HF 4196

as introduced - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

A bill for an act
relating to education finance; modifying the school finance system; creating a
new education funding framework; amending Minnesota Statutes 2006, sections
123B.53, subdivision 5; 123B.57, subdivision 4; 123B.59, subdivision 1;
123B.591, subdivisions 2, 3; 124D.59, subdivision 2; 124D.65, subdivision
5; 125A.79, subdivision 7; 126C.01, by adding subdivisions; 126C.05,
subdivisions 3, 5, 6, 8, 16, 17; 126C.10, subdivisions 1, 2a, 3, 4, 6, 13, 18, by
adding subdivisions; 126C.13, subdivision 5; 126C.17, subdivision 1; 126C.20;
126C.40, subdivision 1; Minnesota Statutes 2007 Supplement, sections 125A.76,
subdivision 5; 126C.05, subdivision 1; 126C.10, subdivision 2; 126C.13,
subdivision 4; proposing coding for new law in Minnesota Statutes, chapters
123B; 126C; repealing Minnesota Statutes 2006, sections 126C.10, subdivisions
13a, 13b, 25, 26, 27, 28, 29, 30, 31, 31a, 31b, 32, 33, 35, 36; 126C.12; 127A.50;
Minnesota Statutes 2007 Supplement, sections 123B.54; 125A.76, subdivision 4;
125A.79, subdivision 6; 126C.10, subdivisions 2b, 24, 34; 126C.126.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2006, section 123B.53, subdivision 5, is amended to read:

Subd. 5.

Equalized debt service levy.

(a) The equalized debt service levy of a
district equals the sum of the first tier equalized debt service levy and the second tier
equalized debt service levy.

(b) A district's first tier equalized debt service levy equals the district's first tier debt
service equalization revenue times the lesser of one or the ratio of:

(1) the quotient derived by dividing the adjusted net tax capacity of the district for
the year before the year the levy is certified by the adjusted pupil units in the district for
the school year ending in the year prior to the year the levy is certified; to

(2) deleted text begin $3,200 deleted text end new text begin 100 percent of the statewide adjusted net tax capacity equalizing factor new text end .

(c) A district's second tier equalized debt service levy equals the district's second tier
debt service equalization revenue times the lesser of one or the ratio of:

(1) the quotient derived by dividing the adjusted net tax capacity of the district for
the year before the year the levy is certified by the adjusted pupil units in the district for
the school year ending in the year prior to the year the levy is certified; to

(2) deleted text begin $8,000 deleted text end new text begin 150 percent of the statewide adjusted net tax capacity equalizing factor new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2009 and later.
new text end

Sec. 2.

new text begin [123B.555] SCHOOL BOND AGRICULTURAL CREDIT.
new text end

new text begin Subdivision 1. new text end

new text begin Eligibility. new text end

new text begin All class 2 property under section 273.13, subdivision 23,
except for (1) property consisting of the house, garage, and immediately surrounding one
acre of land of an agricultural homestead, and (2) property classified under section 273.13,
subdivision 23, paragraph (b), clause (4), is eligible to receive the credit under this section.
new text end

new text begin Subd. 2. new text end

new text begin Credit amount. new text end

new text begin For each qualifying property, the school bond agricultural
credit is equal to 20 percent of the property's eligible net tax capacity multiplied by the
school debt tax rate determined under section 275.08, subdivision 1b.
new text end

new text begin Subd. 3. new text end

new text begin Credit reimbursements. new text end

new text begin The county auditor shall determine the tax
reductions allowed under this section within the county for each taxes payable year and
shall certify that amount to the commissioner of revenue as a part of the abstracts of tax
lists submitted under section 275.29. Any prior year adjustments shall also be certified on
the abstracts of tax lists. The commissioner shall review the certifications for accuracy,
and may make such changes as are deemed necessary, or return the certification to the
county auditor for correction. The credit under this section must be used to reduce the
school district net tax capacity-based property tax as provided in section 273.1393.
new text end

new text begin Subd. 4. new text end

new text begin Payment. new text end

new text begin The commissioner of revenue shall certify the total of the tax
reductions granted under this section for each taxes payable year within each school
district to the commissioner of education, who shall pay the reimbursement amounts to
each school district as provided in section 273.1392.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2009 and later.
new text end

Sec. 3.

Minnesota Statutes 2006, section 123B.57, subdivision 4, is amended to read:

Subd. 4.

Health and safety levy.

To receive health and safety revenue, a district may
levy an amount equal to the district's health and safety revenue as defined in subdivision 3
multiplied by the lesser of one, or the ratio of the quotient derived by dividing the adjusted
net tax capacity of the district for the year preceding the year the levy is certified by the
adjusted marginal cost pupil units in the district for the school year to which the levy is
attributable, to deleted text begin $2,935 deleted text end new text begin 100 percent of the statewide tax capacity equalizing factor new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2009 and later.
new text end

Sec. 4.

Minnesota Statutes 2006, section 123B.59, subdivision 1, is amended to read:

Subdivision 1.

To qualify.

deleted text begin (a) deleted text end An independent or special school district qualifies to
participate in the alternative facilities bonding and levy program if the district has:

(1) deleted text begin more than 66 students per grade;
deleted text end

deleted text begin (2) over 1,850,000 square feet of space and the average age of building space is 15
years or older or over 1,500,000 square feet and the average age of building space is
35 years or older;
deleted text end

deleted text begin (3) deleted text end insufficient funds from projected health and safety revenue and capital facilities
revenue to meet the requirements for deferred maintenance, to make accessibility
improvements, or to make fire, safety, or health repairs; and

deleted text begin (4) deleted text end new text begin (2) new text end a ten-year facility plan approved by the commissioner according to
subdivision 2.

deleted text begin (b) An independent or special school district not eligible to participate in the
alternative facilities bonding and levy program under paragraph (a) qualifies for limited
participation in the program if the district has:
deleted text end

deleted text begin (1) one or more health and safety projects with an estimated cost of $500,000 or
more per site that would qualify for health and safety revenue except for the project size
limitation in section 123B.57, subdivision 1, paragraph (b); and
deleted text end

deleted text begin (2) insufficient funds from capital facilities revenue to fund those projects.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2010
and later.
new text end

Sec. 5.

Minnesota Statutes 2006, section 123B.591, subdivision 2, is amended to read:

Subd. 2.

Deferred maintenance revenue.

The deferred maintenance revenue for an
eligible school district equals the product of deleted text begin $60 deleted text end new text begin $100 new text end times the adjusted marginal cost
pupil units for the school year times the lesser of one or the ratio of the district's average
age of building space to 35 years.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2010
and later.
new text end

Sec. 6.

Minnesota Statutes 2006, section 123B.591, subdivision 3, is amended to read:

Subd. 3.

Deferred maintenance levy.

To obtain deferred maintenance revenue for
fiscal year 2008 and later, a district may levy an amount not more than the product of its
deferred maintenance revenue for the fiscal year times the lesser of one or the ratio of its
adjusted net tax capacity per adjusted marginal cost pupil unit to deleted text begin $5,900 deleted text end new text begin 100 percent of
the statewide adjusted net tax capacity equalizing factor new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2009 and later.
new text end

Sec. 7.

Minnesota Statutes 2006, section 124D.59, subdivision 2, is amended to read:

Subd. 2.

Pupil of limited English proficiency.

(a) "Pupil of limited English
proficiency" means a pupil in kindergarten through grade 12 who meets the following
requirements:

(1) the pupil, as declared by a parent or guardian first learned a language other than
English, comes from a home where the language usually spoken is other than English, or
usually speaks a language other than English; and

(2) the pupil is determined by developmentally appropriate measures, which might
include observations, teacher judgment, parent recommendations, or developmentally
appropriate assessment instruments, to lack the necessary English skills to participate
fully in classes taught in English.

(b) Notwithstanding paragraph (a), a pupil in grades 4 through 12 who was enrolled
in a Minnesota public school on the dates during the previous school year when a
commissioner provided assessment that measures the pupil's emerging academic English
was administered, shall not be counted as a pupil of limited English proficiency in
calculating limited English proficiency pupil units under section 126C.05, subdivision
17, and shall not generate state limited English proficiency aid under section 124D.65,
subdivision 5, unless the pupil scored below the state cutoff score on an assessment
measuring emerging academic English provided by the commissioner during the previous
school year.

(c) Notwithstanding paragraphs (a) and (b), a pupil in kindergarten through grade 12
shall not be counted as a pupil of limited English proficiency in calculating limited English
proficiency pupil units under section 126C.05, subdivision 17, and shall not generate state
limited English proficiency aid under section 124D.65, subdivision 5, if deleted text begin : deleted text end

deleted text begin (1) deleted text end the pupil is not enrolled during the current fiscal year in an educational program
for pupils of limited English proficiency in accordance with sections 124D.58 to 124D.64 deleted text begin ;
or deleted text end

deleted text begin (2) the pupil has generated five or more years of average daily membership in
Minnesota public schools since July 1, 1996 deleted text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2010
and later.
new text end

Sec. 8.

Minnesota Statutes 2006, section 124D.65, subdivision 5, is amended to read:

Subd. 5.

School district LEP revenue.

(a) A district's limited English proficiency
programs revenue equals the product of new text begin : new text end (1) deleted text begin $700 in fiscal year 2004 and later times deleted text end new text begin .2; new text end
(2) new text begin the basic formula allowance for that year; and (3) new text end the greater of 20 or the adjusted
marginal cost average daily membership of eligible pupils of limited English proficiency
enrolled in the district during the current fiscal year.

(b) A pupil ceases to generate state limited English proficiency aid in the school
year following the school year in which the pupil attains the state cutoff score on a
commissioner-provided assessment that measures the pupil's emerging academic English.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2010
and later.
new text end

Sec. 9.

Minnesota Statutes 2007 Supplement, section 125A.76, subdivision 5, is
amended to read:

Subd. 5.

School district special education aid.

A school district's special education
aid deleted text begin for fiscal year 2008 and later deleted text end equals deleted text begin the state total special education aid times the ratio
of the district's deleted text end new text begin its new text end initial special education aid deleted text begin to the state total initial special education aid deleted text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2010
and later.
new text end

Sec. 10.

Minnesota Statutes 2006, section 125A.79, subdivision 7, is amended to read:

Subd. 7.

District special education excess cost aid.

A district's special education
excess cost aid deleted text begin for fiscal year deleted text end deleted text begin 2002 and later deleted text end equals deleted text begin the state total special education excess
cost aid times the ratio of the district's deleted text end new text begin its new text end initial excess cost aid deleted text begin to the state total initial
excess cost aid deleted text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2010
and later.
new text end

Sec. 11.

Minnesota Statutes 2006, section 126C.01, is amended by adding a subdivision
to read:

new text begin Subd. 2a. new text end

new text begin Adjusted net tax capacity equalizing factor. new text end

new text begin The adjusted net tax
capacity equalizing factor equals the quotient derived by dividing the total adjusted net
tax capacity of all school districts in the state for the year before the year the levy is
certified by the total number of adjusted marginal cost pupil units in the state for the
current school year.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2009 and later.
new text end

Sec. 12.

Minnesota Statutes 2006, section 126C.01, is amended by adding a
subdivision to read:

new text begin Subd. 12. new text end

new text begin Location equity index. new text end

new text begin (a) A school district's wage equity index equals
each district's composite wage level divided by the statewide average wage for the same
period. The composite wage level for a school district equals the sum of 80 percent of the
district's county wage level and 20 percent of the district's economic development region
composite wage level. The composite wage level is computed by using the most recent
three-year weighted wage data with the coefficient weights set at 0.83 for the most recent
year, 0.33 for the prior year, and -0.16 for the second prior year.
new text end

new text begin (b) a school district's housing equity index equals the ratio of each district's county
median home value to the statewide median home value.
new text end

new text begin (c) a school district's location equity index equals the greater of one, or the sum of
(i) 0.65 times the district's wage equity index, and (ii) 0.35 times the district's housing
equity index.
new text end

new text begin (d) The commissioner of education annually must recalculate the indexes in this
section. For purposes of this subdivision, the commissioner must locate a school district
with boundaries that cross county borders in the county that generates the highest location
equity index for that district.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2010
and later.
new text end

Sec. 13.

Minnesota Statutes 2007 Supplement, section 126C.05, subdivision 1, is
amended to read:

Subdivision 1.

Pupil unit.

Pupil units for each Minnesota resident pupil under the
age of 21 or who meets the requirements of section 120A.20, subdivision 1, paragraph (c),
in average daily membership enrolled in the district of residence, in another district under
sections 123A.05 to 123A.08, 124D.03, 124D.08, or 124D.68; in a charter school under
section 124D.10; or for whom the resident district pays tuition under section 123A.18,
123A.22, 123A.30, 123A.32, 123A.44, 123A.488, 123B.88, subdivision 4, 124D.04,
124D.05, 125A.03 to 125A.24, 125A.51, or 125A.65, shall be counted according to this
subdivision.

(a) A prekindergarten pupil with a disability who is enrolled in a program approved
by the commissioner and has an individual education plan is counted as the ratio of the
number of hours of assessment and education service to 825 times 1.25 with a minimum
average daily membership of 0.28, but not more than 1.25 pupil units.

(b) A prekindergarten pupil who is assessed but determined not to be disabled is
counted as the ratio of the number of hours of assessment service to 825 times 1.25.

(c) A kindergarten pupil with a disability who is enrolled in a program approved
by the commissioner is counted as the ratio of the number of hours of assessment and
education services required in the fiscal year by the pupil's individual education program
plan to 875, but not more than one.

(d) A kindergarten pupil who is not included in paragraph (c) is counted as deleted text begin .612 deleted text end new text begin 1.0 new text end
pupil units.

(e) A pupil who is in any of grades 1 to 3 is counted as pupil units for
fiscal year 2000 and thereafter.

(f) A pupil who is any of grades 4 to 6 is counted as deleted text begin 1.06 deleted text end new text begin 1.0 new text end pupil units for fiscal
year 1995 and thereafter.

(g) A pupil who is in any of grades 7 to 12 is counted as pupil units.

(h) A pupil who is in the postsecondary enrollment options program is counted as
pupil units.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2010
and later.
new text end

Sec. 14.

Minnesota Statutes 2006, section 126C.05, subdivision 3, is amended to read:

Subd. 3.

Compensation revenue pupil units.

Compensation revenue pupil units
deleted text begin for fiscal year 1998 and thereafter deleted text end must be computed according to this subdivision.

(a) The compensation revenue concentration percentage for each deleted text begin building in a
deleted text end district equals the product of 100 times the ratio of:

(1) deleted text begin the sum of deleted text end the number of pupils enrolled in the deleted text begin building deleted text end new text begin district new text end eligible to
receive free deleted text begin lunch plus one-half of the pupils eligible to receive deleted text end new text begin or new text end reduced priced lunch on
October 1 of the previous fiscal year; to

(2) the number of pupils enrolled in the deleted text begin building deleted text end new text begin district new text end on October 1 of the
previous fiscal year.

(b) The compensation revenue pupil weighting factor deleted text begin for a building deleted text end equals the
deleted text begin lesser of one or the quotient obtained by dividing the building's deleted text end compensation revenue
concentration percentage deleted text begin by 80.0 deleted text end .

(c) The compensation revenue pupil units for a deleted text begin building deleted text end new text begin district new text end equals the product of:

(1) deleted text begin the sum of deleted text end the number of pupils enrolled in the deleted text begin building deleted text end new text begin district new text end eligible to
receive free deleted text begin lunch and one-half of the pupils eligible to receive deleted text end new text begin or new text end reduced priced lunch on
October 1 of the previous fiscal year; times

(2) the compensation revenue pupil weighting factor for the deleted text begin building; times
deleted text end

deleted text begin (3) .60 deleted text end new text begin district new text end .

(d) Notwithstanding paragraphs (a) to (c), for charter schools and contracted
alternative programs in the first year of operation, compensation revenue pupil units shall
be computed using data for the current fiscal year. If the charter school or contracted
alternative program begins operation after October 1, compensatory revenue pupil units
shall be computed based on pupils enrolled on an alternate date determined by the
commissioner, and the compensation revenue pupil units shall be prorated based on the
ratio of the number of days of student instruction to 170 days.

(e) The percentages in this subdivision must be based on the count of individual
pupils and not on a building average or minimum.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2010
and later.
new text end

Sec. 15.

Minnesota Statutes 2006, section 126C.05, subdivision 5, is amended to read:

Subd. 5.

Adjusted pupil units.

deleted text begin (a) deleted text end Adjusted pupil units for a district or charter
school means the sum of:

(1) the number of pupil units served, according to subdivision 7, plus

(2) pupil units according to subdivision 1 for whom the district or charter school
pays tuition under section 123A.18, 123A.22, 123A.30, 123A.32, 123A.44, 123A.488,
123B.88, subdivision 4, 124D.04, 124D.05, 125A.03 to 125A.24, 125A.51, or 125A.65,
minus

(3) pupil units according to subdivision 1 for whom the district or charter school
receives tuition under section 123A.18, 123A.22, 123A.30, 123A.32, 123A.44, 123A.488,
123B.88, subdivision 4, 124D.04, 124D.05, 125A.03 to 125A.24, 125A.51, or 125A.65.

deleted text begin (b) Adjusted marginal cost pupil units means the greater of:
deleted text end

deleted text begin (1) the sum of .77 times the pupil units defined in paragraph (a) for the current school
year and .23 times the pupil units defined in paragraph (a) for the previous school year; or
deleted text end

deleted text begin (2) the number of adjusted pupil units defined in paragraph (a) for the current school
year.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2010
and later.
new text end

Sec. 16.

Minnesota Statutes 2006, section 126C.05, subdivision 6, is amended to read:

Subd. 6.

Resident pupil units.

deleted text begin (a) deleted text end Resident pupil units for a district means the
number of pupil units according to subdivision 1 residing in the district.

deleted text begin (b) Resident marginal cost pupil units means the greater of:
deleted text end

deleted text begin (1) the sum of .77 times the pupil units defined in paragraph (a) for the current year
and .23 times the pupil units defined in paragraph (a) for the previous school year; or
deleted text end

deleted text begin (2) the number of resident pupil units defined in paragraph (a) for the current school
year.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2010
and later.
new text end

Sec. 17.

Minnesota Statutes 2006, section 126C.05, subdivision 8, is amended to read:

Subd. 8.

Average daily membership.

(a) Membership for pupils in grades
kindergarten through 12 and for prekindergarten pupils with disabilities shall mean the
number of pupils on the current roll of the school, counted from the date of entry until
withdrawal. The date of withdrawal shall mean the day the pupil permanently leaves
the school or the date it is officially known that the pupil has left or has been legally
excused. However, a pupil, regardless of age, who has been absent from school for 15
consecutive school days during the regular school year or for five consecutive school days
during summer school or intersession classes of flexible school year programs without
receiving instruction in the home or hospital shall be dropped from the roll and classified
as withdrawn. Nothing in this section shall be construed as waiving the compulsory
attendance provisions cited in section 120A.22. Average daily membership equals the
sum for all pupils of the number of days of the school year each pupil is enrolled in the
district's schools divided by the number of days the schools are in session. Days of
summer school or intersession classes of flexible school year programs are only included
in the computation of membership for pupils with a disability not appropriately served
primarily in the regular classroom. A student must not be counted as more than 1.2 pupils
in average daily membership under this section. When the initial total average daily
membership exceeds 1.2 for a pupil enrolled in more than one school district during the
fiscal year, each district's average daily membership must be reduced proportionately.

(b) A student must not be counted as more than one pupil in average daily
membership except for purposes of section 126C.10, subdivision 2a.

new text begin (c) For purposes of section 126C.10, subdivision 2a, only, a pupil's average daily
membership is counted as 1.0 once a kindergarten or elementary pupil has received 960
hours of instruction during the school year and as 1.0 once a secondary student has
received 1,050 hours of instruction during the school year.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2010
and later.
new text end

Sec. 18.

Minnesota Statutes 2006, section 126C.05, subdivision 16, is amended to read:

Subd. 16.

Free and reduced priced lunches.

The commissioner shall determine
the number of children eligible to receive either a free or reduced priced lunch on October
1 each year. Children enrolled deleted text begin in a building deleted text end on October 1 and determined to be eligible to
receive free or reduced price lunch by December 15 of that school year shall be counted
as eligible on October 1 for purposes of subdivision 3. The commissioner may use
federal definitions for these purposes and may adjust these definitions as appropriate.
The commissioner may adopt reporting guidelines to assure accuracy of data counts and
eligibility. Districts shall use any guidelines adopted by the commissioner.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2010
and later.
new text end

Sec. 19.

Minnesota Statutes 2006, section 126C.05, subdivision 17, is amended to read:

Subd. 17.

LEP pupil units.

(a) Limited English proficiency pupil units deleted text begin for fiscal
year 2004 and thereafter shall be determined according to this subdivision.
deleted text end

deleted text begin (b) The limited English proficiency concentration percentage for a district equals the
product of 100 times the ratio of:
deleted text end

deleted text begin (1) deleted text end new text begin means new text end the number of eligible pupils of limited English proficiency in average
daily membership enrolled in the district during the current fiscal year deleted text begin ; to
deleted text end

deleted text begin (2) the number of pupils in average daily membership enrolled in the district deleted text end .

deleted text begin (c) The limited English proficiency pupil units for each eligible pupil of limited
English proficiency in average daily membership equals the lesser of one or the quotient
obtained by dividing the limited English proficiency concentration percentage for the
pupil's district of enrollment by 11.5.
deleted text end

deleted text begin (d) deleted text end new text begin (b) new text end Limited English proficiency pupil units shall be counted by the district of
enrollment.

deleted text begin (e) deleted text end new text begin (c) new text end Notwithstanding paragraph deleted text begin (d) deleted text end new text begin (b) new text end , for the purposes of this subdivision,
pupils enrolled in a cooperative or intermediate school district shall be counted by the
district of residence.

deleted text begin (f) deleted text end new text begin (d) new text end For the purposes of this subdivision, the terms defined in section 124D.59
have the same meaning.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2010
and later.
new text end

Sec. 20.

new text begin [126C.09] EDUCATION FUNDING FRAMEWORK.
new text end

new text begin Subdivision 1. new text end

new text begin Basic formula framework; general classroom funding. new text end

new text begin The
general classroom funding for each school district equals the sum of the district's general
education basic revenue, extended time revenue, compensatory revenue, LEP revenue,
referendum replacement revenue, and special education revenue.
new text end

new text begin Subd. 2. new text end

new text begin District instructional services. new text end

new text begin A school district's instructional services
revenue equals the sum of its operating sparsity revenue, location equity revenue, and
declining enrollment revenue.
new text end

new text begin Subd. 3. new text end

new text begin District support services. new text end

new text begin A school district's support services revenue
equals the sum of its operating capital revenue, deferred maintenance revenue, health
and safety revenue, alternative facilities revenue, integration revenue, and transportation
revenue.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2010
and later.
new text end

Sec. 21.

Minnesota Statutes 2006, section 126C.10, subdivision 1, is amended to read:

Subdivision 1.

General education revenue.

new text begin (a) new text end For fiscal year 2006 deleted text begin and later deleted text end new text begin
through 2009 new text end , the general education revenue for each district equals the sum of the
district's basic revenue, extended time revenue, gifted and talented revenue, basic skills
revenue, training and experience revenue, secondary sparsity revenue, elementary sparsity
revenue, transportation sparsity revenue, total operating capital revenue, equity revenue,
alternative teacher compensation revenue, and transition revenue.

new text begin (b) For fiscal years 2010 and later, a school district's general education revenue
equals the sum of its basic revenue, extended time revenue, declining enrollment revenue,
basic skills revenue, location equity revenue, referendum replacement revenue, secondary
sparsity revenue, elementary sparsity revenue, transportation revenue, and total operating
capital revenue.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2010
and later.
new text end

Sec. 22.

Minnesota Statutes 2007 Supplement, section 126C.10, subdivision 2, is
amended to read:

Subd. 2.

Basic revenue.

new text begin (a) new text end The basic revenue for each district equals the formula
allowance times the adjusted deleted text begin marginal cost deleted text end pupil units for the school year.

new text begin (b) new text end The formula allowance for fiscal year 2007 is $4,974. The formula allowance for
fiscal year 2008 is $5,074 and the formula allowance for fiscal year 2009 deleted text begin and subsequent
years deleted text end is $5,124.

new text begin (c) The formula allowance for fiscal year 2010 is $7,500. The formula allowance
for fiscal year 2011 and later equals the formula allowance for the previous year times
the sum of 1 and the greater of zero or the ratio of implicit price deflator, as defined in
section 275.70, subdivision 2, for the most recent year to the implicit price deflator for
the previous year.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2010
and later.
new text end

Sec. 23.

Minnesota Statutes 2006, section 126C.10, subdivision 2a, is amended to read:

Subd. 2a.

Extended time revenue.

(a) A school district's extended time revenue
is equal to the product of deleted text begin $4,601 deleted text end new text begin the formula allowance for that year new text end and the sum of
the adjusted deleted text begin marginal cost deleted text end pupil units of the district for each pupil in average daily
membership in excess of 1.0 and less than 1.2 according to section 126C.05, subdivision 8.

(b) A school district's extended time revenue may be used for extended day
programs, extended week programs, summer school, and other programming authorized
under the learning year program.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2010
and later.
new text end

Sec. 24.

Minnesota Statutes 2006, section 126C.10, is amended by adding a
subdivision to read:

new text begin Subd. 2c. new text end

new text begin Declining enrollment revenue. new text end

new text begin A school district's declining enrollment
revenue equals the greater of zero or the product of: (1) the basic formula allowance for
that year; and (2) the difference between the mean average adjusted pupil units for the
three preceding years and the adjusted pupil units for the current year.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2010
and later.
new text end

Sec. 25.

Minnesota Statutes 2006, section 126C.10, is amended by adding a
subdivision to read:

new text begin Subd. 2d. new text end

new text begin Location equity revenue. new text end

new text begin A school district's location equity revenue
equals the product of:
new text end

new text begin (1) .50;
new text end

new text begin (2) the basic formula allowance for that year;
new text end

new text begin (3) the district's adjusted marginal cost pupil units for that year; and
new text end

new text begin (4) the district's location equity index minus one.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2010
and later.
new text end

Sec. 26.

Minnesota Statutes 2006, section 126C.10, is amended by adding a
subdivision to read:

new text begin Subd. 2e. new text end

new text begin Referendum replacement revenue. new text end

new text begin A school district's referendum
replacement revenue equals $500 times the district's adjusted pupil units for that year.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for fiscal year 2010 and later.
new text end

Sec. 27.

Minnesota Statutes 2006, section 126C.10, subdivision 3, is amended to read:

Subd. 3.

Compensatory education revenue.

(a) The compensatory education
revenue for each deleted text begin building in the deleted text end district equals new text begin the greater of: (1) $2,500 times the district's
enrollment of students eligible for free or reduced price meals under section 126C.05,
subdivision 3, paragraph (a), clause (1); or (2) 40 percent of new text end the formula allowance deleted text begin minus
$415 deleted text end times the compensation revenue pupil units computed according to section 126C.05,
subdivision 3. Revenue shall be paid to the district and must be allocated according to
section 126C.15, subdivision 2.

(b) When the district contracting with an alternative program under section 124D.69
changes prior to the start of a school year, the compensatory revenue generated by pupils
attending the program shall be paid to the district contracting with the alternative program
for the current school year, and shall not be paid to the district contracting with the
alternative program for the prior school year.

(c) When the fiscal agent district for an area learning center changes prior to the start
of a school year, the compensatory revenue shall be paid to the fiscal agent district for the
current school year, and shall not be paid to the fiscal agent district for the prior school year.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2010
and later.
new text end

Sec. 28.

Minnesota Statutes 2006, section 126C.10, subdivision 4, is amended to read:

Subd. 4.

Basic skills revenue.

A school district's basic skills revenue equals the
sum of:

(1) compensatory revenue under subdivision 3; plus

(2) limited English proficiency revenue under section 124D.65, subdivision 5 deleted text begin ; plus deleted text end

deleted text begin (3) $250 times the limited English proficiency pupil units under section 126C.05,
subdivision 17 deleted text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2010
and later.
new text end

Sec. 29.

Minnesota Statutes 2006, section 126C.10, subdivision 6, is amended to read:

Subd. 6.

Definitions.

The definitions in this subdivision apply only to subdivisions
7 and 8.

(a) "High school" means a public secondary school, except a charter school under
section 124D.10, that has pupils enrolled in at least the 10th, 11th, and 12th grades. If
there is no high school in the district and the school is at least deleted text begin 19 deleted text end new text begin 15 new text end miles from the next
nearest school, the commissioner must designate one school in the district as a high school
for the purposes of this section.

(b) "Secondary average daily membership" means, for a district that has only one
high school, the average daily membership of pupils served in grades 7 through 12. For a
district that has more than one high school, "secondary average daily membership" for
each high school means the product of the average daily membership of pupils served in
grades 7 through 12 in the high school, times the ratio of six to the number of grades
in the high school.

(c) "Attendance area" means the total surface area of the district, in square miles,
divided by the number of high schools in the district. For a district that does not operate
a high school and is less than 19 miles from the nearest operating high school, the
attendance area equals zero.

(d) "Isolation index" for a high school means the square root of 55 percent of the
attendance area plus the distance in miles, according to the usually traveled routes,
between the high school and the nearest high school. For a district in which there is located
land defined in section 84A.01, 84A.20, or 84A.31, the distance in miles is the sum of:

(1) the square root of one-half of the attendance area; and

(2) the distance from the border of the district to the nearest high school.

(e) "Qualifying high school" means a high school that has an isolation index greater
than 23 and that has secondary average daily membership of less than 400.

(f) "Qualifying elementary school" means a public elementary school, except a
charter school under section 124D.10, that is located 19 miles or more from the nearest
elementary school or from the nearest elementary school within the district and, in either
case, has an elementary average daily membership of an average of 20 or fewer per grade.

(g) "Elementary average daily membership" means, for a district that has only
one elementary school, the average daily membership of pupils served in kindergarten
through grade 6. For a district that has more than one elementary school, "average daily
membership" for each school means the average daily membership of pupils served in
kindergarten through grade 6 multiplied by the ratio of seven to the number of grades
in the elementary school.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2010
and later.
new text end

Sec. 30.

Minnesota Statutes 2006, section 126C.10, subdivision 13, is amended to read:

Subd. 13.

Total operating capital revenue.

(a) Total operating capital revenue for
a district equals the amount determined under paragraph (b) or (c), plus deleted text begin $73 deleted text end new text begin $100 new text end times
the adjusted deleted text begin marginal cost deleted text end pupil units for the school year. The revenue must be placed in a
reserved account in the general fund and may only be used according to subdivision 14.

(b) Capital revenue for a district equals $100 times the district's maintenance cost
index times its adjusted deleted text begin marginal cost deleted text end pupil units for the school year.

(c) The revenue for a district that operates a program under section 124D.128, is
increased by an amount equal to $30 times the number of deleted text begin marginal cost deleted text end new text begin adjusted new text end pupil
units served at the site where the program is implemented.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2010
and later.
new text end

Sec. 31.

Minnesota Statutes 2006, section 126C.10, subdivision 18, is amended to read:

Subd. 18.

Transportation sparsity revenue allowance.

deleted text begin (a) deleted text end A district's
transportation sparsity allowance equals the greater of zero or the result of the following
computation:

(i) Multiply the formula allowance according to subdivision 2, by .1469.

(ii) Multiply the result in clause (i) by the district's sparsity index raised to the
26/100 power.

(iii) Multiply the result in clause (ii) by the district's density index raised to the
13/100 power.

(iv) Multiply the formula allowance according to subdivision 2, by .0485.

(v) Subtract the result in clause (iv) from the result in clause (iii).

deleted text begin (b) Transportation sparsity revenue is equal to the transportation sparsity allowance
times the adjusted marginal cost pupil units.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for fiscal year 2010 and later.
new text end

Sec. 32.

Minnesota Statutes 2006, section 126C.10, is amended by adding a
subdivision to read:

new text begin Subd. 18a. new text end

new text begin Transportation revenue. new text end

new text begin (a) A school district's transportation revenue
equals the sum of its transportation sparsity revenue, hazardous transportation revenue,
and bus purchase revenue.
new text end

new text begin (b) A school district's transportation sparsity revenue equals its transportation
sparsity allowance times its adjusted pupil units for that year.
new text end

new text begin (c) A school district hazardous transportation aid equals the amount necessary to
provide transportation services to students facing hazardous transportation conditions. A
district's hazardous transportation aid must not exceed 20 percent of the district's total
regular to and from school transportation costs for that year. For any year, a school
district may receive aid under this paragraph only after the school board has considered
the comprehensive plan for hazardous transportation submitted by the district's pupil
transportation safety committee at a regularly scheduled meeting of the school board. The
comprehensive plan may not be adopted until after the board has allowed the public
reasonable time to testify on the plan.
new text end

new text begin (d) A school district's bus purchase revenue equals five percent of the district's
spending on transportation services for the previous fiscal year.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2010
and later.
new text end

Sec. 33.

new text begin [126C.115] INNOVATION REVENUE.
new text end

new text begin A school district must use its innovation revenue to incorporate peer-reviewed,
research-based measures and practices to improve academic performance. If a school
district's student growth in academic performance as measured by a growth-based,
value-added system is below the established progress levels, the district must file a plan
with the commissioner describing the district's proposed uses of its innovation revenue.
Once the plan has been approved, the district must spend its innovation revenue in
accordance with that plan.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2010
and later.
new text end

Sec. 34.

Minnesota Statutes 2007 Supplement, section 126C.13, subdivision 4, is
amended to read:

Subd. 4.

General education aid.

deleted text begin For fiscal years 2007 and later, deleted text end A district's general
education aid deleted text begin is the sum of the following amounts deleted text end new text begin equals its new text end :

(1) general education revenue deleted text begin , excluding equity revenue, total operating capital
revenue, alternative teacher compensation revenue, and transition revenue;
deleted text end

deleted text begin (2) operating capital aid under section 126C.10, subdivision 13b;
deleted text end

deleted text begin (3) equity aid under section 126C.10, subdivision 30;
deleted text end

deleted text begin (4) alternative teacher compensation aid under section 126C.10, subdivision 36;
deleted text end

deleted text begin (5) transition aid under section 126C.10, subdivision 33; deleted text end new text begin for that year;
new text end

deleted text begin (6) deleted text end new text begin (2) new text end shared time aid under section 126C.01, subdivision 7;

deleted text begin (7) deleted text end new text begin (3) new text end referendum aid under section 126C.17, subdivisions 7 and 7a; and

deleted text begin (8) deleted text end new text begin (4) new text end online learning aid according to section 124D.096.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2010
and later.
new text end

Sec. 35.

Minnesota Statutes 2006, section 126C.13, subdivision 5, is amended to read:

Subd. 5.

Uses of revenue.

deleted text begin Except as provided in sections 126C.10, subdivision
14; 126C.12; and 126C.15, deleted text end new text begin (a) new text end General education revenue may be used during the
regular school year and the summer for general and special school purposes new text begin and for
prekindergarten programs except as limited by paragraph (b) new text end .

new text begin (b) General education revenue set-asides include:
new text end

new text begin (1) 1.0 percent of basic revenue must be used only for gifted and talented activities
consistent with section 120B.15;
new text end

new text begin (2) 1.5 percent of basic revenue must be used only to implement a district's
innovative revenue program activities under section 126C.115;
new text end

new text begin (3) 0.5 percent of basic revenue must be spent for career and technical services in
the same manner as funds raised under section 124D.4531;
new text end

new text begin (4) basic skills revenue must be used according to section 126C.15; and
new text end

new text begin (5) operating capital revenue must be spent according to section 126C.10,
subdivision 14.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2010
and later.
new text end

Sec. 36.

Minnesota Statutes 2006, section 126C.17, subdivision 1, is amended to read:

Subdivision 1.

Referendum allowance.

deleted text begin (a) For fiscal year 2003 and later, a district's
initial referendum revenue allowance equals the sum of the allowance under section
126C.16, subdivision 2, plus any additional allowance per resident marginal cost pupil
unit authorized under subdivision 9 before May 1, 2001, for fiscal year 2002 and later,
plus the referendum conversion allowance approved under subdivision 13, minus $415.
For districts with more than one referendum authority, the reduction must be computed
separately for each authority. The reduction must be applied first to the referendum
conversion allowance and next to the authority with the earliest expiration date. A
district's initial referendum revenue allowance may not be less than zero.
deleted text end

deleted text begin (b) For fiscal year 2003, a district's referendum revenue allowance equals the initial
referendum allowance plus any additional allowance per resident marginal cost pupil unit
authorized under subdivision 9 between April 30, 2001, and December 30, 2001, for
fiscal year 2003 and later.
deleted text end

deleted text begin (c) For fiscal year 2004 and later, deleted text end A district's referendum revenue allowance equals
the sum of:

(1) the deleted text begin product of (i) the ratio of the resident marginal cost pupil units the district
would have counted for fiscal year 2004 under Minnesota Statutes 2002, section 126C.05,
to the district's resident marginal cost pupil units for fiscal year 2004, times (ii) the deleted text end new text begin greater
of zero or the district's new text end initial referendum allowance deleted text begin plus any additional allowance per
resident marginal cost pupil unit authorized under subdivision 9 between April 30, 2001,
and May 30, 2003, deleted text end for fiscal year deleted text begin 2003 and later deleted text end new text begin 2010 less $500 new text end , plus

(2) any additional allowance per resident deleted text begin marginal cost deleted text end pupil unit authorized under
subdivision 9 after May 30, deleted text begin 2003 deleted text end new text begin 2008 new text end , for fiscal year deleted text begin 2005 deleted text end new text begin 2010 new text end and later.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2010
and later.
new text end

Sec. 37.

Minnesota Statutes 2006, section 126C.20, is amended to read:

126C.20 ANNUAL GENERAL EDUCATION AID APPROPRIATION.

There is annually appropriated from the general fund to the department the deleted text begin amount deleted text end new text begin
amounts new text end necessary for new text begin : (1) new text end general education aid new text begin ; (2) special education aid; (3) debt
service aid; and (4) the school bond agricultural credit new text end . deleted text begin This amount deleted text end new text begin These amounts new text end must
be reduced by the amount of any money specifically appropriated for the same purpose
in any year from any state fund.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2010
and later.
new text end

Sec. 38.

Minnesota Statutes 2006, section 126C.40, subdivision 1, is amended to read:

Subdivision 1.

To lease building or land.

(a) When an independent or a special
school district or a group of independent or special school districts finds it economically
advantageous to rent or lease a building or land for any instructional deleted text begin purposes deleted text end new text begin or
administrative purpose, new text end or for school storage or furniture repair, and it determines that
the operating capital revenue authorized under section 126C.10, subdivision 13, is
insufficient for this purpose, it may apply to the commissioner for permission to make
an additional capital expenditure levy for this purpose. An application for permission to
levy under this subdivision must contain financial justification for the proposed levy, the
terms and conditions of the proposed lease, and a description of the space to be leased
and its proposed use.

(b) The criteria for approval of applications to levy under this subdivision must
include: the reasonableness of the price, the appropriateness of the space to the proposed
activity, the feasibility of transporting pupils to the leased building or land, conformity
of the lease to the laws and rules of the state of Minnesota, and the appropriateness of
the proposed lease to the space needs and the financial condition of the district. The
commissioner must not authorize a levy under this subdivision in an amount greater than
the cost to the district of renting or leasing a building or land for approved purposes.
The proceeds of this levy must not be used for custodial or other maintenance services.
A district may not levy under this subdivision for the purpose of leasing or renting a
district-owned building or site to itself.

(c) For agreements finalized after July 1, 1997, a district may not levy under this
subdivision for the purpose of leasing: (1) a newly constructed building used primarily
for regular kindergarten, elementary, or secondary instruction; or (2) a newly constructed
building addition or additions used primarily for regular kindergarten, elementary, or
secondary instruction that contains more than 20 percent of the square footage of the
previously existing building.

(d) Notwithstanding paragraph (b), a district may levy under this subdivision for the
purpose of leasing or renting a district-owned building or site to itself only if the amount
is needed by the district to make payments required by a lease purchase agreement,
installment purchase agreement, or other deferred payments agreement authorized by law,
and the levy meets the requirements of paragraph (c). A levy authorized for a district by
the commissioner under this paragraph may be in the amount needed by the district to
make payments required by a lease purchase agreement, installment purchase agreement,
or other deferred payments agreement authorized by law, provided that any agreement
include a provision giving the school districts the right to terminate the agreement
annually without penalty.

(e) The total levy under this subdivision for a district for any year must not exceed
deleted text begin $100 deleted text end new text begin $150 new text end times the resident pupil units for the fiscal year to which the levy is attributable.

(f) For agreements for which a review and comment have been submitted to the
Department of Education after April 1, 1998, the term "instructional purpose" as used in
this subdivision excludes expenditures on stadiums.

(g) The commissioner of education may authorize a school district to exceed the
limit in paragraph (e) if the school district petitions the commissioner for approval. The
commissioner shall grant approval to a school district to exceed the limit in paragraph (e)
for not more than five years if the district meets the following criteria:

(1) the school district has been experiencing pupil enrollment growth in the
preceding five years;

(2) the purpose of the increased levy is in the long-term public interest;

(3) the purpose of the increased levy promotes colocation of government services;
and

(4) the purpose of the increased levy is in the long-term interest of the district by
avoiding over construction of school facilities.

(h) A school district that is a member of an intermediate school district may include
in its authority under this section the costs associated with leases of administrative and
classroom space for intermediate school district programs. This authority must not
exceed deleted text begin $25 deleted text end new text begin $50 new text end times the adjusted marginal cost pupil units of the member districts. This
authority is in addition to any other authority authorized under this section.

(i) In addition to the allowable capital levies in paragraph (a), a district that is a
member of the "Technology and Information Education Systems" data processing joint
board, that finds it economically advantageous to enter into a lease purchase agreement for
a building for a group of school districts or special school districts for staff development
purposes, may levy for its portion of lease costs attributed to the district within the total
levy limit in paragraph (e).

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2010
and later.
new text end

Sec. 39. new text begin REVISOR'S INSTRUCTION.
new text end

new text begin In the next and subsequent editions of Minnesota Statutes, the Revisor of Statutes
shall change all references to "adjusted marginal cost pupil units" to "adjusted pupil units"
and all references to "resident marginal cost pupil units" to "resident pupil units."
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2009.
new text end

Sec. 40. new text begin REPEALER.
new text end

new text begin (a) new text end new text begin Minnesota Statutes 2006, sections 126C.10, subdivisions 13a, 13b, 25, 26, 27,
28, 29, 30, 31, 31a, 31b, 32, 33, 35, and 36; 126C.12; and 127A.50, new text end new text begin are repealed.
new text end

new text begin (b) new text end new text begin Minnesota Statutes 2007 Supplement, sections 123B.54; 125A.76, subdivision 4;
125A.79, subdivision 6; 126C.10, subdivisions 2b, 24, and 34; and 126C.126, new text end new text begin are repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2010.
new text end