1.1                          A bill for an act 
  1.2             relating to education; expanding the alternative 
  1.3             facilities program; modifying the compensatory revenue 
  1.4             pupil units; increasing referendum equalization aid; 
  1.5             expanding the debt service equalization program; 
  1.6             amending Minnesota Statutes 1996, sections 124.95, 
  1.7             subdivision 1; and 124A.03, subdivision 1f; Minnesota 
  1.8             Statutes 1997 Supplement, sections 124.17, subdivision 
  1.9             1d; 124.239, subdivisions 5, 5a, and 5b; 124.95, 
  1.10            subdivision 2; and 124.961; proposing coding for new 
  1.11            law in Minnesota Statutes, chapter 124A. 
  1.12  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.13     Section 1.  Minnesota Statutes 1997 Supplement, section 
  1.14  124.17, subdivision 1d, is amended to read: 
  1.15     Subd. 1d.  [COMPENSATION REVENUE PUPIL UNITS.] Compensation 
  1.16  revenue pupil units for fiscal year 1998 1999 and thereafter 
  1.17  must be computed according to this subdivision.  
  1.18     (a) The compensation revenue concentration percentage for 
  1.19  each building in a district equals the product of 100 times the 
  1.20  ratio of:  
  1.21     (1) the sum of the number of pupils enrolled in the 
  1.22  building eligible to receive free lunch plus one-half of the 
  1.23  pupils eligible to receive reduced priced lunch on October 1 of 
  1.24  the previous fiscal year; to 
  1.25     (2) the number of pupils enrolled in the building on 
  1.26  October 1 of the previous fiscal year. 
  1.27     (b) The compensation revenue pupil weighting factor for a 
  1.28  building equals the lesser of one or the quotient obtained by 
  2.1   dividing the building's compensation revenue concentration 
  2.2   percentage by 80.0.  
  2.3      (c) The compensation revenue pupil units for a building 
  2.4   equals the product of:  
  2.5      (1) the sum of the number of pupils enrolled in the 
  2.6   building eligible to receive free lunch and one-half of the 
  2.7   pupils eligible to receive reduced priced lunch on October 1 of 
  2.8   the previous fiscal year times the equity adjustment factor; 
  2.9   times 
  2.10     (2) the compensation revenue pupil weighting factor for the 
  2.11  building times the equity adjustment factor; times 
  2.12     (3) .60. 
  2.13     (d) A district qualifies for the equity adjustment factor 
  2.14  if the district served more than 5,000 pupils eligible to 
  2.15  receive free or reduced price lunch during the previous fiscal 
  2.16  year and if the district's percentage of pupils eligible to 
  2.17  receive free or reduced price lunch during the previous fiscal 
  2.18  year is less than the statewide average percentage for that 
  2.19  year.  The equity adjustment factor equals the ratio of the 
  2.20  statewide percentage of pupils eligible to receive free or 
  2.21  reduced price lunch during the previous fiscal year to the 
  2.22  district's percentage of pupils eligible to receive free or 
  2.23  reduced price lunch. 
  2.24     (e) The percentages in this subdivision must be based on 
  2.25  the count of individual pupils and not on a building average or 
  2.26  minimum. 
  2.27     Sec. 2.  Minnesota Statutes 1997 Supplement, section 
  2.28  124.239, subdivision 5, is amended to read: 
  2.29     Subd. 5.  [LEVY AUTHORIZED.] A district, after local board 
  2.30  approval, may levy for costs related to an approved facility 
  2.31  plan as follows:  
  2.32     (a) if the district has indicated to the commissioner that 
  2.33  bonds will be issued, the district may levy for the principal 
  2.34  and interest payments on outstanding bonds issued according to 
  2.35  subdivision 3 after reduction for any alternative facilities aid 
  2.36  receivable under subdivision 5a; or and 
  3.1      (b) if the district has indicated to the commissioner that 
  3.2   the plan will be funded through levy, the district may levy 
  3.3   according to the schedule approved in the plan after reduction 
  3.4   for any alternative facilities aid receivable under subdivision 
  3.5   5a. 
  3.6      Sec. 3.  Minnesota Statutes 1997 Supplement, section 
  3.7   124.239, subdivision 5a, is amended to read: 
  3.8      Subd. 5a.  [ALTERNATIVE FACILITIES AID.] A district's 
  3.9   alternative facilities aid is the amount equal to the sum of the 
  3.10  district's annual debt service costs and the district's levy 
  3.11  according to the schedule approved in the plan, before reduction 
  3.12  for aid receivable under this section and section 124.95, 
  3.13  provided that the amount does not exceed the sum of the amount 
  3.14  certified to be levied for those purposes for taxes payable in 
  3.15  1997 and the amount of debt service equalization aid 
  3.16  attributable to the levy for those purposes for fiscal year 1998.
  3.17     Sec. 4.  Minnesota Statutes 1997 Supplement, section 
  3.18  124.239, subdivision 5b, is amended to read: 
  3.19     Subd. 5b.  [ALTERNATIVE FACILITIES APPROPRIATION.] (a) An 
  3.20  amount not to exceed $17,000,000 $25,657,000 is appropriated 
  3.21  from the general fund to the commissioner of children, families, 
  3.22  and learning for fiscal year 2000 and each year thereafter for 
  3.23  payment of alternative facilities aid under subdivision 5a.  The 
  3.24  2000 appropriation includes $1,700,000 for 1999 and 
  3.25  $15,300,000 $23,957,000 for 2000.  An amount not to exceed 
  3.26  $26,618,000 is appropriated from the general fund to the 
  3.27  commissioner of children, families, and learning for fiscal year 
  3.28  2001 and each year thereafter for payment of alternative 
  3.29  facilities aid under subdivision 5a.  The 2001 appropriation 
  3.30  includes $2,661,000 for 2000 and $23,957,000 for 2001. 
  3.31     (b) The appropriation in paragraph (a) must be reduced by 
  3.32  the amount of any money specifically appropriated for the same 
  3.33  purpose in any year from any state fund. 
  3.34     Sec. 5.  Minnesota Statutes 1996, section 124.95, 
  3.35  subdivision 1, is amended to read: 
  3.36     Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
  4.1   section, the eligible debt service revenue of a district is 
  4.2   defined as follows: 
  4.3      (1) the amount needed to produce between five and six 
  4.4   percent in excess of the amount needed to meet when due the 
  4.5   principal and interest payments on the obligations of the 
  4.6   district for eligible projects according to subdivision 2, 
  4.7   including the amounts necessary for repayment of energy loans 
  4.8   according to section 216C.37 or sections 298.292 to 298.298, 
  4.9   debt service loans and capital loans, lease purchase payments 
  4.10  under section 124.91, subdivisions 2 and 3, alternative 
  4.11  facilities levies under section 124.239, subdivision 5, lease 
  4.12  levies under section 124.91, subdivision 1, minus 
  4.13     (2) the amount of debt service excess levy reduction for 
  4.14  that school year calculated according to the procedure 
  4.15  established by the commissioner. 
  4.16     (b) The obligations in this paragraph are excluded from 
  4.17  eligible debt service revenue: 
  4.18     (1) obligations under section 124.2445; 
  4.19     (2) the part of debt service principal and interest paid 
  4.20  from the taconite environmental protection fund or northeast 
  4.21  Minnesota economic protection trust; 
  4.22     (3) obligations issued under Laws 1991, chapter 265, 
  4.23  article 5, section 18, as amended by Laws 1992, chapter 499, 
  4.24  article 5, section 24; and 
  4.25     (4) obligations under section 124.2455. 
  4.26     (c) For purposes of this section, if a preexisting school 
  4.27  district reorganized under section 122.22, 122.23, or 122.241 to 
  4.28  122.248 is solely responsible for retirement of the preexisting 
  4.29  district's bonded indebtedness, capital loans or debt service 
  4.30  loans, debt service equalization aid must be computed separately 
  4.31  for each of the preexisting school districts. 
  4.32     Sec. 6.  Minnesota Statutes 1997 Supplement, section 
  4.33  124.95, subdivision 2, is amended to read: 
  4.34     Subd. 2.  [ELIGIBILITY.] (a) The following portions of a 
  4.35  district's debt service levy qualify for debt service 
  4.36  equalization: 
  5.1      (1) debt service for repayment of principal and interest on 
  5.2   bonds issued before July 2, 1992; 
  5.3      (2) debt service for bonds refinanced after July 1, 1992, 
  5.4   if the bond schedule has been approved by the commissioner and, 
  5.5   if necessary, adjusted to reflect a 20-year maturity schedule; 
  5.6   and 
  5.7      (3) debt service for bonds issued after July 1, 1992, for 
  5.8   construction projects that have received a positive review and 
  5.9   comment according to section 121.15, if the commissioner has 
  5.10  determined that the district has met the criteria under section 
  5.11  124.431, subdivision 2, and if the bond schedule has been 
  5.12  approved by the commissioner and, if necessary, adjusted to 
  5.13  reflect a 20-year maturity schedule; and 
  5.14     (4) lease levy amounts under section 124.91, subdivision 1. 
  5.15     (b) The criterion in section 124.431, subdivision 2, 
  5.16  paragraph (a), clause (2), shall be considered to have been met 
  5.17  if the district in the fiscal year in which the bonds are 
  5.18  authorized at an election conducted under chapter 475: 
  5.19     (i) if grades 9 through 12 are to be served by the 
  5.20  facility, and an average of at least 66 pupils per grade in 
  5.21  these grades are served; or 
  5.22     (ii) is eligible for elementary or secondary sparsity 
  5.23  revenue. 
  5.24     (c) The criterion in section 124.431, subdivision 2, 
  5.25  paragraph (a), clause (2), shall also be considered to have been 
  5.26  met if the construction project under review serves students in 
  5.27  kindergarten to grade 8.  Only the debt service levy for that 
  5.28  portion of the facility serving students in prekindergarten to 
  5.29  grade 8, as determined by the commissioner, shall be eligible 
  5.30  for debt service equalization under this paragraph. 
  5.31     (d) The criterion described in section 124.431, subdivision 
  5.32  2, paragraph (a), clause (9), does not apply to bonds authorized 
  5.33  by elections held before July 1, 1992. 
  5.34     (e) For the purpose of this subdivision the department 
  5.35  shall determine the eligibility for sparsity at the location of 
  5.36  the new facility, or the site of the new facility closest to the 
  6.1   nearest operating school if there is more than one new facility. 
  6.2      (f) Notwithstanding paragraphs (a) to (e), debt service for 
  6.3   repayment of principal and interest on bonds issued after July 
  6.4   1, 1997, does not qualify for debt service equalization aid 
  6.5   unless the primary purpose of the facility is to serve students 
  6.6   in kindergarten through grade 12. 
  6.7      Sec. 7.  Minnesota Statutes 1997 Supplement, section 
  6.8   124.961, is amended to read: 
  6.9      124.961 [DEBT SERVICE APPROPRIATION.] 
  6.10     (a) $35,480,000 in fiscal year 
  6.11  1998, $38,159,000 $41,093,000 in fiscal year 1999, and 
  6.12  $38,390,000 $40,316,000 in fiscal year 2000, $40,193,000 in 
  6.13  fiscal year 2001, and each year thereafter is appropriated from 
  6.14  the general fund to the commissioner of children, families, and 
  6.15  learning for payment of debt service equalization aid under 
  6.16  section 124.95.  The 2000 appropriation includes $3,842,000 for 
  6.17  1999 and $34,548,000 $36,474,000 for 2000. 
  6.18     (b) The appropriations in paragraph (a) must be reduced by 
  6.19  the amount of any money specifically appropriated for the same 
  6.20  purpose in any year from any state fund. 
  6.21     Sec. 8.  Minnesota Statutes 1996, section 124A.03, 
  6.22  subdivision 1f, is amended to read: 
  6.23     Subd. 1f.  [REFERENDUM EQUALIZATION REVENUE.] A district's 
  6.24  referendum equalization revenue equals $315 $615 times the 
  6.25  district's actual pupil units for that year. 
  6.26     Referendum equalization revenue must not exceed a 
  6.27  district's total referendum revenue for that year. 
  6.28     Sec. 9.  [124A.32] [DISCRETIONARY REVENUE.] 
  6.29     Subdivision 1.  [PURPOSE.] Property wealth-based revenue 
  6.30  disparities in the Minnesota school finance system result in 
  6.31  disparities in the educational opportunities provided to 
  6.32  children in different school districts.  These disparities place 
  6.33  school children on an unequal footing dependent upon the 
  6.34  property wealth of their school districts in their pursuit of 
  6.35  higher education, job opportunities, and other competitive 
  6.36  aspects of adult life.  It is the purpose of the discretionary 
  7.1   equity levy and aid program to eliminate the significant 
  7.2   advantage higher wealth districts have over lower wealth 
  7.3   districts in areas of programs such as curriculum, summer 
  7.4   schools, advanced placement, gifted and talented, access to 
  7.5   computers, and extracurricular activities. 
  7.6      Subd. 2.  [DISCRETIONARY REVENUE.] A school district is 
  7.7   eligible for discretionary revenue if the school board annually 
  7.8   adopts a resolution to that effect by July 1 of the year in 
  7.9   which the discretionary levy is certified.  A school district's 
  7.10  discretionary revenue equals $315 times the district's pupil 
  7.11  units for that year if the district does not have referendum 
  7.12  revenue under section 124A.03.  If a district has referendum 
  7.13  revenue authority under section 124A.03, its discretionary 
  7.14  revenue is the result of the following calculation: 
  7.15     (1) subtract the district's referendum revenue computed 
  7.16  under section 124A.03, from the product of 25 percent of the 
  7.17  general education formula allowance for that year and the 
  7.18  district's pupil units for that year; 
  7.19     (2) divide the amount in clause (1) by the product of 25 
  7.20  percent of the general education formula allowance for that year 
  7.21  and the district's pupil units for that year; and 
  7.22     (3) multiply the amount in clause (2) by $315 times the 
  7.23  district's pupil units for that year. 
  7.24     A district's discretionary revenue cannot be less than zero.
  7.25     Subd. 3.  [DISCRETIONARY LEVY.] Discretionary levy equals 
  7.26  the discretionary revenue times the lesser of one or the ratio 
  7.27  of: 
  7.28     (1) adjusted net tax capacity divided by the number of 
  7.29  pupil units for the year the revenue is attributable, to 
  7.30     (2) $10,000. 
  7.31     Subd. 4.  [DISCRETIONARY AID.] Discretionary aid equals 
  7.32  discretionary revenue minus discretionary levy.  If a district 
  7.33  levies less than the authorized amount, the aid must be 
  7.34  proportionately reduced. 
  7.35     Sec. 10.  [EFFECTIVE DATE.] 
  7.36     Section 1 is effective July 1, 1998, for revenue for fiscal 
  8.1   year 1999 and later.