1.1                          A bill for an act 
  1.2             relating to education; providing for site-based 
  1.3             financing and site merit pay; appropriating money; 
  1.4             amending Minnesota Statutes 1996, section 124.175; 
  1.5             proposing coding for new law in Minnesota Statutes, 
  1.6             chapter 123; repealing Minnesota Statutes 1996, 
  1.7             section 123.951. 
  1.8   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.9      Section 1.  [123.952] [SITE-BASED FINANCING AND SITE MERIT 
  1.10  PAY.] 
  1.11     Subdivision 1.  [DEFINITION.] "Education site" means a 
  1.12  separate facility or program within a facility having a separate 
  1.13  management organization.  This also includes a site with which 
  1.14  the district has a contract as defined in section 123.35, 
  1.15  subdivision 1a. 
  1.16     Subd. 2.  [LEARNING SITE PERFORMANCE EXPECTATION 
  1.17  AGREEMENT.] (a) The school board in every district shall develop 
  1.18  a written learning site performance expectation agreement with 
  1.19  each education site for the purpose of setting learning 
  1.20  performance expectations for that site.  The agreement shall 
  1.21  include: 
  1.22     (1) the previous year baseline information at the site 
  1.23  regarding student achievement based on the graduation standards, 
  1.24  remediation needs, student attendance and behavior patterns, 
  1.25  retention rates, dropout rates where applicable, other 
  1.26  nationally normed standardized tests, and other student 
  2.1   performance indicators at the site; 
  2.2      (2) the expected levels of improvement in each area of 
  2.3   student performance during the next year; 
  2.4      (3) how student performance will be measured including 
  2.5   assessment procedures required by law and rule; 
  2.6      (4) other performance expectations and measures determined 
  2.7   by the board, including, but not limited to, increased parental 
  2.8   involvement in learning activities with students, community 
  2.9   involvement, or other areas; 
  2.10     (5) frequency of site reporting to the board; and 
  2.11     (6) how the performance results will be made available to 
  2.12  parents and to the public. 
  2.13     (b) The board and site shall determine the method of 
  2.14  developing the learning site performance expectations. 
  2.15     (c) The learning site performance expectation agreement 
  2.16  must be completed not later than July prior to the beginning of 
  2.17  the school year. 
  2.18     Subd. 3.  [SITE MERIT PAY.] (a) The school board in any 
  2.19  district may add a provision to the learning site performance 
  2.20  expectation agreement under subdivision 2 which includes the 
  2.21  awarding of additional revenue to the site if the site achieves 
  2.22  or exceeds the expected levels of improvement.  The decision as 
  2.23  to whether to implement a site merit pay system, the operation 
  2.24  of the system, and the determination as to which education sites 
  2.25  shall qualify for site merit pay shall be made solely at the 
  2.26  discretion of the board.  A determination by the board as to 
  2.27  whether to make an award to an education site and the amount of 
  2.28  the award shall be final.  If site merit pay is to be awarded, 
  2.29  the learning site performance expectation agreement shall 
  2.30  include the following provisions in addition to the provisions 
  2.31  of subdivision 2: 
  2.32     (1) the maximum amount of revenue for site merit pay to be 
  2.33  awarded that shall not be less than the revenue generated by the 
  2.34  site under paragraph (d); 
  2.35     (2) the criteria to be used in awarding the site merit pay 
  2.36  based on the learning site performance expectation agreement; 
  3.1      (3) the information necessary to determine the amount of 
  3.2   progress made; 
  3.3      (4) the timeline for making awards to the site; and 
  3.4      (5) other provisions determined by the board or the site. 
  3.5      (b) An education site that receives site merit pay has sole 
  3.6   discretion over the use of the revenue as long as it is used for 
  3.7   an educational purpose for that site.  This may include staff 
  3.8   development, technology, materials or equipment, or other such 
  3.9   educational purposes.  It may also be used for additional 
  3.10  employee compensation to which the employee would not be 
  3.11  entitled to under contract or board policy and shall not be a 
  3.12  mandatory subject of bargaining under chapter 179A or any other 
  3.13  law, and shall not be a term or condition of employment.  A 
  3.14  determination by the education site as to whether to make an 
  3.15  award to any individual or group of individuals and the amount 
  3.16  of any award shall be final and shall not be subject to review 
  3.17  by an arbitrator through any grievance or other process or by a 
  3.18  court through any appeal process. 
  3.19     (c) Districts entering into site merit pay agreements under 
  3.20  this subdivision shall inform the commissioner of this decision 
  3.21  not later than June 1 of the year preceding the effective school 
  3.22  year except that for the 1997-1998 school year, notice must be 
  3.23  submitted by November 1, 1997. 
  3.24     (d) Each school district that has established a site merit 
  3.25  pay program under this subdivision shall receive site merit pay 
  3.26  aid in the amount of $....... times the actual pupil units 
  3.27  enrolled at the sites with a site merit pay program.  The aid 
  3.28  may only be used to establish and operate a site merit pay award 
  3.29  program.  A district is not required to expend any specific 
  3.30  amount of aid in any year.  The district shall deposit the aid 
  3.31  in a separate account in the general fund.  
  3.32     Subd. 4.  [SITE-BASED FINANCING.] (a) Either the school 
  3.33  board or education site decision making team may determine if a 
  3.34  site is to operate under the provisions of this subdivision. 
  3.35     (b) If a site is to operate under this subdivision, the 
  3.36  school board shall enter into an agreement with an education 
  4.1   site decision making team which shall include: 
  4.2      (1) the specific governance, management, and program 
  4.3   responsibilities which will be under the control of the site and 
  4.4   those which will be retained by the district; 
  4.5      (2) the provisions of subdivision 2; 
  4.6      (3) the provisions of subdivision 3, if applicable; 
  4.7      (4) the membership of the education site decision making 
  4.8   team which shall include the principal or other person having 
  4.9   control and supervision of the education site; 
  4.10     (5) the amount of revenue that shall be allocated to the 
  4.11  site; 
  4.12     (6) the reporting from the site which is expected by the 
  4.13  board; 
  4.14     (7) the consequences which may be taken by the school board 
  4.15  if over a three-year period of time, the provisions of the 
  4.16  performance expectations agreement under subdivision 2 are not 
  4.17  satisfactorily met; and 
  4.18     (8) other provisions determined by the board. 
  4.19     (c) The agreement, at the option of the education site, may 
  4.20  include: 
  4.21     (1) a mechanism to implement flexible support systems for 
  4.22  improvement in student achievement of education outcomes and for 
  4.23  implementation of the graduation rule; 
  4.24     (2) a decision making structure that allows teachers to 
  4.25  identify instructional problems and control and apply the 
  4.26  resources needed to solve them; 
  4.27     (3) a mechanism to allow principals or other persons having 
  4.28  general control and supervision of the school, to make decisions 
  4.29  regarding how financial and personnel resources are best 
  4.30  allocated at the site and from whom goods or services are 
  4.31  purchased; 
  4.32     (4) a mechanism to implement parental involvement programs 
  4.33  under section 126.69 and to provide for effective parental 
  4.34  communication and feedback on this involvement at the site 
  4.35  level; 
  4.36     (5) a provision that allows the team to determine who is 
  5.1   hired into licensed and nonlicensed positions; 
  5.2      (6) a provision that allows direct contact with other 
  5.3   agency service providers; 
  5.4      (7) in-service training for site decision making team 
  5.5   members for financial management of school sites; and 
  5.6      (8) any other powers and duties determined appropriate by 
  5.7   an education site. 
  5.8   The school board of the district remains the legal employer 
  5.9   under clauses (5) and (6). 
  5.10     (d) Any powers or duties not delegated to the education 
  5.11  site management team in the site management agreement shall 
  5.12  remain with the school board. 
  5.13     (e) Approved agreements shall be filed with the 
  5.14  commissioner. 
  5.15     (f) Districts entering into site-based financing 
  5.16  agreements, whether at the district or site's request, under 
  5.17  this section shall inform the commissioner of this decision not 
  5.18  later than June 1 of the year preceding the effective school 
  5.19  year, except that for 1997-1998, notice must be submitted by 
  5.20  November 1, 1997. 
  5.21     Subd. 5.  [REVENUE AND COST ALLOCATION.] (a) Revenue for a 
  5.22  fiscal year received or receivable by the district shall be 
  5.23  allocated to education sites under subdivision 1 with a 
  5.24  site-based financing agreement under subdivision 4 according to 
  5.25  this subdivision.  Revenue shall remain allocated to each site 
  5.26  until used by the site.  The district remains responsible for 
  5.27  legally entering into contracts and expending funds. 
  5.28     (b) Except as provided in paragraph (c), not less than 80 
  5.29  percent of the general education and referendum revenue, 
  5.30  excluding total operating capital revenue under section 124A.22, 
  5.31  subdivision 10, and not less than 25 percent of the total 
  5.32  operating capital revenue under section 124A.22, subdivision 10, 
  5.33  shall be allocated to participating education sites in the 
  5.34  district.  The allocation shall be based on the number of pupil 
  5.35  units served at the site as a portion of total pupil units 
  5.36  served in the district. 
  6.1      (c) 100 percent of basic skills education revenue shall be 
  6.2   allocated to the education sites at which qualifying students 
  6.3   were enrolled as determined under sections 124.175, 124.273, and 
  6.4   124.3111.  Revenue received under sections 124.3201, 124.321, 
  6.5   and 124.323 shall be allocated to the sites where the costs are 
  6.6   incurred. 
  6.7      (d) The district must charge each participating site the 
  6.8   actual cost of teachers at the site by category, and actual 
  6.9   costs of goods and services attributable to the general fund, 
  6.10  excluding the reserves defined in section 124A.02, subdivision 
  6.11  25, and a proportionate share of costs attributable to the total 
  6.12  operating capital account incurred at the site. 
  6.13     (e) For the purposes of this subdivision, "allocation" 
  6.14  means that the determination of the use of the revenue shall be 
  6.15  under the control of the site. 
  6.16     (f) A district's site-based financing aid is equal to 
  6.17  $....... times the actual pupil units enrolled at sites 
  6.18  operating under subdivision 4.  If the school board determines 
  6.19  that a site shall be site-based financed, then at least 80 
  6.20  percent of this revenue shall be allocated to the school site 
  6.21  and the board may use the remaining 20 percent at its discretion 
  6.22  for learning improvement.  If a site petitions the board to be 
  6.23  site-based financed, 100 percent of the revenue under this 
  6.24  subdivision shall be allocated to the site. 
  6.25     Sec. 2.  Minnesota Statutes 1996, section 124.175, is 
  6.26  amended to read: 
  6.27     124.175 [AFDC PUPIL COUNT.] 
  6.28     Each year by March January 1, the department of human 
  6.29  services shall certify to the department of children, families, 
  6.30  and learning, for each school district, the number of pupils 
  6.31  from families receiving aid to families with dependent children 
  6.32  who were enrolled in a public school on October 1 of the 
  6.33  preceding year.  The department of children, families, and 
  6.34  learning shall certify to each school district the number of 
  6.35  pupils from families receiving aid to dependent children at each 
  6.36  site in the district by March 1 of each year. 
  7.1      Sec. 3.  [APPROPRIATIONS.] 
  7.2      Subdivision 1.  [DEPARTMENT OF CHILDREN, FAMILIES, AND 
  7.3   LEARNING.] The sums indicated in this section are appropriated 
  7.4   from the general fund to the department of children, families, 
  7.5   and learning for the fiscal years designated. 
  7.6      Subd. 2.  [SITE MERIT PAY AID.] For site merit pay aid 
  7.7   according to section 1: 
  7.8        $7,500,000     .....     1998 
  7.9        $8,333,000     .....     1999 
  7.10     The 1999 appropriation includes $833,000 for fiscal year 
  7.11  1998 and $7,500,000 for fiscal year 1999. 
  7.12     Subd. 3.  [SITE-BASED FINANCING AID.] For site-based 
  7.13  financing aid according to section 1: 
  7.14       $15,000,000     .....     1998 
  7.15       $16,667,000     .....     1999 
  7.16     The 1999 appropriation includes $1,667,000 for fiscal year 
  7.17  1998 and $15,000,000 for fiscal year 1999. 
  7.18     Sec. 4.  [REPEALER.] 
  7.19     Minnesota Statutes 1996, section 123.951, is repealed.