SF 17

as introduced - 91st Legislature, 2020 2nd Special Session (2020 - 2020) Posted on 07/21/2020 09:03am

A bill for an act
relating to education finance; providing enhanced debt service equalization aid
for consolidating school districts facing unique circumstances; clarifying allowed
uses of long-term facilities maintenance revenue and capital levies; increasing
lease levy authority for school districts that are members of cooperative units;
modifying referendum equalization levy; authorizing Independent School District
No. 709, Duluth, to transfer levy authority from the long-term facilities maintenance
revenue program to the debt redemption fund; requiring a report; amending
Minnesota Statutes 2018, sections 123B.535; 123B.595, subdivision 3; 126C.40,
subdivision 1; Minnesota Statutes 2019 Supplement, section 126C.17, subdivision
6.

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

Section 1.

Minnesota Statutes 2018, section 123B.535, is amended to read:

123B.535 deleted text begin NATURAL DISASTER deleted text end new text begin ENHANCED new text end DEBT SERVICE
EQUALIZATION.

Subdivision 1.

Definitions new text begin ; eligibility new text end .

(a) For purposes of this section, the eligible
deleted text begin natural disaster deleted text end new text begin enhanced new text end debt service revenue of a district is defined as the amount needed
to produce between five and six percent in excess of the amount needed to meet when due
the principal and interest payments on the obligations of the district new text begin issued under paragraphs
(b) and (c) new text end that would otherwise qualify under section 123B.53 deleted text begin under the following
conditions: deleted text end new text begin .
new text end

new text begin (b) A district that has been negatively affected by a natural disaster qualifies for enhanced
debt service equalization under this section if:
new text end

(1) the district was impacted by a natural disaster event or area occurring January 1,
2005, or later, as declared by the President of the United States of America, which is eligible
for Federal Emergency Management Agency payments;

(2) the natural disaster caused $500,000 or more in damages to school district buildings;
and

(3) the repair and replacement costs are not covered by insurance payments or Federal
Emergency Management Agency payments.

new text begin (c) A district that consolidates on or after July 1, 2021, with an approved consolidation
plat and plan under section 123A.48, is eligible for enhanced debt service equalization under
this section if that plan identifies construction projects that have received a positive review
and comment.
new text end

deleted text begin (b) deleted text end new text begin (d) new text end For purposes of this section, 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
pupil units in the state for the year prior to the year the levy is certified.

deleted text begin (c) deleted text end new text begin (e) new text end For purposes of this section, the adjusted net tax capacity determined according
to sections 127A.48 and 273.1325 shall be adjusted to include the tax capacity of property
generally exempted from ad valorem taxes under section 272.02, subdivision 64.

Subd. 2.

Notification.

A district eligible for deleted text begin natural disaster deleted text end new text begin enhanced new text end debt service
equalization revenue under subdivision 1 must notify the commissioner of the amount of
its intended deleted text begin natural disaster deleted text end new text begin enhanced new text end debt service revenue calculated under subdivision 1
for all bonds sold prior to the notification by July 1 of the calendar year the levy is certified new text begin ,
or for a district newly consolidated as of July 1 of the calendar year, by September 30 of
the calendar year the levy is certified new text end .

Subd. 3.

deleted text begin Natural disaster deleted text end new text begin Enhanced new text end debt service equalization revenue.

The debt
service equalization revenue of a district equals the greater of zero or the eligible debt service
revenue, minus the greater of zero or the difference between:

(1) the amount raised by a levy of ten percent times the adjusted net tax capacity of the
district; and

(2) the district's eligible debt service revenue under section 123B.53.

Subd. 4.

Equalized deleted text begin natural disaster deleted text end new text begin enhanced new text end debt service levy.

A district's equalized
deleted text begin natural disaster deleted text end new text begin enhanced new text end debt service levy equals the district's deleted text begin natural disaster deleted text end new text begin enhanced new text end
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) 300 percent of the statewide adjusted net tax capacity equalizing factor.

Subd. 5.

deleted text begin Natural disaster deleted text end new text begin Enhanced new text end debt service equalization aid.

A district's deleted text begin natural
disaster deleted text end new text begin enhanced new text end debt service equalization aid equals the difference between the district's
deleted text begin natural disaster deleted text end new text begin enhanced new text end debt service equalization revenue and the district's equalized
deleted text begin natural disaster deleted text end new text begin enhanced new text end debt service levy.

Subd. 6.

deleted text begin Natural disaster deleted text end new text begin Enhanced new text end debt service equalization aid payment
schedule.

new text begin Enhanced new text end debt service equalization aid must be paid according to section 127A.45,
subdivision 10.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2020.
new text end

Sec. 2.

Minnesota Statutes 2018, section 123B.595, subdivision 3, is amended to read:

Subd. 3.

Intermediate districts and other cooperative units.

new text begin (a) new text end Upon approval through
the adoption of a resolution by each member district school board of an intermediate district
or other cooperative deleted text begin units deleted text end new text begin unit new text end under section 123A.24, subdivision 2, new text begin or a joint powers
district under section 471.59, new text end and the approval of the commissioner of education, a school
district may include in its authority under this section a proportionate share of the long-term
maintenance costs of the intermediate district deleted text begin or deleted text end new text begin , new text end cooperative unit new text begin , or joint powers district new text end .
The cooperative unit new text begin or joint powers district new text end may issue bonds to finance the project costs deleted text begin
or levy for the costs, using deleted text end new text begin . The cooperative unit or joint powers district may use new text end long-term
maintenance revenue transferred from member districts to new text begin :
new text end

new text begin (1) new text end make debt service payments deleted text begin or deleted text end new text begin ;
new text end

new text begin (2) new text end pay project costs deleted text begin . deleted text end new text begin ; or
new text end

new text begin (3) notwithstanding subdivision 11, clause (2), pay the portion of lease costs attributable
to the amortized cost of long-term facilities maintenance projects completed for leased
facilities by the landlord.
new text end

Authority under this subdivision is in addition to the authority for individual district projects
under subdivision 1.

new text begin (b) The resolution adopted under paragraph (a) may specify which member districts will
share the project costs under this subdivision, except that debt service payments for bonds
issued by a cooperative unit or joint powers district to finance long-term maintenance project
costs must be the responsibility of all member districts.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue in fiscal year 2021 and later.
new text end

Sec. 3.

Minnesota Statutes 2019 Supplement, section 126C.17, subdivision 6, is amended
to read:

Subd. 6.

Referendum equalization levy.

(a) A district's referendum equalization levy
equals the sum of the first tier referendum equalization levy and the second tier referendum
equalization levy.

(b) A district's first tier referendum equalization levy equals the district's first tier
referendum equalization revenue times the lesser of new text begin (1) new text end one deleted text begin or deleted text end new text begin , (2) new text end the ratio of the district's
referendum market value per resident pupil unit to deleted text begin $567,000 deleted text end new text begin $650,000, or (3) the ratio of
the district's referendum market value per adjusted pupil unit to $650,000 new text end .

(c) A district's second tier referendum equalization levy equals the district's second tier
referendum equalization revenue times the lesser of new text begin (1) new text end one deleted text begin or deleted text end new text begin , (2) new text end the ratio of the district's
referendum market value per resident pupil unit to deleted text begin $290,000 deleted text end new text begin $320,000, or (3) the ratio of
the district's referendum market value per adjusted pupil unit to $320,000 new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue in fiscal year 2022 and later.
new text end

Sec. 4.

Minnesota Statutes 2018, 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 purposes 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 $212
times the adjusted 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 new text begin or other
cooperative unit under section 123A.24, subdivision 2, or a joint powers district under
section 471.59 new text end may include in its authority under this section the costs associated with leases
of administrative and classroom space for deleted text begin intermediate school district deleted text end programs new text begin of the
intermediate school district or other cooperative unit under section 123A.24, subdivision
2, or joint powers district under section 471.59 new text end . This authority must not exceed $65 times
the adjusted pupil units of the member districts. This authority is in addition to any other
authority authorized under this section. new text begin The intermediate school district, other cooperative
unit, or joint powers district may specify which member districts will levy for lease costs
under this paragraph.
new text end

(i) In addition to the allowable capital levies in paragraph (a), for taxes payable in 2012
to 2023, 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
agreement to finance improvements to a building and land 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). The total levy
authority under this paragraph shall not exceed $632,000.

(j) Notwithstanding paragraph (a), a district may levy under this subdivision for the
purpose of leasing administrative space if the district can demonstrate to the satisfaction of
the commissioner that the lease cost for the administrative space is no greater than the lease
cost for instructional space that the district would otherwise lease. The commissioner must
deny this levy authority unless the district passes a resolution stating its intent to lease
instructional space under this section if the commissioner does not grant authority under
this paragraph. The resolution must also certify that the lease cost for administrative space
under this paragraph is no greater than the lease cost for the district's proposed instructional
lease.

new text begin (k) Notwithstanding paragraph (a), a district may levy under this subdivision for the
district's proportionate share of lease expenditures for a district-owned building or site leased
to a cooperative unit under section 123A.24, subdivision 2, or a joint powers district under
section 471.59. The authority under this paragraph is for buildings leased for any instructional
purposes or for school storage.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue in fiscal year 2021 and later.
new text end

Sec. 5. new text begin SCHOOL BUILDING EFFICIENCIES; DULUTH SCHOOL DISTRICT.
new text end

new text begin Subdivision 1. new text end

new text begin Plan. new text end

new text begin (a) Independent School District No. 709, Duluth, must develop a
plan to sell Historic Old Central High School to another party. The plan must document the
current operating costs of the facility, the expected maintenance costs for the facility over
the next 20 years, and describe the alternatives for the programs and staff currently located
at Historic Old Central High School.
new text end

new text begin (b) The plan must also document potential building projects, which may include:
new text end

new text begin (1) constructing or acquiring new administrative space;
new text end

new text begin (2) adding transportation maintenance and bus storage facilities;
new text end

new text begin (3) improving roads and infrastructure; and
new text end

new text begin (4) preparing sites for building or demolishing the Duluth Central High School facility
constructed in 1971.
new text end

new text begin (c) The plan must be submitted by the school board to the commissioner of education
after the hearing required in subdivision 2.
new text end

new text begin (d) The commissioner must examine the plan, and if the commissioner concludes that
the plan will yield financial, student, and staff efficiencies for the district, approve the plan.
new text end

new text begin Subd. 2. new text end

new text begin Public hearing. new text end

new text begin At least 30 days prior to submitting the projects listed in the
plan developed under subdivision 1 for review and comment, the school board must hold
a public hearing on the plan and the building projects. The school board must allow public
testimony on the proposal.
new text end

new text begin Subd. 3. new text end

new text begin Review and comment. new text end

new text begin The district must submit the projects included in the
plan to the commissioner of education for review and comment under Minnesota Statutes,
section 123B.71.
new text end

new text begin Subd. 4. new text end

new text begin Bond authorization. new text end

new text begin (a) Independent School District No. 709, Duluth, may
issue general obligation bonds in an amount not to exceed $31,500,000 under this section
to finance the school facility plan approved by the district and the commissioner of education
under subdivision 1. The district must comply with Minnesota Statutes, chapter 475, except
Minnesota Statutes, sections 475.58 and 475.59. The authority to issue bonds under this
section is in addition to any other bonding authority granted to the district.
new text end

new text begin (b) At least 20 days before the issuance of bonds or the final certification of levies under
this section, the district must publish notice of the intended projects, the amount of the bonds
to be issued, and the total amount of the district's debt.
new text end

new text begin (c) The debt service required by the bonds issued is debt service revenue under Minnesota
Statutes, section 123B.53.
new text end

new text begin Subd. 5. new text end

new text begin Long-term facilities maintenance revenue. new text end

new text begin The commissioner of education
must ensure that the district's long-term facilities maintenance plan under Minnesota Statutes,
section 123B.595, reflects the savings outlined in the plan developed in subdivision 1.
new text end

new text begin Subd. 6. new text end

new text begin Report. new text end

new text begin On February 15 of each even-numbered year, Independent School
District No. 709, Duluth, must submit a report on the outcomes and efficiencies achieved
under this section to the commissioner of education and to the chairs and ranking minority
members of the legislative committees having jurisdiction over education finance.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end