000 for fiscal 
8.19 	year 2008.
8.20 	The 2009 appropriation includes $9,800,000 for fiscal year 2008 and $189,494,000 
8.21 	for fiscal year 2009.
8.22 		Subd. 3.Nonpublic pupil aid. For nonpublic pupil education aid under Minnesota 
8.23 	Statutes, sections 123B.40 to 123B.43, and 123B.87:

8.24		$
	116,000
	.....
	2008
	
8.25		$
	243,000
	.....
	2009
	
8.26 	The 2008 appropriation includes $0 for fiscal year 2007 and $116,000 for fiscal 
8.27 	year 2008.
8.28 	The 2009 appropriation includes $14,000 for fiscal year 2008 and $229,000 for 
8.29 	fiscal year 2009.
8.30 		Subd. 4.Nonpublic pupil transportation. For nonpublic pupil transportation aid 
8.31 	under Minnesota Statutes, section 123B.92, subdivision 9:

9.1		$
	384,000
	.....
	2008
	
9.2		$
	801,000
	.....
	2009
	
9.3 	The 2008 appropriation includes $0 for fiscal year 2007 and $384,000 for fiscal 
9.4 	year 2008.
9.5 	The 2009 appropriation includes $44,000 for fiscal year 2008 and $757,000 for 
9.6 	fiscal year 2009.
9.7 		Subd. 5.Tribal contract schools. For tribal contract school aid under Minnesota 
9.8 	Statutes, section 124D.83:

9.9		$
	26,000
	.....
	2008
	
9.10		$
	55,000
	.....
	2009
	
9.11 	The 2008 appropriation includes $0 for fiscal year 2007 and $26,000 for fiscal 
9.12 	year 2008.
9.13 	The 2009 appropriation includes $3,000 for fiscal year 2008 and $52,000 for fiscal 
9.14 	year 2009.
9.15 		Subd. 6.Prekindergarten allowances. For the Prekindergarten Education Act 
9.16 	under Minnesota Statutes, sections 124D.332 and 270C.135:

9.17		$
	53,904,000
	.....
	2009
	
9.18 	If this appropriation is insufficient, the department shall prorate the allowance 
9.19 	reimbursements.
9.20 		Subd. 7.Department. For the administrative costs associated with the 
9.21 	Prekindergarten Education Act under Minnesota Statutes, sections 124D.332 and 
9.22 	270C.135:

9.23		$
	1,234,000
	.....
	2008
	
9.24		$
	867,000
	.....
	2009

9.25 	Sec. 11. APPROPRIATIONS; DEPARTMENT OF HUMAN SERVICES.
 9.26 		Subdivision 1.Department of Human Services. The sums indicated in this section 
9.27 	are appropriated from the general fund to the Department of Human Services. These 
9.28 	appropriations are added to any appropriations for the same purpose in 2007 S.F. No. 
9.29 	2171 for the fiscal years indicated.
9.30 		Subd. 2.Department. For the administrative costs associated with the 
9.31 	Prekindergarten Education Act under Minnesota Statutes, sections 124D.332 and 
9.32 	270C.135:

10.1		$
	206,000
	.....
	2008
	
10.2		$
	183,000
	.....
	2009

10.3 	ARTICLE 2
10.4 	HIGHER EDUCATION

10.5	Section 1.  SUMMARY OF APPROPRIATIONS.
 	
10.6 	The amounts shown in this section summarize direct appropriations, by fund, made 
10.7 	in this article.

10.8			2008
		2009
		Total
	
10.9	General
	$
	34,500,000
	$
	58,500,000
	$
	93,000,000

10.10
10.11
10.12	Sec. 2. BOARD OF TRUSTEES OF THE 
MINNESOTA STATE COLLEGES AND 
UNIVERSITIES
 	$
	18,050,000
	$
	33,350,000

						
10.13 	This appropriation is added to the 
10.14 	appropriation in 2007 S.F. No. 1989, article 
10.15 	1, section 4, and includes amounts for 
10.16 	inflation and to limit tuition increases.
10.17 	The legislature intends that the Board of 
10.18 	Trustees will not increase tuition more than 
10.19 	three percent in each year of the biennium at 
10.20 	all institutions in the system.
10.21 	The legislature is concerned that Minnesota's 
10.22 	ranking among the top five states in the nation 
10.23 	with the highest two-year college tuition is 
10.24 	a significant barrier to college access that 
10.25 	will eventually lead to workforce shortages 
10.26 	and economic development challenges. The 
10.27 	Board of Trustees is encouraged to explore 
10.28 	alternative tuition strategies to limit to less 
10.29 	than three percent the tuition increases at 
10.30 	community colleges, technical colleges, 
10.31 	and consolidated community and technical 
10.32 	colleges.

11.1
11.2	Sec. 3. BOARD OF REGENTS OF THE 
UNIVERSITY OF MINNESOTA
 	$
	 9,200,000
	$
	17,800,000

						
11.3 	This appropriation is added to the 
11.4 	appropriation in 2007 S.F. No. 1989, article 
11.5 	1, section 5.
11.6 	The Board of Regents of the University 
11.7 	of Minnesota is encouraged to implement 
11.8 	tuition increases that do not exceed five 
11.9 	percent in each year of the biennium.

11.10
11.11	Sec. 4. MINNESOTA OFFICE OF HIGHER 
EDUCATION
 	$
	7,250,000
	$
	7,350,000
	
11.12 	This appropriation is added to the 
11.13 	appropriation in 2007 S.F. No. 1989, article 
11.14 	1, section 3, and includes amounts to fund 
11.15 	the state grant program.

11.16 	Sec. 5. Minnesota Statutes 2006, section 136A.121, subdivision 5, is amended to read:
11.17 		Subd. 5.Grant stipends. The grant stipend shall be based on a sharing of 
11.18 	responsibility for covering the recognized cost of attendance by the applicant, the 
11.19 	applicant's family, and the government. The amount of a financial stipend must not 
11.20 	exceed a grant applicant's recognized cost of attendance, as defined in subdivision 6, after 
11.21 	deducting the following:
11.22 	(1) the assigned student responsibility of at least 4645 percent of the cost of 
11.23 	attending the institution of the applicant's choosing;
11.24 	(2) the assigned family responsibility as defined in section 136A.101; and 
11.25 	(3) the amount of a federal Pell grant award for which the grant applicant is eligible.
11.26 	The minimum financial stipend is $100 per academic year.