2001 Minnesota Statutes

CHAPTER 126C. Education funding

     126C.01 Definitions. 

    Subdivision 1.    Applicability.  For the purposes of 
 this chapter, the terms defined in section 120A.05 have the same 
 meanings.  For the purpose of this chapter, the following terms 
 have the meanings given them.  

    Subd. 2.    Adjusted net tax capacity.  "Adjusted net 
 tax capacity" means the net tax capacity of the taxable property 
 of the district as adjusted by the commissioner of revenue under 
 section 127A.48.  The adjusted net tax capacity for any given 
 calendar year must be used to compute levy limitations for 
 levies certified in the succeeding calendar year and aid for the 
 school year beginning in the second succeeding calendar year. 

    Subd. 3.    Referendum market value.  "Referendum market 
 value" means the market value of all taxable property, excluding 
 property classified as class 2, noncommercial 4c(1), or 4c(4) 
 under section 273.13.  The portion of class 2a property 
 consisting of the house, garage, and surrounding one acre of 
 land of an agricultural homestead is included in referendum 
 market value.  Any class of property, or any portion of a class 
 of property, that is included in the definition of referendum 
 market value and that has a class rate of less than one percent 
 under section 273.13 shall have a referendum market value equal 
 to its net tax capacity multiplied by 100. 

    Subd. 4.    Equalizing factor.  "Equalizing factor" 
 means the ratio, rounded to the nearest dollar, of the formula 
 allowance to the general education tax rate for the 
 corresponding year.  

    Subd. 5.    Levy use.  A levy "for use in a particular 
 school year," "attributable to a particular school year," or 
 "recognized as revenue in a particular school year," means the 
 levy certified in the calendar year ending in the school year 
 preceding that particular school year, and payable in the 
 calendar year in which that school year begins. 

    Subd. 6.    Shared time average daily membership.  The 
 average daily membership of a pupil enrolled on a shared time 
 basis equals the ratio of the total minutes for which the pupil 
 is enrolled and the minimum minutes required during the year for 
 a regularly enrolled public school pupil.  

    Subd. 7.    Shared time aid.  Aid for shared time pupils 
 must equal the formula allowance times the full-time equivalent 
 resident pupil units for shared time pupils.  Aid for shared 
 time pupils is in addition to any other aid to which the 
 district is otherwise entitled.  Shared time average daily 
 membership may not be used in the computation of pupil units 
 under section 126C.05, subdivision 1, for any purpose other than 
 the computation of shared time aid pursuant to subdivisions 6 to 
 8 and section 126C.19, subdivisions 1 to 3. 

    Subd. 8.    Shared time pupils.  "Shared time pupils" 
 means those pupils who attend public school programs for part of 
 the regular school day and who otherwise fulfill the 
 requirements of section 120A.22 by attendance at a nonpublic 
 school.  

    Subd. 9.    Training and experience index.  "Training 
 and experience index" means a measure of a district's teacher 
 training and experience relative to the education and experience 
 of teachers in the state.  The measure must be determined 
 pursuant to section 126C.11. 

    Subd. 10. Repealed, 1Sp2001 c 6 art 1 s 55 subd 1 

    Subd. 11.    Net unappropriated operating fund balance.  
 "Net unappropriated operating fund balance" means the sum of the 
 fund balances in the general, food service, and community 
 service funds minus the balances reserved for statutory 
 operating debt reduction, bus purchase, severance pay, taconite, 
 unemployment benefits, maintenance levy reduction, operating 
 capital, disabled access, health and safety, and encumbrances, 
 computed as of June 30 each year. 

    HIST: 1981 c 358 art 1 s 20,21,25,26; 1Sp1981 c 2 s 5; 3Sp1981 
 c 2 art 2 s 4,5,6; art 4 s 4; 1982 c 548 art 1 s 3,4,8; art 7 s 
 5; 1983 c 314 art 1 s 1,2,4,5,9,22; 1984 c 463 art 1 s 3,4,5; 
 1Sp1985 c 12 art 1 s 9-13; 1Sp1985 c 14 art 4 s 23,24; 1Sp1986 c 
 1 art 9 s 15,16; 1Sp1986 c 3 art 1 s 18; 1987 c 268 art 6 s 5; 
 art 7 s 12,13; 1987 c 398 art 1 s 4-7; 1988 c 486 s 46-48; 1988 
 c 719 art 5 s 4,5,84; 1989 c 209 art 2 s 1; 1989 c 329 art 13 s 
 20; 1Sp1989 c 1 art 2 s 11; 1991 c 265 art 1 s 8,9; 1994 c 488 s 
 8; 1994 c 647 art 1 s 13,14; 1Sp1995 c 3 art 13 s 6; 1996 c 412 
 art 1 s 13; 1998 c 397 art 7 s 125-131,164; art 11 s 3; 1999 c 
 107 s 66; 2000 c 343 s 4; 1Sp2001 c 5 art 2 s 8 

*   NOTE:  Subdivisions 9 and 10 (formerly section 124A.02, 
*subdivisions 23 and 24) are repealed effective June 30, 2004.  
*Laws 1992, chapter 499, article 7, section 31, as amended by 
*Laws 1998, chapter 398, article 1, section 39; Laws 1999, 
*chapter 241, article 1, section 54; and Laws 2000, chapter 489, 
*article 2, section 28.

     126C.05 Definition of pupil units. 

    Subdivision 1.    Pupil unit.  Pupil units for each 
 Minnesota resident pupil in average daily membership enrolled in 
 the district of residence, in another district under sections 
 123A.05 to 123A.08, 124D.03, 124D.06, 124D.07, 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 handicapped 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 .557 of a pupil unit for fiscal year 2000 and 
 thereafter. 

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

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

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

    (h) A pupil who is in the post-secondary enrollment options 
 program is counted as 1.3 pupil units.  

    Subd. 2.    Foreign exchange pupils.  Notwithstanding 
 section 124D.02, subdivision 3, or any other law to the 
 contrary, a foreign exchange pupil enrolled in a district under 
 a cultural exchange program may be counted as a resident pupil 
 for the purposes of this chapter and chapters 120B, 122A, 123A, 
 123B, 124D, 125A, and 127A, even if the pupil has graduated from 
 high school or the equivalent. 

    Subd. 3.    Compensation revenue pupil units.  
 Compensation revenue pupil units for fiscal year 1998 and 
 thereafter must be computed according to this subdivision.  

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

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

    (2) the number of pupils enrolled in the building on 
 October 1 of the previous fiscal year. 

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

    (c) The compensation revenue pupil units for a building 
 equals the product of:  

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

    (2) the compensation revenue pupil weighting factor for the 
 building; times 

    (3) .60. 

    (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. 

    Subd. 4. Repealed, 1999 c 159 s 154; 1999 c 241 art 1 s 
 69 

    Subd. 5.    Adjusted pupil units.  (a) 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. 

    (b) Adjusted marginal cost pupil units means the greater of:

    (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 

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

    Subd. 6.    Resident pupil units.  (a) Resident pupil 
 units for a district means the number of pupil units according 
 to subdivision 1 residing in the district. 

    (b) Resident marginal cost pupil units means the greater of:

    (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 

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

    Subd. 7.    Pupil units served.  Pupil units served for 
 a district or charter school means the number of pupil units 
 according to subdivision 1 enrolled in the district or charter 
 school. 

    Subd. 8.    Average daily membership.  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. 

    Subd. 9.    Transitional year pupils.  Notwithstanding 
 subdivision 8, pupils granted transitional year status shall 
 continue to be counted as members on the current roll of the 
 school for the remainder of the school year.  For purposes of 
 computing average daily membership, transitional year pupils 
 must be considered to be enrolled every day school is in session 
 for the remainder of the school year. 

    Subd. 10.    National guard pupils.  Notwithstanding 
 subdivision 8, pupils enrolled in the Minnesota National Guard 
 program shall be construed to be in attendance, for purposes of 
 computing average daily membership, during any period of the 
 regular school year, but not to include summer school, during 
 which the pupil is attending military active duty training 
 pursuant to that program.  During that period of military active 
 duty training, the pupil shall earn all aid for the district of 
 residence or attendance which would be otherwise earned by the 
 pupil's presence. 

    Subd. 11.    Average daily membership; justifiable cause; 
 strikes excluded.  Notwithstanding subdivision 8, in cases 
 when school is in session but pupils are prevented from 
 attending for more than 15 consecutive school days during the 
 regular school year or five consecutive school days during 
 summer school or intersession classes of flexible school year 
 programs, because of epidemic, calamity, weather, fuel shortage, 
 or other justifiable cause, the commissioner, upon application, 
 may allow the district to continue to count these pupils in 
 average daily membership.  A lawful employees' strike is not a 
 justifiable cause for purposes of this subdivision. 

    Subd. 12.    Average daily membership, pupils age 21 or 
 over.  The average daily membership for pupils age 21 or over 
 is equal to the ratio of the number of yearly hours that the 
 pupil is in membership to the number of instructional hours in 
 the district's regular school year.  A pupil enrolled in the 
 graduation incentives program under section 124D.68, subdivision 
 2, paragraph (b), for more than the number of instructional 
 hours in the district's regular school year may be counted as 
 more than one pupil in average daily membership. 

    Subd. 13.    PSEO pupils.  The average daily membership 
 for a pupil participating in the post-secondary enrollment 
 options program equals the lesser of 

    (a) 1.00, or 

    (b) the greater of 

    (1) .12, or 

    (2) the ratio of (i) the sum of the number of instructional 
 hours the pupil is enrolled in the secondary school during 
 quarters, trimesters, or semesters during which the pupil 
 participates in PSEO, and hours enrolled in the secondary school 
 during the remainder of the school year, to (ii) the actual 
 number of instructional days in the school year times the length 
 of day in the school. 

    Subd. 14.    Computing pupil units for a prior year.  In 
 computing pupil units for a prior year, the number of pupil 
 units shall be adjusted to reflect any change for the current 
 year in relative weightings by grade level or category of 
 special assistance, any change in measurement from average daily 
 attendance to average daily membership and any change in school 
 district boundaries, but not for the addition for the first time 
 in the current year of a specified category of special 
 assistance as provided in subdivision 1, clause (4). 

    Subd. 15.    Learning year pupil units.  (a) When a 
 pupil is enrolled in a learning year program under section 
 124D.128, an area learning center under sections 123A.05 and 
 123A.06, an alternative program approved by the commissioner, or 
 a contract alternative program under section 124D.68, 
 subdivision 3, paragraph (d), or subdivision 3a, for more than 
 1,020 hours in a school year for a secondary student, more than 
 935 hours in a school year for an elementary student, or more 
 than 425 hours in a school year for a kindergarten student 
 without a disability, that pupil may be counted as more than one 
 pupil in average daily membership.  The amount in excess of one 
 pupil must be determined by the ratio of the number of hours of 
 instruction provided to that pupil in excess of:  (i) the 
 greater of 1,020 hours or the number of hours required for a 
 full-time secondary pupil in the district to 1,020 for a 
 secondary pupil; (ii) the greater of 935 hours or the number of 
 hours required for a full-time elementary pupil in the district 
 to 935 for an elementary pupil in grades 1 through 6; and (iii) 
 the greater of 425 hours or the number of hours required for a 
 full-time kindergarten student without a disability in the 
 district to 425 for a kindergarten student without a 
 disability.  Hours that occur after the close of the 
 instructional year in June shall be attributable to the 
 following fiscal year.  A kindergarten student must not be 
 counted as more than 1.2 pupils in average daily membership 
 under this subdivision. 

    (b)(i) To receive general education revenue for a pupil in 
 an alternative program that has an independent study component, 
 a district must meet the requirements in this paragraph.  The 
 district must develop, for the pupil, a continual learning plan 
 consistent with section 124D.128, subdivision 3.  Each school 
 district that has a state-approved public alternative program 
 must reserve revenue in an amount equal to at least 90 percent 
 of the district average general education revenue per pupil unit 
 less compensatory revenue per pupil unit times the number of 
 pupil units generated by students attending a state-approved 
 public alternative program.  The amount of reserved revenue 
 available under this subdivision may only be spent for program 
 costs associated with the state-approved public alternative 
 program.  Compensatory revenue must be allocated according to 
 section 126C.15, subdivision 2. 

    (ii) General education revenue for a pupil in an approved 
 alternative program without an independent study component must 
 be prorated for a pupil participating for less than a full year, 
 or its equivalent.  The district must develop a continual 
 learning plan for the pupil, consistent with section 124D.128, 
 subdivision 3.  Each school district that has a state-approved 
 public alternative program must reserve revenue in an amount 
 equal to at least 90 percent of the district average general 
 education revenue per pupil unit less compensatory revenue per 
 pupil unit times the number of pupil units generated by students 
 attending a state-approved public alternative program.  The 
 amount of reserved revenue available under this subdivision may 
 only be spent for program costs associated with the 
 state-approved public alternative program.  Compensatory revenue 
 must be allocated according to section 126C.15, subdivision 2.  

    (iii) General education revenue for a pupil in an approved 
 alternative program that has an independent study component must 
 be paid for each hour of teacher contact time and each hour of 
 independent study time completed toward a credit or graduation 
 standards necessary for graduation.  Average daily membership 
 for a pupil shall equal the number of hours of teacher contact 
 time and independent study time divided by 1,020. 

    (iv) For an alternative program having an independent study 
 component, the commissioner shall require a description of the 
 courses in the program, the kinds of independent study involved, 
 the expected learning outcomes of the courses, and the means of 
 measuring student performance against the expected outcomes.  

    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 in a building on October 1 and 
 determined to be eligible to receive free or reduced price lunch 
 by January 15 of the following 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. 

    Subd. 17.    LEP pupil units.  (a) Limited English 
 proficiency pupil units for fiscal year 1998 and thereafter 
 shall be determined according to this subdivision. 

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

    (1) the number of pupils of limited English proficiency 
 enrolled in the district during the current fiscal year; to 

    (2) the number of pupils in average daily membership 
 enrolled in the district. 

    (c) The limited English proficiency pupil units for each 
 pupil enrolled in a program for pupils of limited English 
 proficiency in accordance with sections 124D.58 to 124D.64 
 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. 

    (d) Limited English proficiency pupil units shall be 
 counted by the district of enrollment. 

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

    Subd. 18.    Pupil adjustment for closed charter schools 
 and contracted alternative programs.  For a charter school or 
 contracted alternative program operating during the prior school 
 year but ceasing operations before the end of the current school 
 year, prior year pupil data used in computing revenues for the 
 current school year shall be prorated based on the number of 
 days of student instruction in the current school year to 170. 

    HIST: Ex1959 c 71 art 5 s 17; Ex1961 c 77 s 1; 1969 c 736 s 1; 
 1969 c 1085 s 3; 1971 c 829 s 1; Ex1971 c 31 art 20 s 2; 1973 c 
 683 s 4; 1974 c 521 s 18-20; 1975 c 432 s 21,22; 1976 c 2 s 59; 
 1976 c 271 s 42,43; 1977 c 447 art 1 s 4-6; 1978 c 764 s 40-43; 
 1979 c 50 s 13; 1979 c 334 art 1 s 5; 1981 c 358 art 1 s 13-16; 
 1982 c 548 art 3 s 6; 1983 c 314 art 3 s 2; 1985 c 248 s 69; 
 1Sp1985 c 12 art 1 s 5,6; 1986 c 444; 1Sp1986 c 1 art 9 s 2; 
 1987 c 398 art 1 s 2; art 3 s 16; 1988 c 486 s 24,25; 1988 c 718 
 art 3 s 2; art 6 s 6; 1989 c 209 art 2 s 1; 1990 c 562 art 1 s 
 1; 1991 c 130 s 37; 1991 c 265 art 1 s 4-7; art 3 s 38; art 9 s 
 42; 1992 c 499 art 12 s 29; 1993 c 224 art 1 s 2; art 9 s 28,29; 
 art 13 s 35; 1994 c 647 art 1 s 6; art 9 s 7; 1995 c 212 art 4 s 
 64; 1Sp1995 c 3 art 1 s 8-11; art 14 s 4; 1996 c 412 art 1 s 
 7,8,35; art 4 s 6; art 14 s 2; 1997 c 1 s 3; 1997 c 162 art 2 s 
 15; 1Sp1997 c 4 art 1 s 12-14; art 2 s 3; 1998 c 397 art 7 s 
 21-28,164; art 11 s 3; 1998 c 398 art 1 s 6-8; art 2 s 24; 1999 
 c 241 art 1 s 8-12,55; 2000 c 489 art 2 s 12,13; 1Sp2001 c 6 art 
 1 s 14; art 2 s 56,57 

  126C.052 Renumbered 126C.125 

  126C.06 Repealed, 1999 c 159 s 154;1999 c 241 art 1 s 69 

     126C.10 General education revenue. 

    Subdivision 1.    General education revenue.  (a) For 
 fiscal year 2002, the general education revenue for each 
 district equals the sum of the district's basic revenue, basic 
 skills revenue, training and experience revenue, secondary 
 sparsity revenue, elementary sparsity revenue, transportation 
 sparsity revenue, total operating capital revenue, equity 
 revenue, transition revenue, and supplemental revenue. 

    (b) For fiscal year 2003 and later, the general education 
 revenue for each district equals the sum of the district's basic 
 revenue, basic skills revenue, training and experience revenue, 
 secondary sparsity revenue, elementary sparsity revenue, 
 transportation sparsity revenue, total operating capital 
 revenue, and equity revenue. 

    Subd. 2.    Basic revenue.  The basic revenue for each 
 district equals the formula allowance times the adjusted 
 marginal cost pupil units for the school year.  The formula 
 allowance for fiscal year 2001 is $3,964.  The formula allowance 
 for fiscal year 2002 is $4,068.  The formula allowance for 
 fiscal year 2003 and subsequent years is $4,601. 

    Subd. 3.    Compensatory education revenue.  The 
 compensatory education revenue for each building in the district 
 equals the formula allowance 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. 

    Subd. 4.    Basic skills revenue.  (a) For fiscal year 
 2002, a school district's basic skills revenue equals the sum of:

    (1) compensatory revenue under subdivision 3; plus 

    (2) limited English proficiency revenue according to 
 section 124D.65, subdivision 5; plus 

    (3) $190 times the limited English proficiency pupil units 
 according to section 126C.05, subdivision 17; plus 

    (4) $22.50 times the number of adjusted marginal cost pupil 
 units in kindergarten to grade 8. 

    (b) For fiscal year 2003, 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; plus 

    (3) $190 times the limited English proficiency pupil units 
 under section 126C.05, subdivision 17. 

    Subd. 5.    Training and experience revenue.  The 
 training and experience revenue for each district equals the 
 greater of zero or the result of the following computation:  

    (1) subtract .8 from the training and experience index; 

    (2) multiply the result in clause (1) by the product of 
 $660 times the adjusted marginal cost pupil units for the school 
 year.  

    Subd. 6.    Definitions.  The definitions in this 
 subdivision apply only to subdivisions 7 and 8.  

    (a) "High school" means a secondary school that has pupils 
 enrolled in at least the 10th, 11th, and 12th grades.  If there 
 is no secondary school in the district that has pupils enrolled 
 in at least the 10th, 11th, and 12th grades, and the school is 
 at least 19 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 an elementary 
 school 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.  

    Subd. 7.    Secondary sparsity revenue.  (a) A 
 district's secondary sparsity revenue for a school year equals 
 the sum of the results of the following calculation for each 
 qualifying high school in the district: 

    (1) the formula allowance for the school year, multiplied 
 by 

    (2) the secondary average daily membership of pupils served 
 in the high school, multiplied by 

    (3) the quotient obtained by dividing 400 minus the 
 secondary average daily membership by 400 plus the secondary 
 daily membership, multiplied by 

    (4) the lesser of 1.5 or the quotient obtained by dividing 
 the isolation index minus 23 by ten. 

    (b) A newly formed district that is the result of districts 
 combining under the cooperation and combination program or 
 consolidating under section 123A.48 must receive secondary 
 sparsity revenue equal to the greater of:  (1) the amount 
 calculated under paragraph (a) for the combined district; or (2) 
 the sum of the amounts of secondary sparsity revenue the former 
 districts had in the year prior to consolidation, increased for 
 any subsequent changes in the secondary sparsity formula. 

    Subd. 8.    Elementary sparsity revenue.  A district's 
 elementary sparsity revenue equals the sum of the following 
 amounts for each qualifying elementary school in the district:  

    (1) the formula allowance for the year, multiplied by 

    (2) the elementary average daily membership of pupils 
 served in the school, multiplied by 

    (3) the quotient obtained by dividing 140 minus the 
 elementary average daily membership by 140 plus the average 
 daily membership. 

    Subd. 9.    Supplemental revenue.  (a) A district's 
 supplemental revenue allowance for fiscal year 2002 equals the 
 district's supplemental revenue allowance for fiscal year 2001. 

    (b) A district's supplemental revenue equals the 
 supplemental revenue allowance, if any, times its adjusted 
 marginal cost pupil units for that year.  

    Subd. 10.    Supplemental levy.  To obtain supplemental 
 revenue, a district may levy an amount not more than the product 
 of its supplemental revenue for the school year times the lesser 
 of one or the ratio of its adjusted net tax capacity per 
 adjusted marginal cost pupil unit to $8,404. 

    Subd. 11.    Supplemental aid.  A district's 
 supplemental aid equals its supplemental revenue minus its 
 supplemental levy times the ratio of the actual amount levied to 
 the permitted levy. 

    Subd. 12. Repealed, 1Sp2001 c 5 art 2 s 30; 1Sp2001 c 6 
 art 1 s 55 subd 1 

    Subd. 13.    Total operating capital revenue.  (a) For 
 fiscal year 2000 and thereafter, total operating capital revenue 
 for a district equals the amount determined under paragraph (b) 
 or (c), plus $73 times the adjusted marginal cost 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 
 paragraph (d) or subdivision 14. 

    (b) For fiscal years 2000 and later, capital revenue for a 
 district equals $100 times the district's maintenance cost index 
 times its adjusted marginal cost pupil units for the school year.

    (c) For fiscal years 2000 and later, 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 marginal 
 cost pupil units served at the site where the program is 
 implemented. 

    (d) For fiscal years 2001 and 2002, the district must 
 reserve an amount equal to $5 per adjusted marginal cost pupil 
 unit for telecommunication access costs.  Reserve revenue under 
 this paragraph must first be used to pay for ongoing or 
 recurring telecommunication access costs, including access to 
 data and video connections, including Internet access.  Any 
 revenue remaining after covering all ongoing or recurring access 
 costs may be used for computer hardware or equipment. 

    Subd. 14.    Uses of total operating capital revenue.  
 Total operating capital revenue may be used only for the 
 following purposes: 

    (1) to acquire land for school purposes; 

    (2) to acquire or construct buildings for school purposes; 

    (3) to rent or lease buildings, including the costs of 
 building repair or improvement that are part of a lease 
 agreement; 

    (4) to improve and repair school sites and buildings, and 
 equip or reequip school buildings with permanent attached 
 fixtures, including library media centers; 

    (5) for a surplus school building that is used 
 substantially for a public nonschool purpose; 

    (6) to eliminate barriers or increase access to school 
 buildings by individuals with a disability; 

    (7) to bring school buildings into compliance with the 
 Uniform Fire Code adopted according to chapter 299F; 

    (8) to remove asbestos from school buildings, encapsulate 
 asbestos, or make asbestos-related repairs; 

    (9) to clean up and dispose of polychlorinated biphenyls 
 found in school buildings; 

    (10) to clean up, remove, dispose of, and make repairs 
 related to storing heating fuel or transportation fuels such as 
 alcohol, gasoline, fuel oil, and special fuel, as defined in 
 section 296A.01; 

    (11) for energy audits for school buildings and to modify 
 buildings if the audit indicates the cost of the modification 
 can be recovered within ten years; 

    (12) to improve buildings that are leased according to 
 section 123B.51, subdivision 4; 

    (13) to pay special assessments levied against school 
 property but not to pay assessments for service charges; 

    (14) to pay principal and interest on state loans for 
 energy conservation according to section 216C.37 or loans made 
 under the Northeast Minnesota Economic Protection Trust Fund Act 
 according to sections 298.292 to 298.298; 

    (15) to purchase or lease interactive telecommunications 
 equipment; 

    (16) by board resolution, to transfer money into the debt 
 redemption fund to:  (i) pay the amounts needed to meet, when 
 due, principal and interest payments on certain obligations 
 issued according to chapter 475; or (ii) pay principal and 
 interest on debt service loans or capital loans according to 
 section 126C.70; 

    (17) to pay operating capital-related assessments of any 
 entity formed under a cooperative agreement between two or more 
 districts; 

    (18) to purchase or lease computers and related materials, 
 copying machines, telecommunications equipment, and other 
 noninstructional equipment; 

    (19) to purchase or lease assistive technology or equipment 
 for instructional programs; 

    (20) to purchase textbooks; 

    (21) to purchase new and replacement library media 
 resources or technology; 

    (22) to purchase vehicles; 

    (23) to purchase or lease telecommunications equipment, 
 computers, and related equipment for integrated information 
 management systems for: 

    (i) managing and reporting learner outcome information for 
 all students under a results-oriented graduation rule; 

    (ii) managing student assessment, services, and achievement 
 information required for students with individual education 
 plans; and 

    (iii) other classroom information management needs; and 

    (24) to pay personnel costs directly related to the 
 acquisition, operation, and maintenance of telecommunications 
 systems, computers, related equipment, and network and 
 applications software. 

    Subd. 15.    Uses of revenue.  Except as otherwise 
 prohibited by law, a district may spend general fund money for 
 capital purposes. 

    Subd. 16.    Maintenance cost index.  (a) A district's 
 maintenance cost index is equal to the ratio of: 

    (1) the total weighted square footage for all eligible 
 district-owned facilities; and 

    (2) the total unweighted square footage of these facilities.

    (b) The department shall determine a district's maintenance 
 cost index annually.  Eligible district-owned facilities must 
 include only instructional or administrative square footage 
 owned by the district.  The commissioner may adjust the age of a 
 building or addition for major renovation projects. 

    (c) The square footage weighting factor for each original 
 building or addition equals the lesser of: 

    (1) one plus the ratio of the age in years to 100; or 

    (2) 1.5. 

    (d) The weighted square footage for each original building 
 or addition equals the product of the unweighted square footage 
 times the square footage weighting factor. 

    Subd. 17.    Transportation sparsity definitions.  The 
 definitions in this subdivision apply to subdivisions 18 and 19. 

    (a) "Sparsity index" for a district means the greater of .2 
 or the ratio of the square mile area of the district to the 
 resident pupil units of the district. 

    (b) "Density index" for a district means the ratio of the 
 square mile area of the district to the resident pupil units of 
 the district.  However, the density index for a district cannot 
 be greater than .2 or less than .005. 

    (c) "Fiscal year 1996 base allowance" for a district means 
 the result of the following computation: 

    (1) sum the following amounts: 

    (i) the fiscal year 1996 regular transportation revenue for 
 the district according to Minnesota Statutes 1996, section 
 124.225, subdivision 7d, paragraph (a), excluding the revenue 
 attributable nonpublic school pupils and to pupils with 
 disabilities receiving special transportation services; plus 

    (ii) the fiscal year 1996 nonregular transportation revenue 
 for the district according to Minnesota Statutes 1996, section 
 124.225, subdivision 7d, paragraph (b), excluding the revenue 
 for desegregation transportation according to Minnesota Statutes 
 1996, section 124.225, subdivision 1, paragraph (c), clause (4), 
 and the revenue attributable to nonpublic school pupils and to 
 pupils with disabilities receiving special transportation 
 services or board and lodging; plus 

    (iii) the fiscal year 1996 excess transportation levy for 
 the district according to Minnesota Statutes 1996, section 
 124.226, subdivision 5, excluding the levy attributable to 
 nonpublic school pupils; plus 

    (iv) the fiscal year 1996 late activity bus levy for the 
 district according to Minnesota Statutes 1996, section 124.226, 
 subdivision 9, excluding the levy attributable to nonpublic 
 school pupils; plus 

    (v) an amount equal to one-third of the fiscal year 1996 
 bus depreciation for the district according to Minnesota 
 Statutes 1996, section 124.225, subdivision 1, paragraph (b), 
 clauses (2), (3), and (4). 

    (2) divide the result in clause (1) by the district's 
 1995-1996 fund balance pupil units. 

    Subd. 18.    Transportation sparsity revenue allowance.  
 (a) 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). 

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

    Subd. 19.    Transition allowance.  (a) A district's 
 transportation transition allowance for fiscal year 1998 and 
 later equals the result of the following: 

    (1) if the result in subdivision 18, paragraph (a), clause 
 (iii), for fiscal year 1998 is less than the fiscal year 1996 
 base allowance, the transportation transition allowance equals 
 the fiscal year 1996 base allowance minus the result in 
 subdivision 18, paragraph (a), clause (iii); or 

    (2) if the result in subdivision 18, paragraph (a), clause 
 (iii), for fiscal year 1998 and later is greater than or equal 
 to the fiscal year 1996 base allowance, the transportation 
 transition allowance equals zero. 

    (b) A district's compensatory transition allowance equals 
 the greater of zero or the difference between:  

    (1) the amount of compensatory revenue the district would 
 have received under Minnesota Statutes 1996, section 124A.22, 
 subdivision 3, for fiscal year 1998 computed using a basic 
 formula allowance of $3,281; and 

    (2) the amount the district receives under subdivision 3; 
 divided by 

    (3) the district's actual pupil units for fiscal year 1998. 

    (c) A district's cooperation transition allowance for 
 fiscal year 2001 and later equals the greater of zero or the 
 difference between:  

    (1) $25,000; and 

    (2) $67 times the district's resident pupil units for 
 fiscal year 2001; divided by 

    (3) the district's resident pupil units for fiscal year 
 2001. 

    (d) A district's transition allowance for fiscal years 1999 
 and 2000 is equal to the sum of its transportation transition 
 allowance and its compensatory transition allowance.  A 
 district's transition allowance for fiscal year 2001 and 
 thereafter is equal to the sum of its transportation transition 
 allowance, its compensatory transition allowance, and its 
 cooperation transition allowance. 

    Subd. 20.    Transition revenue adjustment.  A 
 district's transition revenue adjustment equals the district's 
 transition allowance times the adjusted marginal cost pupil 
 units for the school year. 

    Subd. 21.    Transition levy adjustment.  A district's 
 general education levy shall be adjusted by an amount equal to 
 the district's transition revenue times the lesser of 1 or the 
 ratio of its adjusted net tax capacity per adjusted marginal 
 cost pupil unit to $8,404. 

    Subd. 22.    Transition aid adjustment.  A district's 
 transition aid adjustment is the difference between the 
 transition revenue and the transition levy. 

    Subd. 23. Repealed, 1Sp2001 c 6 art 1 s 55 subd 1 

    Subd. 24.    Equity revenue.  (a) A school district 
 qualifies for equity revenue if: 

    (1) the school district's adjusted marginal cost pupil unit 
 amount of basic revenue, supplemental revenue, transition 
 revenue, and referendum revenue is less than the value of the 
 school district at or immediately above the 95th percentile of 
 school districts in its equity region for those revenue 
 categories; and 

    (2) the school district's administrative offices are not 
 located in a city of the first class on July 1, 1999. 

    (b) Equity revenue for a qualifying district that receives 
 referendum revenue under section 126C.17, subdivision 4, equals 
 the product of (1) the district's adjusted marginal cost pupil 
 units for that year; times (2) the sum of (i) $10, plus (ii) 
 $55, times the school district's equity index computed under 
 subdivision 27. 

    (c) Equity revenue for a qualifying district that does not 
 receive referendum revenue under section 126C.17, subdivision 4, 
 equals the product of the district's adjusted marginal cost 
 pupil units for that year times $10. 

    Subd. 25.    Regional equity gap.  The regional equity 
 gap equals the difference between the value of the school 
 district at or immediately above the fifth percentile of 
 adjusted general revenue per adjusted marginal cost pupil unit 
 and the value of the school district at or immediately above the 
 95th percentile of adjusted general revenue per adjusted 
 marginal cost pupil unit. 

    Subd. 26.    District equity gap.  A district's equity 
 gap equals the greater of zero or the difference between the 
 district's adjusted general revenue and the value of the school 
 district at or immediately above the regional 90th percentile of 
 adjusted general revenue per adjusted marginal cost pupil unit. 

    Subd. 27.    District equity index.  A district's equity 
 index equals the ratio of the sum of the district equity gap 
 amount to the regional equity gap amount. 

    Subd. 28.    Equity region.  For the purposes of 
 computing equity revenue under subdivision 23, a district whose 
 administrative offices on July 1, 1999, is located in Anoka, 
 Carver, Dakota, Hennepin, Ramsey, Scott, or Washington county is 
 part of the metro equity region.  Districts whose administrative 
 offices on July 1, 1999, are not located in Anoka, Carver, 
 Dakota, Hennepin, Ramsey, Scott, or Washington county are part 
 of the rural equity region. 

    HIST: 1987 c 398 art 1 s 11; 1988 c 486 s 58-60; 1988 c 718 
 art 1 s 1-3; 1989 c 329 art 1 s 5-12; 1990 c 375 s 3; 1990 c 562 
 art 8 s 28; 1991 c 130 s 37; 1991 c 265 art 1 s 12-19; 1992 c 
 499 art 6 s 20; art 12 s 13,14,29; 1993 c 224 art 1 s 12-17; 
 1993 c 374 s 2; 1994 c 647 art 1 s 21-24; 1995 c 212 art 4 s 64; 
 1Sp1995 c 3 art 1 s 25-44; art 13 s 7; art 16 s 13; 1996 c 412 
 art 1 s 23-25; art 9 s 6; 1997 c 1 s 4; 1997 c 2 s 6; 1Sp1997 c 
 4 art 1 s 36-45; art 4 s 22,23; 1998 c 299 s 30; 1998 c 397 art 
 7 s 145-151,164; art 11 s 3; art 12 s 3-5; 1998 c 398 art 1 s 
 28-31; art 4 s 8; 1Sp1998 c 3 s 17; 1999 c 241 art 1 s 13-34; 
 2000 c 254 s 37; 2000 c 464 art 3 s 3,4; 2000 c 489 art 2 s 
 15-20; art 5 s 9; 1Sp2001 c 5 art 2 s 9,10; 1Sp2001 c 6 art 1 s 
 15-21,55 subd 2 

*   NOTE:  Subdivisions 2, 3, 5, 9, and 12 (formerly section 
*124A.22, subdivisions 2, 3, 4, 8, and 9), are repealed effective 
*June 30, 2004.  Laws 1992, chapter 499, article 7, section 31, 
*as amended by Laws 1998, chapter 398, article 1, section 39; 
*Laws 1999, chapter 241, article 1, section 54; and Laws 2000, 
*chapter 489, article 2, section 28. 

*   NOTE:  Subdivisions 9, 10, 11, 19, 20, 21, and 22, are 
*repealed by Laws 2001, First Special Session chapter 5, article 
*2, section 30, paragraph (a), effective for revenue for fiscal 
*year 2003.  Laws 2001, First Special Session chapter 5, article 
*2, section 30, paragraph (a).

     126C.11 Training and experience index. 

    The training and experience index for fiscal year 1999 and 
 later must be constructed in the following manner:  

    (a) The department must construct a matrix that classifies 
 teachers by the extent of training received in accredited 
 institutions of higher education and by the years of experience 
 that districts take into account in determining teacher salaries.

    (b) The average salary for each cell of the matrix must be 
 computed as follows using data from fiscal year 1997:  

    (1) For each district, multiply the salary paid to 
 full-time equivalent teachers with that combination of training 
 and experience according to the district's teacher salary 
 schedule by the number of resident pupil units in that district. 

    (2) Add the amounts computed in clause (1) for all 
 districts in the state and divide the resulting sum by the total 
 number of resident pupil units in all districts in the state 
 that employ teachers.  

    (c) For each cell in the matrix, compute the ratio of the 
 average salary in that cell to the average salary for all 
 teachers in the state during fiscal year 1997.  

    (d) The index for each district that employs teachers 
 equals the sum of:  (i) for teachers employed in that district 
 during fiscal year 1997 and the current fiscal year, the ratios 
 for each teacher computed using data for fiscal year 1997; and 
 (ii) for teachers employed in that district during the current 
 fiscal year but not during fiscal year 1997, the ratio for 
 teachers who are in their first year of teaching and who have no 
 additional credits or degrees above a bachelor's degree divided 
 by the number of teachers in that district.  The index for a 
 district that employs no teachers is zero. 

    HIST: 1983 c 314 art 1 s 10; 1991 c 265 art 1 s 11; 1992 c 499 
 art 7 s 31; 1993 c 224 art 1 s 11; 1Sp1997 c 4 art 1 s 35; 1998 
 c 397 art 7 s 144,164; art 11 s 3; 1998 c 398 art 1 s 39; 1999 c 
 241 art 1 s 54; 2000 c 489 art 2 s 28; 1Sp2001 c 5 art 3 s 82; 1Sp2001 c 
 6 art 1 s 42 

*   NOTE:  This section is repealed by Laws 2001, First Special 
*Session chapter 5, article 2, section 30, paragraph (a), 
*effective for revenue for fiscal year 2003.  Laws 2001, First 
*Special Session chapter 5, article 2, section 30, paragraph (a).

     126C.12 Learning and development revenue amount and use. 

    Subdivision 1.    Revenue.  Of a district's general 
 education revenue for fiscal year 2000 and thereafter each 
 school district shall reserve an amount equal to the formula 
 allowance multiplied by the following calculation: 

    (1) the sum of adjusted marginal cost pupils in average 
 daily membership, according to section 126C.05, subdivision 5, 
 in kindergarten times .057; plus 

    (2) the sum of adjusted marginal cost pupils in average 
 daily membership, according to section 126C.05, subdivision 5, 
 in grades 1 to 3 times .115; plus 

    (3) the sum of adjusted marginal cost pupils in average 
 daily membership, according to section 126C.05, subdivision 5, 
 in grades 4 to 6 times .06. 

    Subd. 2.    Definitions.  (a) "Classroom teacher" means 
 a public employee licensed by the board of teaching who is 
 authorized to teach all subjects to children in any grade in 
 kindergarten through grade 6 and whose duties are full-time 
 regular classroom instruction, excluding a teacher for whom 
 federal aids are received or for whom categorical aids are 
 received under section 125A.76 or who is an itinerant teacher or 
 provides instruction outside of the regular classroom.  Except 
 as provided in section 122A.68, subdivision 6, classroom teacher 
 does not include supervisory and support personnel defined in 
 section 122A.15.  A classroom teacher whose duties are less than 
 full-time instruction must be included as an equivalent only for 
 the number of hours of instruction in kindergarten through grade 
 3.  

    (b) "Class size" means the districtwide ratio at each grade 
 level of the number of full-time students in kindergarten 
 through grade 3 served at least 40 percent of the time in 
 regular classrooms to the number of full-time classroom teachers 
 in kindergarten through grade 3, determined as of October 1 of 
 each school year. 

    Subd. 3.    Instruction contact time.  Instruction may 
 be provided by a classroom teacher or by a team of classroom 
 teachers, or by a teacher resident supervised by a classroom 
 teacher.  The district must maximize classroom teacher to 
 learner average instructional contact time in the core subjects 
 of reading and mathematics. 

    Subd. 4.    Revenue use.  (a) Revenue must be used to 
 reduce and maintain the district's average class size in 
 kindergarten through grade 3 to a level of 17 to 1 on average in 
 each of the respective grades.  

    (b) A district must not increase the districtwide class 
 sizes in other grades as a result of reducing class sizes in 
 kindergarten through grade 3.  Revenue may not be used to 
 provide instructor preparation.  A district may use a portion of 
 the revenue reserved under this section to employ up to the same 
 number of full-time equivalent education assistants or aides as 
 the district employed during the 1992-1993 school year under 
 Minnesota Statutes 1992, section 124.331, subdivision 2, through 
 fiscal year 2002.  Beginning in fiscal year 2003, class size 
 reduction revenue may only be reserved to employ classroom 
 teachers contributing to lower class sizes in kindergarten 
 through grade 3. 

    Subd. 5.    Additional revenue use.  If the board of a 
 district determines that the district has achieved and is 
 maintaining the class sizes specified in subdivision 4, the 
 board may use the revenue to reduce class size in grades 4, 5, 
 and 6, provide all-day, everyday kindergarten, prepare and use 
 individualized learning plans, improve program offerings, 
 purchase instructional material, services, or technology, or 
 provide staff development needed for reduced class sizes. 

    Subd. 6.    Annual report.  By December 1 of each year, 
 districts receiving revenue under subdivision 1 shall make 
 available to the public a report on the amount of revenue the 
 district has received and the use of the revenue.  This report 
 shall be in the form and manner determined by the commissioner 
 and shall include the district average class sizes in 
 kindergarten through grade 6 as of October 1 of the current 
 school year and the class sizes for each site serving 
 kindergarten through grade 6 students in the district.  A copy 
 of the report shall be filed with the commissioner by December 
 15. 

    HIST: 1993 c 224 art 1 s 18; 1993 c 374 s 3; 1994 c 647 art 1 
 s 25; art 7 s 2; art 8 s 12,13; 1Sp1995 c 3 art 1 s 45; art 13 s 
 8; 1997 c 7 art 1 s 66; 1Sp1997 c 4 art 11 s 3; 1998 c 397 art 7 
 s 152,153,164; art 11 s 3; 1999 c 241 art 1 s 35,36; 2000 c 464 
 art 3 s 5; 2000 c 489 art 2 s 21; art 10 s 14; 1Sp2001 c 6 art 1 
 s 22-26 

     126C.125 Class size, all-day kindergarten, and special 
  education student-to-instructor ratio reserve. 

    A district is required to reserve $3 in fiscal year 2000 
 and $11 in fiscal year 2001 and later per adjusted marginal cost 
 pupil unit for class size reduction, all-day kindergarten, or 
 for reducing special education student-to-instructor ratios.  
 The school board of each district must pass a resolution stating 
 which one of these three programs will be funded with this 
 reserve.  The reserve amount under this section must be 
 allocated to the education site as defined in section 123B.04, 
 subdivision 1, according to a plan adopted by the school board. 

    HIST: 1999 c 241 art 1 s 67; 2000 c 464 art 3 s 2; 2000 c 489 
 art 2 s 14 

     126C.126 Reallocating general education revenue for 
  all-day kindergarten. 

    In order to provide additional revenue for an optional 
 all-day kindergarten program, a district may reallocate general 
 education revenue attributable to 12th grade students who have 
 graduated early under section 120B.07.  

    HIST: 1Sp2001 c 6 art 1 s 27 

     126C.13 General education levy and aid. 

    Subdivision 1. Repealed, 1Sp2001 c 5 art 2 s 30 

    Subd. 2. Repealed, 1Sp2001 c 5 art 2 s 30 

    Subd. 3. Repealed, 1Sp2001 c 5 art 2 s 30 

    Subd. 4.    General education aid.  A district's general 
 education aid is the sum of the following amounts:  

    (1) general education revenue; 

    (2) shared time aid according to section 126C.01, 
 subdivision 7; and 

    (3) referendum aid according to section 126C.17. 

    Subd. 5.    Uses of revenue.  Except as provided in 
 sections 126C.10, subdivision 14; 126C.12; and 126C.15, general 
 education revenue may be used during the regular school year and 
 the summer for general and special school purposes. 

    HIST: 1987 c 398 art 1 s 12; 1988 c 486 s 61-64; 1988 c 718 
 art 1 s 4-6; 1988 c 719 art 5 s 84; 1989 c 329 art 1 s 13; art 
 13 s 20; 1Sp1989 c 1 art 2 s 11; art 6 s 7; art 9 s 6; 1990 c 
 562 art 1 s 4; 1991 c 265 art 1 s 20-22; 1992 c 499 art 1 s 15; 
 art 12 s 15,16; 1992 c 511 art 4 s 1; 1993 c 224 art 1 s 19,20; 
 1994 c 647 art 1 s 26; 1Sp1995 c 3 art 1 s 46,47; 1996 c 412 art 
 1 s 26; 1Sp1997 c 4 art 1 s 46-49; 1998 c 397 art 7 s 
 154-156,164; art 11 s 3; art 12 s 6; 1998 c 398 art 1 s 33; 1999 
 c 241 art 1 s 37,38; 1Sp2001 c 5 art 2 s 11 

*   NOTE:  Subdivisions 1, 2, 3, 4, and 5 (formerly section 
*124A.23, subdivisions 1, 2, 3, 4, and 5), are repealed effective 
*June 30, 2004.  Laws 1992, chapter 499, article 7, section 31, 
*as amended by Laws 1998, chapter 398, article 1, section 39; 
*Laws 1999, chapter 241, article 1, section 54; and Laws 2000, 
*chapter 489, article 2, section 28. 

*   NOTE:  The amendment to subdivision 4 by Laws 2001, First 
*Special Session chapter 5, article 2, section 11, is effective 
*for fiscal year 2003 and thereafter.  Laws 2001, First Special 
*Session chapter 5, article 2, section 11, the effective date.

     126C.14 General education levy equity. 

    If a district's general education levy is determined 
 according to section 126C.13, subdivision 3, an amount must be 
 deducted from state aid authorized in this chapter and chapters 
 120B, 122A, 123A, 123B, 124D, 125A, and 127A, receivable for the 
 same school year, and from other state payments receivable for 
 the same school year authorized in chapter 273.  The aid in 
 section 124D.111 must not be reduced. 

    The amount of the deduction equals the difference between: 

    (1) the general education tax rate, according to section 
 126C.13, times the district's adjusted net tax capacity used to 
 determine the general education aid for the same school year; 
 and 

    (2) the district's general education revenue, excluding 
 transition revenue and supplemental revenue, for the same school 
 year, according to section 126C.10. 

    HIST: 1987 c 398 art 1 s 13; 1988 c 486 s 65; 1988 c 718 art 1 
 s 7; 1988 c 719 art 5 s 84; 1989 c 209 art 2 s 9; 1989 c 222 s 
 29; 1989 c 329 art 13 s 20; 1Sp1989 c 1 art 2 s 11; 1991 c 130 s 
 22; 1991 c 265 art 1 s 23; 1992 c 499 art 12 s 17; 1993 c 224 
 art 1 s 21; 1Sp1995 c 3 art 1 s 48; 1998 c 397 art 7 s 164; art 
 11 s 3; 2000 c 254 s 38 

*   NOTE:  This section (formerly section 124A.24) is repealed 
*effective June 30, 2004.  Laws 1992, chapter 499, article 7, 
*section 31, as amended by Laws 1998, chapter 398, article 1, 
*section 39; Laws 1999, chapter 241, article 1, section 54; and 
*Laws 2000, chapter 489, article 2, section 28.

     126C.15 Basic skills revenue; compensatory education 
  revenue. 

    Subdivision 1.    Use of the revenue.  The basic skills 
 revenue under section 126C.10, subdivision 4, and the portion of 
 the transition revenue adjustment under section 126C.10, 
 subdivision 20, attributable to the compensatory transition 
 allowance under section 126C.10, subdivision 19, paragraph (b), 
 must be reserved and used to meet the educational needs of 
 pupils who enroll under-prepared to learn and whose progress 
 toward meeting state or local content or performance standards 
 is below the level that is appropriate for learners of their 
 age.  Any of the following may be provided to meet these 
 learners' needs: 

    (1) direct instructional services under the assurance of 
 mastery program according to section 124D.66; 

    (2) remedial instruction in reading, language arts, 
 mathematics, other content areas, or study skills to improve the 
 achievement level of these learners; 

    (3) additional teachers and teacher aides to provide more 
 individualized instruction to these learners through individual 
 tutoring, lower instructor-to-learner ratios, or team teaching; 

    (4) a longer school day or week during the regular school 
 year or through a summer program that may be offered directly by 
 the site or under a performance-based contract with a 
 community-based organization; 

    (5) comprehensive and ongoing staff development consistent 
 with district and site plans according to section 122A.60, for 
 teachers, teacher aides, principals, and other personnel to 
 improve their ability to identify the needs of these learners 
 and provide appropriate remediation, intervention, 
 accommodations, or modifications; 

    (6) instructional materials and technology appropriate for 
 meeting the individual needs of these learners; 

    (7) programs to reduce truancy, encourage completion of 
 high school, enhance self-concept, provide health services, 
 provide nutrition services, provide a safe and secure learning 
 environment, provide coordination for pupils receiving services 
 from other governmental agencies, provide psychological services 
 to determine the level of social, emotional, cognitive, and 
 intellectual development, and provide counseling services, 
 guidance services, and social work services; 

    (8) bilingual programs, bicultural programs, and programs 
 for learners of limited English proficiency; 

    (9) all day kindergarten; 

    (10) extended school day and extended school year programs; 
 and 

    (11) substantial parent involvement in developing and 
 implementing remedial education or intervention plans for a 
 learner, including learning contracts between the school, the 
 learner, and the parent that establish achievement goals and 
 responsibilities of the learner and the learner's parent or 
 guardian. 

    Subd. 2.    Building allocation.  (a) A district must 
 allocate its compensatory revenue to each school building in the 
 district where the children who have generated the revenue are 
 served. 

    (b) Notwithstanding paragraph (a), a district may allocate 
 up to five percent of the amount of compensatory revenue that 
 the district received during the previous fiscal year to school 
 sites according to a plan adopted by the school board. 

    (c) For the purposes of this section and section 126C.05, 
 subdivision 3, "building" means education site as defined in 
 section 123B.04, subdivision 1. 

    (d) If the pupil is served at a site other than one owned 
 and operated by the district, the revenue shall be paid to the 
 district and used for services for pupils who generate the 
 revenue.  

    Subd. 3.    Recommendation.  A school site 
 decision-making team, as defined in section 123B.04, subdivision 
 2, paragraph (a), or the instruction and curriculum advisory 
 committee under section 120B.11, if the school has no school 
 site decision team, shall recommend how the compensatory 
 education revenue will be used to carry out the purpose of this 
 section. 

    Subd. 4.    Separate accounts.  Each district that 
 receives basic skills revenue shall maintain separate accounts 
 to identify expenditures for salaries and programs related to 
 basic skills revenue. 

    Subd. 5.    Annual expenditure report.  Each year a 
 district that receives basic skills revenue must submit a report 
 identifying the expenditures it incurred to meet the needs of 
 eligible learners under subdivision 1.  The report must conform 
 to uniform financial and reporting standards established for 
 this purpose.  Using valid and reliable data and measurement 
 criteria, the report also must determine whether increased 
 expenditures raised student achievement levels. 

    HIST: 1987 c 398 art 1 s 17; 1988 c 718 art 1 s 9,10; 1989 c 
 329 art 3 s 19; 1994 c 647 art 1 s 28; 1996 c 412 art 1 s 27; 
 1Sp1997 c 4 art 1 s 51; 1998 c 397 art 7 s 157,164; art 11 s 3; 
 1998 c 398 art 1 s 34,35; 1Sp1998 c 3 s 18; 1999 c 241 art 1 s 
 39; 2000 c 254 s 39; 1Sp2001 c 5 art 3 s 82; 1Sp2001 c 6 art 1 s 
 28-30,42 

*   NOTE:  This section (formerly section 124A.28) is repealed 
*effective June 30, 2004.  Laws 1992, chapter 499, article 7, 
*section 31, as amended by Laws 1998, chapter 398, article 1, 
*section 39; Laws 1999, chapter 241, article 1, section 54; and 
*Laws 2000, chapter 489, article 2, section 28.

     126C.16 Referendum and desegregation revenue conversion. 

    Subdivision 1.    Revenue conversion.  Except as 
 provided under subdivision 3, the referendum authority under 
 section 126C.17 of a district must be converted by the 
 department according to this section. 

    Subd. 2. Repealed, 1Sp2001 c 6 art 1 s 55 subd 1 

    Subd. 3.    Per pupil revenue conversion.  (a) The 
 department must convert each district's referendum revenue 
 authority for fiscal year 2002 and later years to an allowance 
 per pupil unit as follows:  the revenue allowance equals the 
 amount determined by dividing the district's maximum revenue 
 under section 126C.17, for fiscal year 2001 by the district's 
 2000-2001 resident marginal cost pupil units.  A district's 
 maximum revenue for all later years for which the revenue is 
 authorized equals the revenue allowance times the district's 
 resident marginal cost pupil units for that year.  

    (b) The referendum allowance reduction must be applied 
 first to the authority with the earliest expiration date. 

    HIST: 1991 c 130 s 37; 1992 c 499 art 1 s 10; art 12 s 29; 
 1993 c 224 art 15 s 1; 1994 c 647 art 1 s 15; 1996 c 412 art 1 s 
 14; 1998 c 397 art 7 s 132-134,164; art 11 s 3; 2000 c 254 s 
 40,41; 2000 c 489 art 2 s 22 

     126C.17 Referendum revenue. 

    Subdivision 1.    Referendum allowance.  (a) For fiscal 
 year 2002, a district's 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 for fiscal year 2002. 

    (b) 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. 

    (c) For fiscal year 2003 and later, 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 after April 30, 2001, for fiscal 
 year 2003 and later. 

    Subd. 2.    Referendum allowance limit.  (a) 
 Notwithstanding subdivision 1, for fiscal year 2002, a 
 district's referendum allowance must not exceed the greater of:  

    (1) the district's referendum allowance for fiscal year 
 1994; 

    (2) 25 percent of the formula allowance; or 

    (3) for a newly reorganized district created after July 1, 
 1994, the sum of the referendum revenue authority for the 
 reorganizing districts for the fiscal year preceding the 
 reorganization, divided by the sum of the resident marginal cost 
 pupil units of the reorganizing districts for the fiscal year 
 preceding the reorganization. 

    (b) Notwithstanding subdivision 1, for fiscal year 2003 and 
 later fiscal years, a district's referendum allowance must not 
 exceed the greater of: 

    (1) the sum of a district's referendum allowance for fiscal 
 year 1994 times 1.162 plus its referendum conversion allowance 
 for fiscal year 2003, minus $415; 

    (2) 18.2 percent of the formula allowance; 

    (3) for a newly reorganized district created on July 1, 
 2002, the referendum revenue authority for each reorganizing 
 district in the year preceding reorganization divided by its 
 resident marginal cost pupil units for the year preceding 
 reorganization, minus $415; or 

    (4) for a newly reorganized district created after July 1, 
 2002, the referendum revenue authority for each reorganizing 
 district in the year preceding reorganization divided by its 
 resident marginal cost pupil units for the year preceding 
 reorganization. 

    Subd. 3.    Sparsity exception.  A district that 
 qualifies for sparsity revenue under section 126C.10 is not 
 subject to a referendum allowance limit. 

    Subd. 4.    Total referendum revenue.  The total 
 referendum revenue for each district equals the district's 
 referendum allowance times the resident marginal cost pupil 
 units for the school year. 

    Subd. 5.    Referendum equalization revenue.  (a) For 
 fiscal year 2003 and later, a district's referendum equalization 
 revenue equals the sum of the first tier referendum equalization 
 revenue and the second tier referendum equalization revenue. 

    (b) A district's first tier referendum equalization revenue 
 equals the district's first tier referendum equalization 
 allowance times the district's resident marginal cost pupil 
 units for that year.  

    (c) A district's first tier referendum equalization 
 allowance equals the lesser of the district's referendum 
 allowance under subdivision 1 or $126. 

    (d) A district's second tier referendum equalization 
 revenue equals the district's second tier referendum 
 equalization allowance times the district's resident marginal 
 cost pupil units for that year. 

    (e) A district's second tier referendum equalization 
 allowance equals the lesser of the district's referendum 
 allowance under subdivision 1 or 18.2 percent of the formula 
 allowance, minus the district's first tier referendum 
 equalization allowance. 

    (f) Notwithstanding paragraph (e), the second tier 
 referendum allowance for a district qualifying for secondary 
 sparsity revenue under section 126C.10, subdivision 7, or 
 elementary sparsity revenue under section 126C.10, subdivision 
 8, equals the district's referendum allowance under subdivision 
 1 minus the district's first tier referendum equalization 
 allowance. 

    Subd. 6.    Referendum equalization levy.  A district's 
 referendum equalization levy equals the district's referendum 
 equalization revenue times the lesser of one or the ratio of the 
 district's referendum market value per resident marginal cost 
 pupil unit to $476,000. 

    Subd. 7.    Referendum equalization aid.  (a) A 
 district's referendum equalization aid equals the difference 
 between its referendum equalization revenue and levy. 

    (b) If a district's actual levy for first or second tier 
 referendum equalization revenue is less than its maximum levy 
 limit for that tier, aid shall be proportionately reduced. 

    Subd. 7a.    Referendum tax base replacement aid.  For 
 each school district that had a referendum allowance for fiscal 
 year 2002 exceeding $415, for each separately authorized 
 referendum levy, the commissioner of revenue, in consultation 
 with the commissioner of children, families, and learning, shall 
 certify the amount of the referendum levy in taxes payable year 
 2001 attributable to the portion of the referendum allowance 
 exceeding $415 levied against property classified as class 2 
 4c(1), or 4c(4), under section 273.13, excluding the portion of 
 the tax paid by the portion of class 2a property consisting of 
 the house, garage, and surrounding one acre of land.  The 
 resulting amount must be used to reduce the district's 
 referendum levy amount otherwise determined, and must be paid to 
 the district each year that the referendum authority remains in 
 effect.  The aid payable under this subdivision must be 
 subtracted from the district's referendum equalization aid under 
 subdivision 7.  The referendum equalization aid after the 
 subtraction must not be less than zero. 

    For the purposes of this subdivision, the referendum levy 
 with the latest year of expiration is assumed to be at the 
 highest level of equalization, and the referendum levy with the 
 earliest year of expiration is assumed to be at the lowest level 
 of equalization. 

    Subd. 8.    Unequalized referendum levy.  Each year, a 
 district may levy an amount equal to the difference between its 
 total referendum revenue according to subdivision 4 and its 
 referendum equalization revenue according to subdivision 5. 

    Subd. 9.    Referendum revenue.  (a) The revenue 
 authorized by section 126C.10, subdivision 1, may be increased 
 in the amount approved by the voters of the district at a 
 referendum called for the purpose.  The referendum may be called 
 by the board or shall be called by the board upon written 
 petition of qualified voters of the district.  The referendum 
 must be conducted one or two calendar years before the increased 
 levy authority, if approved, first becomes payable.  Only one 
 election to approve an increase may be held in a calendar year.  
 Unless the referendum is conducted by mail under paragraph (g), 
 the referendum must be held on the first Tuesday after the first 
 Monday in November.  The ballot must state the maximum amount of 
 the increased revenue per resident marginal cost pupil unit, the 
 estimated referendum tax rate as a percentage of referendum 
 market value in the first year it is to be levied, and that the 
 revenue must be used to finance school operations.  The ballot 
 may state a schedule, determined by the board, of increased 
 revenue per resident marginal cost pupil unit that differs from 
 year to year over the number of years for which the increased 
 revenue is authorized.  If the ballot contains a schedule 
 showing different amounts, it must also indicate the estimated 
 referendum tax rate as a percent of referendum market value for 
 the amount specified for the first year and for the maximum 
 amount specified in the schedule.  The ballot may state that 
 existing referendum levy authority is expiring.  In this case, 
 the ballot may also compare the proposed levy authority to the 
 existing expiring levy authority, and express the proposed 
 increase as the amount, if any, over the expiring referendum 
 levy authority.  The ballot must designate the specific number 
 of years, not to exceed ten, for which the referendum 
 authorization applies.  The notice required under section 275.60 
 may be modified to read, in cases of renewing existing levies: 

    "BY VOTING "YES" ON THIS BALLOT QUESTION, YOU MAY BE VOTING 
    FOR A PROPERTY TAX INCREASE." 

    The ballot may contain a textual portion with the 
 information required in this subdivision and a question stating 
 substantially the following:  

    "Shall the increase in the revenue proposed by (petition 
 to) the board of ........., School District No. .., be approved?"

    If approved, an amount equal to the approved revenue per 
 resident marginal cost pupil unit times the resident marginal 
 cost pupil units for the school year beginning in the year after 
 the levy is certified shall be authorized for certification for 
 the number of years approved, if applicable, or until revoked or 
 reduced by the voters of the district at a subsequent referendum.

    (b) The board must prepare and deliver by first class mail 
 at least 15 days but no more than 30 days before the day of the 
 referendum to each taxpayer a notice of the referendum and the 
 proposed revenue increase.  The board need not mail more than 
 one notice to any taxpayer.  For the purpose of giving mailed 
 notice under this subdivision, owners must be those shown to be 
 owners on the records of the county auditor or, in any county 
 where tax statements are mailed by the county treasurer, on the 
 records of the county treasurer.  Every property owner whose 
 name does not appear on the records of the county auditor or the 
 county treasurer is deemed to have waived this mailed notice 
 unless the owner has requested in writing that the county 
 auditor or county treasurer, as the case may be, include the 
 name on the records for this purpose.  The notice must project 
 the anticipated amount of tax increase in annual dollars and 
 annual percentage for typical residential homesteads, 
 agricultural homesteads, apartments, and commercial-industrial 
 property within the school district. 

    The notice for a referendum may state that an existing 
 referendum levy is expiring and project the anticipated amount 
 of increase over the existing referendum levy in the first year, 
 if any, in annual dollars and annual percentage for typical 
 residential homesteads, agricultural homesteads, apartments, and 
 commercial-industrial property within the district. 

    The notice must include the following statement:  "Passage 
 of this referendum will result in an increase in your property 
 taxes."  However, in cases of renewing existing levies, the 
 notice may include the following statement:  "Passage of this 
 referendum may result in an increase in your property taxes." 

    (c) A referendum on the question of revoking or reducing 
 the increased revenue amount authorized pursuant to paragraph 
 (a) may be called by the board and shall be called by the board 
 upon the written petition of qualified voters of the district.  
 A referendum to revoke or reduce the levy amount must be based 
 upon the dollar amount, local tax rate, or amount per resident 
 marginal cost pupil unit, that was stated to be the basis for 
 the initial authorization.  Revenue approved by the voters of 
 the district pursuant to paragraph (a) must be received at least 
 once before it is subject to a referendum on its revocation or 
 reduction for subsequent years.  Only one revocation or 
 reduction referendum may be held to revoke or reduce referendum 
 revenue for any specific year and for years thereafter. 

    (d) A petition authorized by paragraph (a) or (c) is 
 effective if signed by a number of qualified voters in excess of 
 15 percent of the registered voters of the district on the day 
 the petition is filed with the board.  A referendum invoked by 
 petition must be held on the date specified in paragraph (a). 

    (e) The approval of 50 percent plus one of those voting on 
 the question is required to pass a referendum authorized by this 
 subdivision. 

    (f) At least 15 days before the day of the referendum, the 
 district must submit a copy of the notice required under 
 paragraph (b) to the commissioner and to the county auditor of 
 each county in which the district is located.  Within 15 days 
 after the results of the referendum have been certified by the 
 board, or in the case of a recount, the certification of the 
 results of the recount by the canvassing board, the district 
 must notify the commissioner of the results of the referendum. 

    Subd. 10.    School referendum levy; market value.  A 
 school referendum levy must be levied against the referendum 
 market value of all taxable property as defined in section 
 126C.01, subdivision 3.  Any referendum levy amount subject to 
 the requirements of this subdivision must be certified 
 separately to the county auditor under section 275.07. 

    Subd. 11.    Referendum date.  (a) Except for a 
 referendum held under paragraph (b), any referendum under this 
 section held on a day other than the first Tuesday after the 
 first Monday in November must be conducted by mail in accordance 
 with section 204B.46.  Notwithstanding subdivision 9, paragraph 
 (b), to the contrary, in the case of a referendum conducted by 
 mail under this paragraph, the notice required by subdivision 9, 
 paragraph (b), must be prepared and delivered by first-class 
 mail at least 20 days before the referendum. 

    (b) In addition to the referenda allowed in subdivision 9, 
 clause (a), the commissioner may grant authority to a district 
 to hold a referendum on a different day if the district is in 
 statutory operating debt and has an approved plan or has 
 received an extension from the department to file a plan to 
 eliminate the statutory operating debt.  

    (c) The commissioner must approve, deny, or modify each 
 district's request for a referendum levy on a different day 
 within 60 days of receiving the request from a district. 

    Subd. 12. Repealed, 1Sp2001 c 6 art 1 s 55 subd 1 

    Subd. 13.    Referendum conversion allowance.  A school 
 district that received supplemental or transition revenue in 
 fiscal year 2002 may convert its supplemental revenue conversion 
 allowance and transition revenue conversion allowance to 
 additional referendum allowance under subdivision 1 for fiscal 
 year 2003 and thereafter.  A majority of the school board must 
 approve the conversion at a public meeting before November 1, 
 2001.  For a district with other referendum authority, the 
 referendum conversion allowance approved by the board continues 
 until the portion of the district's other referendum authority 
 with the earliest expiration date after June 30, 2006, expires.  
 For a district with no other referendum authority, the 
 referendum conversion allowance approved by the board continues 
 until June 30, 2012. 

    HIST: Ex1971 c 31 art 20 s 8; 1973 c 683 s 18,19; 1974 c 521 s 
 29-31; 1975 c 432 s 74-81; 1976 c 2 s 97; 1976 c 134 s 78; 1976 
 c 271 s 80-90; 1977 c 307 s 29; 1977 c 423 art 3 s 12; 1977 c 
 447 art 1 s 19,20; art 2 s 8; art 4 s 5; art 5 s 12; art 6 s 
 8-10; art 7 s 26; 1978 c 764 s 103-111; 1979 c 303 art 2 s 22; 
 1979 c 334 art 1 s 14-24; art 2 s 13; art 4 s 4; art 6 s 23; 
 1980 c 509 s 112; 1980 c 607 art 7 s 9; 1980 c 609 art 1 s 9-13; 
 art 2 s 3,4; art 4 s 15-18,22; art 5 s 19; 1981 c 224 s 38; 1981 
 c 356 s 248; 1981 c 358 art 1 s 31-42,48; art 4 s 10; art 6 s 
 32,33; 3Sp1981 c 2 art 2 s 10; art 4 s 7; 1982 c 548 art 1 s 
 12-14; art 2 s 4-6; art 3 s 26; art 6 s 19-22; art 7 s 6; 1983 c 
 216 art 1 s 45; 1983 c 314 art 1 s 18-21,22; art 2 s 3-6; art 3 
 s 13-15; art 4 s 6; art 6 s 24-29; art 7 s 34; 1983 c 323 s 2-4; 
 1984 c 463 art 1 s 11; art 2 s 6,7; art 4 s 5,6; art 5 s 36; art 
 6 s 6-11; art 7 s 20; 1984 c 502 art 7 s 7-9; 1984 c 583 s 32; 
 1985 c 248 s 33; 1Sp1985 c 12 art 1 s 14-16; 1Sp1986 c 1 art 9 s 
 17; 1987 c 398 art 1 s 8; 1988 c 486 s 49; 1988 c 719 art 5 s 
 84; 1989 c 329 art 1 s 4; 1Sp1989 c 1 art 2 s 11; art 9 s 5; 
 1990 c 562 art 1 s 3; 1991 c 265 art 1 s 10; 1991 c 291 art 1 s 
 5,6; 1992 c 499 art 1 s 11-14; 1992 c 603 s 13; 1993 c 44 s 1; 
 1993 c 224 art 1 s 7-10; 1993 c 374 s 1; 1994 c 647 art 1 s 
 16-19; 1Sp1995 c 3 art 1 s 20-23; art 16 s 13; 1996 c 412 art 1 
 s 15-18; 1996 c 471 art 3 s 2; 1Sp1997 c 4 art 1 s 33,34; 1998 c 
 389 art 2 s 6; 1998 c 397 art 7 s 135-137,164; art 11 s 3; 1998 
 c 398 art 1 s 24,25; 1999 c 241 art 1 s 40-45; 2000 c 489 art 2 
 s 23; 1Sp2001 c 5 art 2 s 12-19; 1Sp2001 c 6 art 1 s 31-34 

*   NOTE:  Subdivisions 1, 2, 3, 4, 5, 6, 7, and 8 (formerly 
*section 124A.03, subdivisions 1b, 1c, 1d, 1e, 1f, 1g, 1h, and 
*1i), are repealed effective June 30, 2004.  Laws 1992, chapter 
*499, article 7, section 31, as amended by Laws 1998, chapter 
*398, article 1, section 39; Laws 1999, chapter 241, article 1, 
*section 54; and Laws 2000, chapter 489, article 2, section 28. 

*   NOTE:  The amendment to subdivision 2 by Laws 2001, First 
*Special Session chapter 5, article 2, section 13, is effective 
*for fiscal year 2003 and thereafter.  Laws 2001, First Special 
*Session chapter 5, article 2, section 13, the effective date. 

*   NOTE:  The amendments to subdivisions 5, 7, and 8, by Laws 
*2001, First Special Session chapter 5, article 2, sections 14, 
*16, and 18, are effective for taxes payable in 2002 and revenue 
*in fiscal year 2003, and thereafter.  Laws 2001, First Special 
*Session chapter 5, article 2, sections 14, 16, and 18, the 
*effective dates. 

*   NOTE:  Subdivision 6 was also amended by Laws 2001, First 
*Special Session chapter 5, article 2, section 15, to read as 
*follows: 

*   "Subd. 6.    Referendum equalization levy.  (a) For 
*fiscal year 2003 and later, 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 one or the ratio of the district's 
*referendum market value per resident marginal cost pupil unit to 
*$476,000. 

*   (c) A district's second tier referendum equalization levy 
*equals the district's second tier referendum equalization 
*revenue times the lesser of one or the ratio of the district's 
*referendum market value per resident marginal cost pupil unit to 
*$270,000."

  126C.18 Repealed, 1Sp2001 c 6 art 1 s 55 subd 1 

     126C.19 Shared time aid. 

    Subdivision 1.    To resident district.  Aid for shared 
 time pupils must be paid to the district of the pupil's 
 residence.  If a pupil attends shared time classes in another 
 district, the resident district must pay to the district of 
 attendance an amount of tuition equal to the ratio in section 
 126C.01, subdivision 6, times the amount of tuition that would 
 be charged and paid for a nonresident public school pupil in a 
 similar circumstance.  The district of residence is not 
 obligated for tuition except by previous agreement. 

    Subd. 2.    Exception.  Notwithstanding subdivision 1, 
 the resident district of a shared time pupil attending shared 
 time classes in another district may grant the district of 
 attendance, upon its request, permission to claim the pupil as a 
 resident for state aid purposes.  In this case, state aid must 
 be paid to the district of attendance and, upon agreement, the 
 district of attendance may bill the resident district for any 
 unreimbursed education costs, but not for unreimbursed 
 transportation costs.  The agreement may, however, provide for 
 the resident district to pay the cost of any of the particular 
 transportation categories specified in section 123B.92, 
 subdivision 1, and in this case, aid for those categories must 
 be paid to the district of residence rather than to the district 
 of attendance.  

    Subd. 3.    Section 123B.44 services.  Minutes of 
 enrollment in a public school during which a nonpublic school 
 pupil receives services pursuant to section 123B.44 must not be 
 used in the computation of shared time aid. 

    Subd. 4.    Location of services.  (a) Public school 
 programs that provide instruction in core curriculum may be 
 provided to shared time pupils only at a public school building. 
 Public school programs, excluding programs that provide 
 instruction in core curriculum, may be provided to shared time 
 pupils at a public school building, a neutral site, the 
 nonpublic school, or any other suitable location.  Guidance and 
 counseling and diagnostic and health services required under 
 sections 125A.03 to 125A.24 and 125A.65 may be provided at a 
 nonpublic school building.  As used in this subdivision, 
 "diagnostic services" means speech, hearing, vision, 
 psychological, medical and dental diagnostic services and 
 "health services" means physician, nursing or optometric 
 services provided to pupils in the field of physical and mental 
 health.  

    (b) For those children with a disability under sections 
 125A.03 to 125A.24 who attend nonpublic school at their parent's 
 choice, a school district may provide special instruction and 
 services at the nonpublic school building, a public school, or 
 at a neutral site other than a nonpublic school as defined in 
 section 123B.41, subdivision 13.  The school district shall 
 determine the location at which to provide services on a 
 student-by-student basis, consistent with federal law. 

    HIST: 1981 c 358 art 1 s 26; 1983 c 314 art 1 s 5,22; 1988 c 
 486 s 51,52; 1991 c 265 art 3 s 38; 1998 c 397 art 7 s 142,164; 
 art 11 s 3; 1998 c 398 art 2 s 29 

     126C.20 Annual foundation or general education aid 
  appropriation. 

    There is annually appropriated from the general fund to the 
 department the amount necessary for general education aid.  This 
 amount must be reduced by the amount of any money specifically 
 appropriated for the same purpose in any year from any state 
 fund.  

    HIST: 1961 c 562 s 14; 1969 c 399 s 15,16; 1973 c 492 s 7; 
 1975 c 432 s 20; 1977 c 447 art 1 s 3; art 2 s 1; 1979 c 334 art 
 6 s 19; 1981 c 358 art 7 s 23-26; 1982 c 548 art 7 s 4; 1983 c 
 314 art 1 s 22; art 7 s 22; 1987 c 398 art 1 s 9; 1988 c 486 s 
 50; 1Sp1995 c 3 art 16 s 13; 1998 c 397 art 7 s 141,164

     126C.21 Deductions from general education aid. 

    Subdivision 1.    Permanent school fund.  The amount of 
 money received by a district as income from the permanent school 
 fund for any year must be deducted from the general education 
 aid earned by the district for the same year or from aid earned 
 from other state sources.  

    Subd. 2.    Minimum.  The amount payable to any district 
 from state sources for any one year may not be reduced below the 
 amount payable as apportionment of the school endowment fund 
 pursuant to sections 127A.32 to 127A.34.  

    Subd. 3.    County apportionment deduction.  Each year 
 the amount of money apportioned to a district for that year 
 pursuant to section 127A.34, subdivision 2, excluding any 
 district where the general education levy is determined 
 according to section 126C.13, subdivision 3, must be deducted 
 from the general education aid earned by that district for the 
 same year or from aid earned from other state sources.  

    Subd. 4.    Taconite deductions.  (1) Notwithstanding 
 any provisions of any other law to the contrary, the adjusted 
 net tax capacity used in calculating general education aid may 
 include only that property that is currently taxable in the 
 district.  

    (2) For districts that received payments under sections 
 298.018; 298.34 to 298.39; 298.391 to 298.396; and 298.405, or 
 any law imposing a tax upon severed mineral values; the general 
 education aid must be reduced in the final adjustment payment by 
 the difference between the dollar amount of the payments 
 received pursuant to those sections in the fiscal year to which 
 the final adjustment is attributable and the amount that was 
 calculated, pursuant to section 126C.48, subdivision 8, as a 
 reduction of the levy attributable to the fiscal year to which 
 the final adjustment is attributable.  If the final adjustment 
 of a district's general education aid for a fiscal year is a 
 negative amount because of this clause, the next fiscal year's 
 general education aid to that district must be reduced by this 
 negative amount in the following manner:  there must be withheld 
 from each scheduled general education aid payment due the 
 district in such fiscal year, 15 percent of the total negative 
 amount, until the total negative amount has been withheld.  The 
 amount reduced from general education aid pursuant to this 
 clause must be recognized as revenue in the fiscal year to which 
 the final adjustment payment is attributable. 

    HIST: 1981 c 358 art 1 s 27; 1982 c 548 art 1 s 10; 1983 c 314 
 art 1 s 6,17,22; 1987 c 268 art 9 s 5; 1988 c 486 s 53-55; 1988 
 c 719 art 5 s 84; 1989 c 329 art 13 s 20; 1991 c 130 s 37; 1992 
 c 499 art 12 s 29; 1996 c 412 art 1 s 21; 1998 c 397 art 7 s 
 143,164; art 11 s 3; 1999 c 86 art 1 s 34; 1Sp2001 c 5 art 6 s 2 

*   NOTE:  The amendment to subdivision 4 by Laws 2001, First 
*Special Session chapter 5, article 6, section 2, is effective 
*for aids payable in the 2002-2003 school year.  Laws 2001, First 
*Special Session chapter 5, article 6, section 2, the effective 
*date.

  126C.22 Repealed, 1Sp2001 c 6 art 1 s 55 subd 1 

     126C.23 Allocation of general education revenue. 

    Subdivision 1.    Definitions.  For the purposes of this 
 section, "building" means education site as defined in section 
 123B.04, subdivision 1.  

    Subd. 2.    Building allocation.  A district must 
 initially allocate its general education and referendum revenue 
 to each building in the district where the children who have 
 generated the revenue are served.  General education and 
 referendum revenue generated by students served at sites not 
 owned and operated by the district must be allocated to a 
 separate account to be used for services for pupils who 
 generated the revenue. 

    Subd. 3.    Reallocation for expenditures.  A district 
 may, by board resolution, adjust the initial allocation so as to 
 expend revenue for any purpose including, but not limited to, 
 district services, revenues or other funds established, 
 reallocations among buildings and programs and, separately, the 
 costs of increases in compensation approved by the board for 
 teachers and other employees. 

    Subd. 4.    Separate accounts.  Each district shall 
 maintain separate accounts to identify revenues and expenditures 
 for each building. 

    Subd. 5.    Data reporting.  Each district must report 
 to the commissioner the actual amount of general education and 
 referendum revenue initially allocated to each building under 
 subdivision 2 and the amount of any reallocations under 
 subdivision 3 by January 30 of the next fiscal year. 

    HIST: 1999 c 249 s 23; 1Sp2001 c 6 art 1 s 35 

  126C.30 Repealed, 1Sp2001 c 5 art 3 s 96; 1Sp2001 c 6 art 
  1 s 55 subd 1 

*   NOTE:  This section, as added by Laws 1992, chapter 499, 
*article 7, section 4, is effective for revenue for fiscal year 
*2002.  Laws 1992, chapter 499, article 7, section 32, as amended 
*by Laws 2000, chapter 489, article 2, section 29.

  126C.31 Repealed, 1Sp2001 c 5 art 3 s 96; 1Sp2001 c 6 art 
  1 s 55 subd 1 

  126C.32 Repealed, 1Sp2001 c 5 art 3 s 96; 1Sp2001 c 6 art 
  1 s 55 subd 1 

*   NOTE:  This section, as added by Laws 1992, chapter 499, 
*article 7, section 5, is effective for revenue for fiscal year 
*2002.  See Laws 1992, chapter 499, article 7, section 32, as 
*amended by Laws 2000, chapter 489, article 2, section 29.

  126C.33 Repealed, 1Sp2001 c 5 art 3 s 96; 1Sp2001 c 6 art 
  1 s 55 subd 1 

  126C.34 Repealed, 1Sp2001 c 5 art 3 s 96; 1Sp2001 c 6 art 
  1 s 55 subd 1 

  126C.35 Repealed, 1Sp2001 c 5 art 3 s 96; 1Sp2001 c 6 art 
  1 s 55 subd 1 

*   NOTE:  This section, as added by Laws 1992, chapter 499, 
*article 7, section 7, is effective for revenue for fiscal year 
*2002.  Laws 1992, chapter 499, article 7, section 32, as amended 
*by Laws 2000, chapter 489, article 2, section 29.

  126C.36 Repealed, 1Sp2001 c 5 art 3 s 96; 1Sp2001 c 6 art 
  1 s 55 subd 1 

     126C.40 Capital levies. 

    Subdivision 1.    To lease building or land.  (a) When a 
 district 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 $100 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 children, families, and learning 
 after April 1, 1998, the term "instructional purpose" as used in 
 this subdivision excludes expenditures on stadiums. 

    (g) The commissioner of children, families, and learning 
 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 $25 times the adjusted marginal cost pupil units 
 of the member districts.  This authority is in addition to any 
 other authority authorized under this section. 

    Subd. 2.    Pre-July 1990 lease purchase, installment buys.
  A district may annually levy the amount needed to make 
 payments required by a lease purchase agreement, installment 
 purchase agreement, or other deferred payment agreement 
 authorized by Minnesota Statutes 1989 Supplement, section 
 465.71, if:  

    (1) the agreement was approved by the commissioner before 
 July 1, 1990, according to Minnesota Statutes 1989 Supplement, 
 section 275.125, subdivision 11d; or 

    (2) the district levied in 1989 for the payments. 

    Subd. 3.    Cooperating districts.  A district that has 
 an agreement according to section 123A.30 or 123A.32 may levy 
 for the repair costs, as approved by the department of a 
 building located in another district that is a party to the 
 agreement. 

    Subd. 4.    Interactive television.  (a) A district with 
 its central administrative office located within economic 
 development region one, two, three, four, five, six, seven, 
 eight, nine, and ten may apply to the commissioner for ITV 
 revenue up to the greater of .6 percent of the adjusted net tax 
 capacity of the district or $25,000.  Eligible interactive 
 television expenditures include the construction, maintenance, 
 and lease costs of an interactive television system for 
 instructional purposes.  An eligible school district that has 
 completed the construction of its interactive television system 
 may also purchase computer hardware and software used primarily 
 for instructional purposes and access to the Internet provided 
 that its total expenditures for interactive television 
 maintenance and lease costs and for computer hardware and 
 software under this subdivision do not exceed its interactive 
 television revenue for fiscal year 1998.  The approval by the 
 commissioner and the application procedures set forth in 
 subdivision 1 shall apply to the revenue in this subdivision.  
 In granting the approval, the commissioner shall consider 
 whether the district is maximizing efficiency through peak use 
 and off-peak use pricing structures. 

    (b) To obtain ITV revenue, a district may levy an amount 
 not to exceed the district's ITV 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 marginal cost pupil units in the 
 district for the year to which the levy is attributable; to 

    (2) $8,404.  

    (c) A district's ITV aid is the difference between its ITV 
 revenue and the ITV levy. 

    (d) The revenue in the first year after reorganization for 
 a district that has reorganized under sections 123A.35 to 
 123A.41, 123A.46, or 123A.48 shall be the greater of: 

    (1) the revenue computed for the reorganized district under 
 paragraph (a), or 

    (2)(i) for two districts that reorganized, 75 percent of 
 the revenue computed as if the districts involved in the 
 reorganization were separate, or 

    (ii) for three or more districts that reorganized, 50 
 percent of the revenue computed as if the districts involved in 
 the reorganization were separate. 

    (e) The revenue in paragraph (d) is increased by the 
 difference between the initial revenue and ITV lease costs for 
 leases that had been entered into by the preexisting districts 
 on the effective date of the consolidation or combination and 
 with a term not exceeding ten years.  This increased revenue is 
 only available for the remaining term of the lease.  However, in 
 no case shall the revenue exceed the amount available had the 
 preexisting districts received revenue separately. 

    (f) Effective for fiscal year 2000, the revenue under this 
 section shall be 75 percent of the amount determined in 
 paragraph (a); for fiscal year 2001, 50 percent of the amount in 
 paragraph (a); and for fiscal year 2002, 25 percent of the 
 amount in paragraph (a). 

    (g) This subdivision expires effective for revenue for 
 fiscal year 2003.  

    Subd. 5.    Energy conservation.  For loans approved 
 before March 1, 1998, the district may annually include as 
 revenue under section 123B.53, without the approval of a 
 majority of the voters in the district, an amount sufficient to 
 repay the annual principal and interest of the loan made 
 pursuant to sections 216C.37 and 298.292 to 298.298.  For energy 
 loans approved after March 1, 1998, school districts must 
 annually transfer from the general fund to the debt redemption 
 fund the amount sufficient to pay interest and principal on the 
 loans.  

    Subd. 6.    Lease purchase; installment buys.  (a) Upon 
 application to, and approval by, the commissioner in accordance 
 with the procedures and limits in subdivision 1, paragraphs (a) 
 and (b), a district, as defined in this subdivision, may: 

    (1) purchase real or personal property under an installment 
 contract or may lease real or personal property with an option 
 to purchase under a lease purchase agreement, by which 
 installment contract or lease purchase agreement title is kept 
 by the seller or vendor or assigned to a third party as security 
 for the purchase price, including interest, if any; and 

    (2) annually levy the amounts necessary to pay the 
 district's obligations under the installment contract or lease 
 purchase agreement. 

    (b) The obligation created by the installment contract or 
 the lease purchase agreement must not be included in the 
 calculation of net debt for purposes of section 475.53, and does 
 not constitute debt under other law.  An election is not 
 required in connection with the execution of the installment 
 contract or the lease purchase agreement. 

    (c) The proceeds of the levy authorized by this subdivision 
 must not be used to acquire a facility to be primarily used for 
 athletic or school administration purposes. 

    (d) For the purposes of this subdivision, "district" means: 

    (1) a school district required to have a comprehensive plan 
 for the elimination of segregation whose plan has been 
 determined by the commissioner to be in compliance with 
 department of children, families, and learning rules relating to 
 equality of educational opportunity and school desegregation 
 and, for a district eligible for revenue under section 124D.86, 
 subdivision 3, clause (4), where the acquisition of property 
 under this subdivision is determined by the commissioner to 
 contribute to the implementation of the desegregation plan; or 

    (2) a school district that participates in a joint program 
 for interdistrict desegregation with a district defined in 
 clause (1) if the facility acquired under this subdivision is to 
 be primarily used for the joint program and the commissioner 
 determines that the joint programs are being undertaken to 
 implement the districts' desegregation plan. 

    (e) Notwithstanding subdivision 1, the prohibition against 
 a levy by a district to lease or rent a district-owned building 
 to itself does not apply to levies otherwise authorized by this 
 subdivision. 

    (f) For the purposes of this subdivision, any references in 
 subdivision 1 to building or land shall include personal 
 property. 

    HIST: 1974 c 521 s 30; 1977 c 447 art 1 s 20; art 6 s 9; 1983 
 c 323 s 4; 1984 c 502 art 7 s 9; 1984 c 583 s 32; 1986 c 444; 
 1988 c 718 art 8 s 21; 1988 c 719 art 5 s 84; 1989 c 222 s 36; 
 1989 c 329 art 5 s 14; art 6 s 49; art 13 s 20; 1Sp1989 c 1 art 
 2 s 11; 1990 c 562 art 5 s 9,10; 1991 c 130 s 30; 1991 c 265 art 
 5 s 13; art 6 s 56; 1992 c 499 art 5 s 22; art 6 s 30; art 12 s 
 29; 1993 c 224 art 5 s 30; art 7 s 12; 1994 c 465 art 2 s 1; art 
 3 s 25; 1994 c 614 s 1; 1994 c 647 art 5 s 13; art 6 s 29; 
 1Sp1995 c 3 art 5, s 9; art 12 s 3; art 16 s 13; 1996 c 412 art 
 5 s 5,6; 1997 c 7 art 1 s 63; 1Sp1997 c 4 art 4 s 19; art 9 s 1; 
 3Sp1997 c 3 s 27; 1998 c 397 art 7 s 108-110,164; art 11 s 3; 
 1998 c 398 art 4 s 4-6; 1998 c 398 art 5 s 55; 1999 c 241 art 4 
 s 12; 2000 c 254 s 51; 2000 c 489 art 5 s 10,11; 1Sp2001 c 6 art 
 4 s 15 

     126C.41 Benefits levies. 

    Subdivision 1.    Health insurance.  (a) A district may 
 levy the amount necessary to make employer contributions for 
 insurance for retired employees under this subdivision.  

    (b) The school board of a joint vocational technical 
 district formed under the provisions formerly codified as 
 sections 136C.60 to 136C.69 and the school board of a school 
 district may provide employer-paid hospital, medical, and dental 
 benefits to a person who: 

    (1) is eligible for employer-paid insurance under 
 collective bargaining agreements or personnel plans in effect on 
 June 30, 1992; 

    (2) has at least 25 years of service credit in the public 
 pension plan of which the person is a member on the day before 
 retirement or, in the case of a teacher, has a total of at least 
 25 years of service credit in the teachers retirement 
 association, a first-class city teacher retirement fund, or any 
 combination of these; 

    (3) upon retirement is immediately eligible for a 
 retirement annuity; 

    (4) is at least 55 and not yet 65 years of age; and 

    (5) retires on or after May 15, 1992, and before July 21, 
 1992. 

    A school board paying insurance under this subdivision may 
 not exclude any eligible employees. 

    (c) An employee who is eligible both for the health 
 insurance benefit under this subdivision and for an early 
 retirement incentive under a collective bargaining agreement or 
 personnel plan established by the employer must select either 
 the early retirement incentive provided under the collective 
 bargaining agreement personnel plan or the incentive provided 
 under this subdivision, but may not receive both.  For purposes 
 of this subdivision, a person retires when the person terminates 
 active employment and applies for retirement benefits.  The 
 retired employee is eligible for single and dependent coverages 
 and employer payments to which the person was entitled 
 immediately before retirement, subject to any changes in 
 coverage and employer and employee payments through collective 
 bargaining or personnel plans, for employees in positions 
 equivalent to the position from which the employee retired.  The 
 retired employee is not eligible for employer-paid life 
 insurance.  Eligibility ceases when the retired employee attains 
 the age of 65, or when the employee chooses not to receive the 
 retirement benefits for which the employee has applied, or when 
 the employee is eligible for employer-paid health insurance from 
 a new employer.  Coverages must be coordinated with relevant 
 health insurance benefits provided through the federally 
 sponsored Medicare program.  

    (d) Unilateral implementation of this section by a public 
 employer is not an unfair labor practice for purposes of chapter 
 179A.  The authority provided in this subdivision for an 
 employer to pay health insurance costs for certain retired 
 employees is not subject to the limits in section 179A.20, 
 subdivision 2a. 

    (e) If a school district levies according to this 
 subdivision, it may not also levy according to section 123A.73, 
 subdivision 12, for eligible employees. 

    Subd. 2.    Retired employee health benefits.  A 
 district may levy an amount up to the amount the district is 
 required by the collective bargaining agreement in effect on 
 March 30, 1992, to pay for health insurance or unreimbursed 
 medical expenses for licensed and nonlicensed employees who have 
 terminated services in the employing district and withdrawn from 
 active teaching service or other active service, as applicable, 
 before July 1, 1992.  The total amount of the levy each year may 
 not exceed $600,000.  

    Subd. 3.    Retirement levies.  (a) In 1991 and each 
 year thereafter, a district to which this subdivision applies 
 may levy an additional amount required for contributions to the 
 Minneapolis employees retirement fund as a result of the maximum 
 dollar amount limitation on state contributions to the fund 
 imposed under section 422A.101, subdivision 3.  The additional 
 levy must not exceed the most recent amount certified by the 
 board of the Minneapolis employees retirement fund as the 
 district's share of the contribution requirement in excess of 
 the maximum state contribution under section 422A.101, 
 subdivision 3.  

    (b) For taxes payable in 1994 and thereafter, special 
 school district No. 1, Minneapolis, and independent school 
 district No. 625, St. Paul, may levy for the increase in the 
 employer retirement fund contributions, under Laws 1992, chapter 
 598, article 5, section 1.  

    (c) If the employer retirement fund contributions under 
 section 354A.12, subdivision 2a, are increased for fiscal year 
 1994 or later fiscal years, special school district No. 1, 
 Minneapolis, and independent school district No. 625, St. Paul, 
 may levy in payable 1994 or later an amount equal to the amount 
 derived by applying the net increase in the employer retirement 
 fund contribution rate of the respective teacher retirement fund 
 association between fiscal year 1993 and the fiscal year 
 beginning in the year after the levy is certified to the total 
 covered payroll of the applicable teacher retirement fund 
 association.  If an applicable school district levies under this 
 paragraph, they may not levy under paragraph (b). 

    (d) In addition to the levy authorized under paragraph (c), 
 special school district No. 1, Minneapolis, may also levy 
 payable in 1997 or later an amount equal to the contributions 
 under section 423A.02, subdivision 3, and may also levy in 
 payable 1994 or later an amount equal to the state aid 
 contribution under section 354A.12, subdivision 3b.  Independent 
 school district No. 625, St. Paul, may levy payable in 1997 or 
 later an amount equal to the supplemental contributions under 
 section 423A.02, subdivision 3.  

    Subd. 4.    Minneapolis health insurance subsidy.  Each 
 year special school district No. 1, Minneapolis, may make an 
 additional levy not to exceed the amount raised by a net tax 
 rate of .10 percent times the adjusted net tax capacity for 
 taxes payable in 1991 and thereafter of the property in the 
 district for the preceding year.  The proceeds may be used only 
 to subsidize health insurance costs for eligible teachers as 
 provided in this section.  

    "Eligible teacher" means a retired teacher who was a basic 
 member of the Minneapolis teachers retirement fund association, 
 who retired before May 1, 1974, or who had 20 or more years of 
 basic member service in the Minneapolis teacher retirement fund 
 association and retired before June 30, 1983, and who is not 
 eligible to receive the hospital insurance benefits of the 
 federal Medicare program of the Social Security Act without 
 payment of a monthly premium.  The district must notify eligible 
 teachers that a subsidy is available.  To obtain a subsidy, an 
 eligible teacher must submit to the school district a copy of 
 receipts for health insurance premiums paid.  The district must 
 disburse the health insurance premium subsidy to each eligible 
 teacher according to a schedule determined by the district, but 
 at least annually.  An eligible teacher may receive a subsidy up 
 to an amount equal to the lesser of 90 percent of the cost of 
 the eligible teacher's health insurance or up to 90 percent of 
 the cost of the number two qualified plan of health coverage for 
 individual policies made available by the Minnesota 
 comprehensive health association under chapter 62E.  

    If funds remaining from the previous year's health 
 insurance subsidy levy, minus the previous year's required 
 subsidy amount, are sufficient to pay the estimated current year 
 subsidy, the levy must be discontinued until the remaining funds 
 are estimated by the school board to be insufficient to pay the 
 subsidy. 

    This subdivision does not extend benefits to teachers who 
 retire after June 30, 1983, and does not create a contractual 
 right or claim for altering the benefits in this subdivision.  
 This subdivision does not restrict the district's right to 
 modify or terminate coverage under this subdivision. 

    HIST: 1976 c 271 s 84; 1979 c 303 art 2 s 22; 1981 c 224 s 38; 
 1983 c 314 art 1 s 21; 1986 c 444; 1987 c 384 art 2 s 68; 1987 c 
 398 art 6 s 14; 1988 c 719 art 5 s 84; 1989 c 15 s 1; 1989 c 329 
 art 13 s 10,20; 1Sp1989 c 1 art 2 s 11; 1990 c 562 art 10 s 
 7,12; 1991 c 345 art 4 s 1; 1992 c 499 art 7 s 12,13; art 12 s 
 29; 1992 c 603 s 7; 1993 c 224 art 8 s 5,6; 1995 c 186 s 37; 
 1Sp1995 c 3 art 8 s 5; 1996 c 412 art 8 s 8; 1996 c 438 art 4 s 
 3; 1Sp1997 c 4 art 1 s 29-31; 1998 c 397 art 7 s 116,164; art 11 
 s 3; 1999 c 241 art 1 s 46; 2000 c 254 s 43; 1Sp2001 c 6 art 1 s 
 36,37 

     126C.42 Operating debt levies. 

    Subdivision 1.    1977 statutory operating debt.  (a) In 
 each year in which so required by this subdivision, a district 
 must make an additional levy to eliminate its statutory 
 operating debt, determined as of June 30, 1977, and certified 
 and adjusted by the commissioner.  This levy shall not be made 
 in more than 30 successive years and each year before it is 
 made, it must be approved by the commissioner and the approval 
 shall specify its amount.  This levy shall be an amount which is 
 equal to the amount raised by a levy of a net tax rate of 1.98 
 percent times the adjusted net tax capacity of the district for 
 the preceding year for taxes payable in 2000 and thereafter; 
 provided that in the last year in which the district is required 
 to make this levy, it must levy an amount not to exceed the 
 amount raised by a levy of a net tax rate of 1.98 percent times 
 the adjusted net tax capacity of the district for the preceding 
 year for taxes payable in 2000 and thereafter.  When the sum of 
 the cumulative levies made pursuant to this subdivision and 
 transfers made according to section 123B.79, subdivision 6, 
 equals an amount equal to the statutory operating debt of the 
 district, the levy shall be discontinued. 

    (b) The district must establish a special account in the 
 general fund which shall be designated "appropriated fund 
 balance reserve account for purposes of reducing statutory 
 operating debt" on its books and records.  This account shall 
 reflect the levy authorized pursuant to this subdivision.  The 
 proceeds of this levy must be used only for cash flow 
 requirements and must not be used to supplement district 
 revenues or income for the purposes of increasing the district's 
 expenditures or budgets. 

    (c) Any district which is required to levy pursuant to this 
 subdivision must certify the maximum levy allowable under 
 section 126C.13, subdivision 2, in that same year. 

    (d) Each district shall make permanent fund balance 
 transfers so that the total statutory operating debt of the 
 district is reflected in the general fund as of June 30, 1977. 

    Subd. 2. Repealed, 1Sp2001 c 6 art 1 s 55 subd 1 

    Subd. 3. Repealed, 1Sp2001 c 6 art 1 s 55 subd 1 

    Subd. 4.    1992 operating debt.  (a) For taxes payable 
 for calendar year 2003 and earlier, a district that has filed a 
 plan pursuant to section 123B.83, subdivision 4, may levy, with 
 the approval of the commissioner, to eliminate a deficit in the 
 net unappropriated balance in the operating funds of the 
 district, determined as of June 30, 1992, and certified and 
 adjusted by the commissioner.  Each year this levy may be an 
 amount not to exceed the lesser of: 

    (1) an amount raised by a levy of a net tax rate of one 
 percent times the adjusted net tax capacity; or 

    (2) $100,000. 

 This amount must be reduced by referendum revenue authorized 
 under section 126C.17 pursuant to the plan filed under section 
 123B.83.  However, the total amount of this levy for all years 
 it is made must not exceed the amount of the deficit in the net 
 unappropriated balance in the operating funds of the district as 
 of June 30, 1992.  When the cumulative levies made pursuant to 
 this subdivision equal the total amount permitted by this 
 subdivision, the levy must be discontinued.  

    (b) A district, if eligible, may levy under this 
 subdivision or subdivision 2 or 3, or under section 123A.73, 
 subdivision 9, or Laws 1992, chapter 499, article 7, sections 16 
 or 17, but not under more than one. 

    (c) The proceeds of this levy must be used only for cash 
 flow requirements and must not be used to supplement district 
 revenues or income for the purposes of increasing the district's 
 expenditures or budgets.  

    (d) Any district that levies pursuant to this subdivision 
 must certify the maximum levy allowable under section 126C.13, 
 subdivision 2, in that same year. 

    HIST: 1976 c 271 s 88; 1977 c 447 art 7 s 26; 1981 c 358 art 1 
 s 40; 1983 c 314 art 6 s 26; 1984 c 463 art 6 s 8; art 7 s 20; 
 1986 c 444; 1Sp1986 c 1 art 9 s 20; 1987 c 268 art 7 s 42; 1988 
 c 486 s 88,101 subd 2; 1988 c 719 art 5 s 84; 1989 c 329 art 13 
 s 14-16,20; 1Sp1989 c 1 art 2 s 11; 1992 c 499 art 12 s 29; 1993 
 c 224 art 6 s 17; 1Sp1993 c 6 s 6; 1994 c 647 art 8 s 10,11; 
 1998 c 397 art 7 s 115,164; art 11 s 3; 1999 c 241 art 6 s 7,8 

     126C.43 Levies; statutory obligations. 

    Subdivision 1.    Allocation of assets and liabilities.  
 A district may levy the amount authorized for liabilities of 
 dissolved districts pursuant to section 123A.67. 

    Subd. 2.    Payment to unemployment insurance program 
 trust fund by state and political subdivisions.  A district 
 may levy the amounts necessary to pay the district's obligations 
 under section 268.052, subdivision 1, and the amounts necessary 
 to pay for job placement services offered to employees who may 
 become eligible for benefits pursuant to section 268.085 for the 
 fiscal year the levy is certified. 

    Subd. 3.    Tax levy for judgment.  A district may levy 
 the amounts necessary to pay judgments against the district 
 under section 123B.25 that became final after the date the 
 district certified its proposed levy in the previous year.  With 
 the approval of the commissioner, a district may spread this 
 levy over a period not to exceed three years. 

    Subd. 4.    Levy limitations of reorganized districts.  
 A district may levy the amounts authorized by section 123A.73. 

    Subd. 5.    Expenses of transition; dissolved district.  
 A district may levy the amounts necessary to pay the district's 
 obligations under section 123A.76. 

    Subd. 6.    Teacher severance pay.  A district may levy 
 for severance pay required by sections 124D.05, subdivision 3, 
 and 123A.30, subdivision 6. 

    HIST: 1975 c 432 s 75; 1976 c 271 s 81; 1977 c 447 art 6 s 8; 
 1978 c 764 s 105; 1982 c 548 art 6 s 21; 1983 c 314 art 6 s 24; 
 1984 c 463 art 6 s 6; 1986 c 444; 1987 c 398 art 1 s 21; art 6 s 
 12; 1988 c 486 s 85; 1988 c 718 art 6 s 20,21; 1988 c 719 art 5 
 s 84; 1989 c 329 art 6 s 48; art 13 s 9-11,20; 1Sp1989 c 1 art 2 
 s 11; 1990 c 426 art 2 s 1; 1990 c 562 art 6 s 33; art 7 s 10; 
 art 10 s 9-11; 1990 c 596 s 3; 1991 c 130 s 29; 1991 c 265 art 5 
 s 12; 1991 c 291 art 4 s 1; 1992 c 499 art 6 s 29; art 7 s 
 11,26; art 12 s 29; 1992 c 511 art 2 s 21; art 5 s 9; 1992 c 603 
 s 11; 1993 c 224 art 7 s 13; art 8 s 3,4; 1994 c 647 art 8 s 9; 
 1Sp1995 c 3 art 1 s 17; art 16 s 13; 1996 c 412 art 4 s 10; art 
 13 s 18; 1997 c 66 s 79; 1Sp1997 c 4 art 1 s 26-28; art 2 s 31; 
 1998 c 265 s 45; 1998 c 397 art 7 s 111-114,164; art 11 s 3; 
 1999 c 107 s 66; 2000 c 343 s 4; 1Sp2001 c 6 art 1 s 38 

     126C.44 Crime-related costs levy. 

    Each district may make a levy on all taxable property 
 located within the district for the purposes specified in this 
 section.  The maximum amount which may be levied for all costs 
 under this section shall be equal to $11 multiplied by the 
 district's adjusted marginal cost pupil units for the school 
 year.  The proceeds of the levy must be used for directly 
 funding the following purposes or for reimbursing the cities and 
 counties who contract with the district for the following 
 purposes:  (1) to pay the costs incurred for the salaries, 
 benefits, and transportation costs of peace officers and 
 sheriffs for liaison in services in the district's schools; (2) 
 to pay the costs for a drug abuse prevention program as defined 
 in section 609.101, subdivision 3, paragraph (e), in the 
 elementary schools; (3) to pay the costs for a gang resistance 
 education training curriculum in the district's schools; (4) to 
 pay the costs for security in the district's schools and on 
 school property; or (5) to pay the costs for other crime 
 prevention, drug abuse, student and staff safety, and violence 
 prevention measures taken by the school district.  The district 
 must initially attempt to contract for services to be provided 
 by peace officers or sheriffs with the police department of each 
 city or the sheriff's department of the county within the 
 district containing the school receiving the services.  If a 
 local police department or a county sheriff's department does 
 not wish to provide the necessary services, the district may 
 contract for these services with any other police or sheriff's 
 department located entirely or partially within the school 
 district's boundaries.  The levy authorized under this section 
 is not included in determining the school district's levy 
 limitations. 

    HIST: 1975 c 432 s 75; 1976 c 271 s 81; 1977 c 447 art 6 s 8; 
 1978 c 764 s 105; 1982 c 548 art 6 s 21; 1983 c 314 art 6 s 24; 
 1984 c 463 art 6 s 6; 1986 c 444; 1987 c 398 art 1 s 21; art 6 s 
 12; 1988 c 486 s 85; 1988 c 718 art 6 s 20,21; 1988 c 719 art 5 
 s 84; 1989 c 329 art 6 s 48; art 13 s 9-11,20; 1Sp1989 c 1 art 2 
 s 11; 1990 c 426 art 2 s 1; 1990 c 562 art 6 s 33; art 7 s 10; 
 art 10 s 9-11; 1990 c 596 s 3; 1991 c 130 s 29; 1991 c 265 art 5 
 s 12; 1991 c 291 art 4 s 1; 1992 c 499 art 6 s 29; art 7 s 
 11,26; art 12 s 29; 1992 c 511 art 2 s 21; art 5 s 9; 1992 c 603 
 s 11; 1993 c 224 art 7 s 13; art 8 s 3,4; 1994 c 647 art 8 s 9; 
 1Sp1995 c 3 art 1 s 17; art 16 s 13; 1996 c 412 art 4 s 10; art 
 13 s 18; 1997 c 66 s 79; 1Sp1997 c 4 art 1 s 26-28; art 2 s 31; 
 1998 c 397 art 7 s 111-114,164; 1999 c 241 art 2 s 48; 2000 c 
 254 s 44; 2000 c 489 art 2 s 24 

     126C.45 Ice arena levy. 

    (a) Each year, an independent school district operating and 
 maintaining an ice arena, may levy for the net operational costs 
 of the ice arena.  The levy may not exceed the net actual costs 
 of operation of the arena for the previous year.  Net actual 
 costs are defined as operating costs less any operating revenues.

    (b) Any district operating and maintaining an ice arena 
 must demonstrate to the satisfaction of the office of monitoring 
 in the department that the district will offer equal sports 
 opportunities for male and female students to use its ice arena, 
 particularly in areas of access to prime practice time, team 
 support, and providing junior varsity and younger level teams 
 for girls' ice sports and ice sports offerings. 

    HIST: 1975 c 432 s 75; 1976 c 271 s 81; 1977 c 447 art 6 s 8; 
 1978 c 764 s 105; 1982 c 548 art 6 s 21; 1983 c 314 art 6 s 24; 
 1984 c 463 art 6 s 6; 1986 c 444; 1987 c 398 art 1 s 21; art 6 s 
 12; 1988 c 486 s 85; 1988 c 718 art 6 s 20,21; 1988 c 719 art 5 
 s 84; 1989 c 329 art 6 s 48; art 13 s 9-11,20; 1Sp1989 c 1 art 2 
 s 11; 1990 c 426 art 2 s 1; 1990 c 562 art 6 s 33; art 7 s 10; 
 art 10 s 9-11; 1990 c 596 s 3; 1991 c 130 s 29; 1991 c 265 art 5 
 s 12; 1991 c 291 art 4 s 1; 1992 c 499 art 6 s 29; art 7 s 
 11,26; art 12 s 29; 1992 c 511 art 2 s 21; art 5 s 9; 1992 c 603 
 s 11; 1993 c 224 art 7 s 13; art 8 s 3,4; 1994 c 647 art 8 s 9; 
 1Sp1995 c 3 art 1 s 17; art 16 s 13; 1996 c 412 art 4 s 10; art 
 13 s 18; 1997 c 66 s 79; 1Sp1997 c 4 art 1 s 26-28; art 2 s 31; 
 1998 c 397 art 7 s 111-114,164 

     126C.455 Swimming pool levy. 

    Each year, a school district with its home office located 
 in a county that has (i) a population density of ten or fewer 
 persons per square mile according to the 2000 census of 
 population; (ii) an international border; and (iii) more than 
 one school district within its boundaries, may levy for the net 
 operational costs of a swimming pool.  The levy may not exceed 
 the net actual costs of operation of the swimming pool for the 
 previous year.  Net actual costs are defined as operating costs 
 less any operating revenues and less any payments from other 
 local governmental units. 

    HIST: 1Sp2001 c 5 art 3 s 7 

     126C.46 Abatement levy. 

    (a) Each year, a school district may levy an amount to 
 replace the net revenue lost to abatements that have occurred 
 under chapter 278, section 270.07, 375.192, or otherwise.  The 
 maximum abatement levy is the sum of: 

    (1) the amount of the net revenue loss determined under 
 section 127A.49, subdivision 2, that is not paid in state aid 
 including any aid amounts not paid due to proration; 

    (2) the difference of (i) the amount of any abatements that 
 have been reported by the county auditor for the first six 
 months of the calendar year during which the abatement levy is 
 certified that the district chooses to levy, (ii) less any 
 amount actually levied under this clause that was certified in 
 the previous calendar year for the first six months of the 
 previous calendar year; and 

    (3) an amount equal to any interest paid on abatement 
 refunds.  

    (b) A district may spread this levy over a period not to 
 exceed two years.  With the approval of the commissioner, a 
 district may spread this levy over a period not to exceed three 
 years. 

    By July 15, the county auditor shall separately report the 
 abatements that have occurred during the first six calendar 
 months of that year to the commissioner and each district 
 located within the county. 

    HIST: 1975 c 432 s 75; 1976 c 271 s 81; 1977 c 447 art 6 s 8; 
 1978 c 764 s 105; 1982 c 548 art 6 s 21; 1983 c 314 art 6 s 24; 
 1984 c 463 art 6 s 6; 1986 c 444; 1987 c 398 art 1 s 21; art 6 s 
 12; 1988 c 486 s 85; 1988 c 718 art 6 s 20,21; 1988 c 719 art 5 
 s 84; 1989 c 329 art 6 s 48; art 13 s 9-11,20; 1Sp1989 c 1 art 2 
 s 11; 1990 c 426 art 2 s 1; 1990 c 562 art 6 s 33; art 7 s 10; 
 art 10 s 9-11; 1990 c 596 s 3; 1991 c 130 s 29; 1991 c 265 art 5 
 s 12; 1991 c 291 art 4 s 1; 1992 c 499 art 6 s 29; art 7 s 
 11,26; art 12 s 29; 1992 c 511 art 2 s 21; art 5 s 9; 1992 c 603 
 s 11; 1993 c 224 art 7 s 13; art 8 s 3,4; 1994 c 647 art 8 s 9; 
 1Sp1995 c 3 art 1 s 17; art 16 s 13; 1996 c 412 art 4 s 10; art 
 13 s 18; 1997 c 66 s 79; 1Sp1997 c 4 art 1 s 26-28; art 2 s 31; 
 1998 c 397 art 7 s 111-114,164; art 11 s 3; 1999 c 241 art 6 s 9 

  126C.47 Repealed, 1Sp2001 c 6 art 1 s 55 subd 1 

     126C.48 Levy procedure. 

    Subdivision 1.    Certify levy limits.  (a) By September 
 8, the commissioner shall notify the school districts of their 
 levy limits.  The commissioner shall certify to the county 
 auditors the levy limits for all districts headquartered in the 
 respective counties together with adjustments for errors in 
 levies not penalized pursuant to subdivision 3, as well as 
 adjustments to final pupil unit counts.  A district may require 
 the commissioner to review the certification and to present 
 evidence in support of modification of the certification. 

    The county auditor shall reduce levies for any excess of 
 levies over levy limitations pursuant to section 275.16.  Such 
 reduction in excess levies may, at the discretion of the school 
 district, be spread over two calendar years. 

    (b) As part of the commissioner's certification under 
 paragraph (a), the commissioner shall certify the amount by 
 which a district's levy for its general fund was reduced under 
 subdivision 8. 

    Subd. 2.    Notice to commissioner; forms.  By October 7 
 of each year each district must notify the commissioner of the 
 proposed levies in compliance with the levy limitations of this 
 chapter and chapters 120B, 122A, 123A, 123B, 124D, 125A, 127A, 
 and 136D.  By January 15 of each year each district must notify 
 the commissioner of the final levies certified.  The 
 commissioner shall prescribe the form of these notifications and 
 may request any additional information necessary to compute 
 certified levy amounts. 

    Subd. 3.    Adjustments.  If any district levy is found 
 to be excessive as a result of a decision of the tax court or a 
 redetermination by the commissioner of revenue under section 
 127A.48, subdivisions 7 to 16, or for any other reason, the 
 amount of the excess shall be deducted from the levy certified 
 in the next year for the same purpose.  If no levy is certified 
 in the next year for the same purpose or if the amount certified 
 is less than the amount of the excess, the excess must be 
 deducted from that levy and the levy certified pursuant to 
 section 126C.13, subdivision 2.  If the amount of any aid would 
 have been increased in a prior year as a result of a decision of 
 the tax court or a redetermination by the commissioner of 
 revenue, the amount of the increase shall be added to the amount 
 of current aid for the same purposes. 

    Subd. 4.    Applicability.  Notwithstanding any other 
 charter provision, general or special laws to the contrary, 
 every school district in the state shall abide by the terms and 
 provisions of this section and chapters 120B, 122A, 123A, 123B, 
 124D, 125A, 126C, and 127A. 

    Subd. 5.    Estimates.  The computation of levy 
 limitations pursuant to this chapter and chapters 120B, 122A, 
 123A, 123B, 124D, 125A, 127A, 136C, and 136D shall be based on 
 estimates where necessary.  If as a result of using estimates 
 for these computations the amount of any levy is different from 
 the amount which could actually have been levied if actual data 
 had been available, levy limitations in the first year when the 
 actual data is known shall be adjusted to reflect for this 
 difference.  The amount of any adjustment to levy limitations 
 pursuant to this subdivision shall be recognized as revenue in 
 the school year when the levy for which the levy limitation is 
 so adjusted is recognized as revenue. 

    Subd. 6.    Adjustments for law changes.  Whenever a 
 change enacted in law changes the levy authority for a school 
 district or an intermediate school district for a fiscal year 
 after the levy for that fiscal year has been certified by the 
 district under section 275.07, the department must adjust the 
 next levy certified by the district by the amount of the change 
 in levy authority for that fiscal year resulting from the change.
 Notwithstanding section 123B.75, the entire amount of the levy 
 adjustment must be recognized as revenue in the fiscal year the 
 levy is certified, if sufficient levy resources are available 
 under generally accepted accounting principles in the district 
 fund where the adjustment is to occur.  Districts that do not 
 have sufficient levy resources available in the fund where the 
 adjustment is to occur must recognize in the fiscal year the 
 levy is certified an amount equal to the levy resources 
 available.  The remaining adjustment amount must be recognized 
 as revenue in the fiscal year after the levy is certified. 

    Subd. 7.    Reporting.  For each tax settlement, the 
 county auditor shall report to each school district by fund, the 
 district tax settlement revenue defined in section 123B.75, 
 subdivision 5, paragraph (a), and the amount levied pursuant to 
 section 126C.42, subdivision 1, on the form specified in section 
 276.10.  The county auditor shall send to the district a copy of 
 the spread levy report specified in section 275.124. 

    Subd. 8.    Taconite payment and other reductions.  (1) 
 Reductions in levies pursuant to sections 126C.48, subdivision 
 1, and 273.138, must be made prior to the reductions in clause 
 (2). 

    (2) Notwithstanding any other law to the contrary, 
 districts which received payments pursuant to sections 298.018; 
 298.34 to 298.39; 298.391 to 298.396; 298.405; and any law 
 imposing a tax upon severed mineral values; must not include a 
 portion of these aids in their permissible levies pursuant to 
 those sections, but instead must reduce the permissible levies 
 authorized by this chapter and chapters 120B, 122A, 123A, 123B, 
 124A, 124D, 125A, and 127A by the greater of the following: 

    (a) an amount equal to 50 percent of the total dollar 
 amount of the payments received pursuant to those sections in 
 the previous fiscal year; or 

    (b) an amount equal to the total dollar amount of the 
 payments received pursuant to those sections in the previous 
 fiscal year less the product of the same dollar amount of 
 payments or revenue times five percent. 

    (3) The amount of any increased levy authorized by 
 referendum pursuant to section 126C.17, subdivision 9, shall not 
 be reduced pursuant to this subdivision.  The amount of any levy 
 authorized by section 126C.43, to make payments for bonds issued 
 and for interest thereon, shall not be reduced pursuant to this 
 subdivision.  

    (4) Before computing the reduction pursuant to this 
 subdivision of the health and safety levy authorized by sections 
 123B.57 and 126C.40, subdivision 5, the commissioner shall 
 ascertain from each affected school district the amount it 
 proposes to levy under each section or subdivision.  The 
 reduction shall be computed on the basis of the amount so 
 ascertained. 

    (5) Notwithstanding any law to the contrary, any amounts 
 received by districts in any fiscal year pursuant to sections 
 298.018; 298.34 to 298.39; 298.391 to 298.396; 298.405; or any 
 law imposing a tax on severed mineral values; and not deducted 
 from general education aid pursuant to section 126C.21, 
 subdivision 4, clause (2), and not applied to reduce levies 
 pursuant to this subdivision shall be paid by the district to 
 the St. Louis county auditor in the following amount by March 15 
 of each year, the amount required to be subtracted from the 
 previous fiscal year's general education aid pursuant to section 
 126C.21, subdivision 4, which is in excess of the general 
 education aid earned for that fiscal year.  The county auditor 
 shall deposit any amounts received pursuant to this clause in 
 the St. Louis county treasury for purposes of paying the 
 taconite homestead credit as provided in section 273.135. 

    HIST: Ex1971 c 31 art 20 s 8; 1973 c 683 s 19; 1975 c 432 s 
 75,78,80,81; 1976 c 2 s 97; 1976 c 271 s 87,90; 1977 c 447 art 1 
 s 20; 1978 c 764 s 106,109,111; 1979 c 334 art 1 s 22,24; art 2 
 s 13; 1980 c 509 s 112; 1980 c 607 art 7 s 9; 1980 c 609 art 1 s 
 13; art 4 s 16; 1981 c 358 art 1 s 39,42; 1986 c 441 s 1; 1986 c 
 444; 1Sp1986 c 1 art 4 s 27; 1Sp1986 c 3 art 2 s 36; 1987 c 268 
 art 7 s 41,43; art 9 s 8; 1987 c 398 art 7 s 39; 1Sp1987 c 4 art 
 1 s 5; 1988 c 486 s 87,89; 1988 c 719 art 5 s 84; 1989 c 222 s 
 35; 1989 c 329 art 13 s 13,20; 1Sp1989 c 1 art 2 s 11; art 6 s 
 10,11; 1990 c 604 art 3 s 29; 1991 c 130 s 31,32; 1992 c 499 art 
 12 s 25,29; 1992 c 511 art 3 s 8; 1995 c 212 art 4 s 64; 1995 c 
 264 art 3 s 1,2; 1Sp1995 c 3 art 1 s 18,19; art 16 s 13; 1996 c 
 412 art 1 s 12; 1997 c 7 art 1 s 64; 1997 c 251 s 18; 1Sp1997 c 
 4 art 1 s 32; 1998 c 389 art 10 s 1; 1998 c 397 art 7 s 
 117-122,164; art 11 s 3; 1999 c 86 art 1 s 35; 2000 c 254 s 
 45,46; 1Sp2001 c 5 art 6 s 3 

     126C.50 Tax and aid anticipation borrowing; definitions. 

    School district as used in sections 126C.50 to 126C.56 
 means any school district in the state of Minnesota, however 
 organized and wherever located. 

    HIST: 1963 c 371 s 1; 1981 c 1 s 3; 1Sp1986 c 1 art 10 s 5; 
 1987 c 258 s 12; 1989 c 246 s 2; 1990 c 375 s 3; 1Sp1995 c 3 art 
 16 s 13; 1996 c 412 art 13 s 17; 1998 c 397 art 7 s 82,164; art 
 11 s 3 

     126C.51 Application of limiting tax legislation. 

    Notwithstanding the provisions of section 471.69 or 471.75, 
 or of any other provision of law which by per capita limitation, 
 local tax rate limitation, or otherwise, limits the power of a 
 district to incur any debt or to issue any warrant or order, a 
 district has the powers in sections 126C.50 to 126C.56 
 specifically conferred upon it and all powers incident and 
 necessary to carrying out the purposes of sections 126C.50 to 
 126C.56. 

    HIST: 1963 c 371 s 2; 1981 c 1 s 4; 1988 c 719 art 5 s 84; 
 1Sp1989 c 1 art 2 s 11; 1998 c 397 art 7 s 83,164; art 11 s 3 

     126C.52 Authority to borrow money; limitations. 

    Subdivision 1.    Borrowing authority.  The board of any 
 school district may borrow money upon negotiable tax 
 anticipation certificates of indebtedness, in the manner and 
 subject to the limitations set forth in sections 126C.50 to 
 126C.56, for the purpose of anticipating general taxes already 
 levied by the district for school purposes.  The aggregate of 
 the borrowing under this subdivision must never exceed 75 
 percent of the taxes which are due and payable in the calendar 
 year, and as to which taxes no penalty for nonpayment or 
 delinquency has attached.  In determining the amount of taxes 
 due and payable in the calendar year, any amounts paid by the 
 state to replace such taxes, whether paid in that calendar year 
 or not, must be included. 

    Subd. 2.    Limitations.  The board may also borrow 
 money in the manner and subject to the limitations set forth in 
 sections 126C.50 to 126C.56 in anticipation of receipt of state 
 aids for schools as defined in Minnesota Statutes and of federal 
 school aids to be distributed by or through the department.  The 
 aggregate of such borrowings under this subdivision shall never 
 exceed 75 percent of such aids which are receivable by said 
 school district in the school year (from July 1 to June 30) in 
 which the money is borrowed, as estimated and certified by the 
 commissioner. 

    HIST: 1963 c 371 s 3; 1981 c 1 s 5; 1982 c 642 s 18; 1993 c 
 224 art 1 s 5; 1Sp1995 c 3 art 16 s 13; 1998 c 397 art 7 s 
 84,164; art 11 s 3 

     126C.53 Enabling resolution; form of certificates of 
  indebtedness. 

    The board may authorize and effect such borrowing, and may 
 issue such certificates of indebtedness upon passage of a 
 resolution specifying the amount and purposes for which it deems 
 such borrowing is necessary.  The resolution must be adopted by 
 a vote of at least two-thirds of its members.  The board must 
 fix the amount, date, maturity, form, denomination, and other 
 details of the certificates of indebtedness, not inconsistent 
 with this chapter.  The board must fix the date and place for 
 receipt of bids for the purchase of the certificates when bids 
 are required and direct the clerk to give notice of the date and 
 place for bidding. 

    HIST: 1963 c 371 s 4; 1978 c 764 s 73; 1998 c 397 art 7 s 
 85,164 

     126C.54 Repayment; maturity date of certificates; 
  interest. 

    The proceeds of the current tax levies and future state aid 
 receipts or other school funds which may become available must 
 be applied to the extent necessary to repay such certificates 
 and the full faith and credit of the district shall be pledged 
 to payment of the certificates.  Certificates issued in 
 anticipation of receipt of aids shall mature not later than the 
 anticipated date of receipt of the aids as estimated by the 
 commissioner, but in no event later than three months after the 
 close of the school year in which issued.  Certificates issued 
 in anticipation of receipt of taxes shall mature not later than 
 the anticipated date of receipt in full of the taxes, but in no 
 event later than three months after the close of the calendar 
 year in which issued.  The certificates must be sold at not less 
 than par.  The certificates must bear interest after maturity 
 until paid at the rate they bore before maturity and any 
 interest accruing before or after maturity must be paid from any 
 available school funds.  

    HIST: 1963 c 371 s 5; 1969 c 874 s 1; 1998 c 397 art 7 s 
 86,164 

     126C.55 State payment of debt obligation upon potential 
  default; repayment; state obligation not debt. 

    Subdivision 1.    Definitions.  For the purposes of this 
 section, the term "debt obligation" means: 

    (1) a tax or aid anticipation certificate of indebtedness; 

    (2) a certificate of participation issued under section 
 126C.40, subdivision 6; or 

    (3) a general obligation bond.  

    Subd. 2.    Notifications; payment; appropriation.  (a) 
 If a district believes that it may be unable to make a principal 
 or interest payment on any outstanding debt obligation on the 
 date that payment is due, it must notify the commissioner as 
 soon as possible, but not less than 15 working days before the 
 date that principal or interest payment is due.  The notice must 
 include the name of the district, an identification of the debt 
 obligation issue in question, the date the payment is due, the 
 amount of principal and interest due on the payment date, the 
 amount of principal or interest that the district will be unable 
 to repay on that date, the paying agent for the debt obligation, 
 the wire transfer instructions to transfer funds to that paying 
 agent, and an indication as to whether a payment is being 
 requested by the district under this section.  If a paying agent 
 becomes aware of a potential default, it shall inform the 
 commissioner of that fact.  After receipt of a notice which 
 requests a payment under this section, after consultation with 
 the district and the paying agent, and after verification of the 
 accuracy of the information provided, the commissioner shall 
 notify the commissioner of finance of the potential default.  
 The notice must include a final figure as to the amount due that 
 the district will be unable to repay on the date due.  

    (b) Except as provided in subdivision 9, upon receipt of 
 this notice from the commissioner, the commissioner of finance 
 shall issue a warrant and authorize the commissioner of 
 children, families, and learning to pay to the paying agent for 
 the debt obligation the specified amount on or before the date 
 due.  The amounts needed for the purposes of this subdivision 
 are annually appropriated to the department from the state 
 general fund. 

    (c) The departments of children, families, and learning and 
 finance must jointly develop detailed procedures for districts 
 to notify the state that they have obligated themselves to be 
 bound by the provisions of this section, procedures for 
 districts and paying agents to notify the state of potential 
 defaults and to request state payment under this section, and 
 procedures for the state to expedite payments to prevent 
 defaults.  The procedures are not subject to chapter 14. 

    Subd. 3.    School district bound; interest rate on state 
 paid amount.  If, at the request of a district, the state has 
 paid part or all of the principal or interest due on a 
 district's debt obligation on a specific date, the district is 
 bound by all provisions of this section and the amount paid 
 shall bear taxable interest from the date paid until the date of 
 repayment at the state treasurer's invested cash rate as it is 
 certified by the commissioner of finance.  Interest shall only 
 accrue on the amounts paid and outstanding less the reduction in 
 aid under subdivision 4 and other payments received from the 
 district. 

    Subd. 4.    Pledge of district's full faith and credit.  
 If, at the request of a district, the state has paid part or all 
 of the principal or interest due on a district's debt obligation 
 on a specific date, the pledge of the full faith and credit and 
 unlimited taxing powers of the district to repay the principal 
 and interest due on those debt obligations shall also, without 
 an election or the requirement of a further authorization, 
 become a pledge of the full faith and credit and unlimited 
 taxing powers of the district to repay to the state the amount 
 paid, with interest.  Amounts paid by the state must be repaid 
 in the order in which the state payments were made. 

    Subd. 5.    Aid reduction for repayment.  Except as 
 provided in this subdivision, the state must reduce the state 
 aid payable to the district under this chapter and chapters 
 120B, 122A, 123A, 123B, 124D, 125A, 127A, and 273, according to 
 the schedule in section 127A.44, subdivision 2, by the amount 
 paid by the state under this section on behalf of the district, 
 plus the interest due on it, and the amount reduced must revert 
 from the appropriate account to the state general fund.  
 Payments from the school endowment fund or any federal aid 
 payments shall not be reduced.  If, after review of the 
 financial situation of the district, the commissioner advises 
 the commissioner of finance that a total reduction of the aids 
 would cause an undue hardship on or an undue disruption of the 
 educational program of the district, the commissioner, with the 
 approval of the commissioner of finance, may establish a 
 different schedule for reduction of those aids to repay the 
 state.  The amount of aids to be reduced are decreased by any 
 amounts repaid to the state by the school district from other 
 revenue sources. 

    Subd. 6.    Tax levy for repayment.  (a) With the 
 approval of the commissioner, a district may levy in the year 
 the state makes a payment under this section an amount up to the 
 amount necessary to provide funds for the repayment of the 
 amount paid by the state plus interest through the date of 
 estimated repayment by the district.  The proceeds of this levy 
 may be used only for this purpose unless they are in excess of 
 the amount actually due, in which case the excess shall be used 
 to repay other state payments made under this section or shall 
 be deposited in the debt redemption fund of the school district. 
 This levy shall be an increase in the levy limits of the 
 district for purposes of section 275.065, subdivision 6.  The 
 amount of aids to be reduced to repay the state shall be 
 decreased by the amount levied.  This levy by the district is 
 not eligible for debt service equalization under section 123B.53.

    (b) If the state is not repaid in full for a payment made 
 under this section by November 30 of the calendar year following 
 the year in which the state makes the payment, the commissioner 
 shall require the district to certify a property tax levy in an 
 amount up to the amount necessary to provide funds for repayment 
 of the amount paid by the state plus interest through the date 
 of estimated repayment by the school district.  To prevent undue 
 hardship, the commissioner may allow the district to certify the 
 levy over a five-year period.  The proceeds of the levy may be 
 used only for this purpose unless they are in excess of the 
 amount actually due, in which case the excess shall be used to 
 repay other state payments made under this section or shall be 
 deposited in the debt redemption fund of the district.  This 
 levy shall be an increase in the levy limits of the school 
 district for purposes of section 275.065, subdivision 6.  If the 
 commissioner orders the district to levy, the amount of aids 
 reduced to repay the state shall be decreased by the amount 
 levied.  This levy by the district is not eligible for debt 
 service equalization under section 123B.53 or any successor 
 provision.  A levy under this subdivision must be explained as a 
 specific increase at the meeting required under section 275.065, 
 subdivision 6.  

    Subd. 7.    Election as to mandatory application.  A 
 district may covenant and obligate itself, prior to the issuance 
 of an issue of debt obligations, to notify the commissioner of a 
 potential default and to use the provisions of this section to 
 guarantee payment of the principal and interest on those debt 
 obligations when due.  If the district obligates itself to be 
 bound by this section, it must covenant in the resolution that 
 authorizes the issuance of the debt obligations to deposit with 
 the paying agent three business days prior to the date on which 
 a payment is due an amount sufficient to make that payment or to 
 notify the commissioner under subdivision 1 that it will be 
 unable to make all or a portion of that payment.  A district 
 that has obligated itself must include a provision in its 
 agreement with the paying agent for that issue that requires the 
 paying agent to inform the commissioner if it becomes aware of a 
 potential default in the payment of principal or interest on 
 that issue or if, on the day two business days prior to the date 
 a payment is due on that issue, there are insufficient funds to 
 make the payment on deposit with the paying agent.  Funds 
 invested in a refunding escrow account established under section 
 475.67 that are to become available to the paying agent on a 
 principal or interest payment date are deemed to be on deposit 
 with the paying agent three business days before the payment 
 date.  If a district either covenants to be bound by this 
 section or accepts state payments under this section to prevent 
 a default of a particular issue of debt obligations, the 
 provisions of this section shall be binding as to that issue as 
 long as any debt obligation of that issue remain outstanding.  
 If the provisions of this section are or become binding for more 
 than one issue of debt obligations and a district is unable to 
 make payments on one or more of those issues, the district must 
 continue to make payments on the remaining issues.  

    Subd. 8.    Mandatory plan; technical assistance.  If 
 the state makes payments on behalf of a district under this 
 section or the district defaults in the payment of principal or 
 interest on an outstanding debt obligation, it must submit a 
 plan to the commissioner for approval specifying the measures it 
 intends to implement to resolve the issues which led to its 
 inability to make the payment and to prevent further defaults.  
 The department must provide technical assistance to the district 
 in preparing its plan.  If the commissioner determines that a 
 district's plan is not adequate, the commissioner shall notify 
 the district that the plan has been disapproved, the reasons for 
 the disapproval, and that the state shall not make future 
 payments under this section for debt obligations issued after 
 the date specified in that notice until its plan is approved.  
 The commissioner may also notify the district that until its 
 plan is approved, other aids due the district will be withheld 
 after a date specified in the notice. 

    Subd. 9.    State bond rating.  If the commissioner of 
 finance determines that the credit rating of the state would be 
 adversely affected thereby, the commissioner of finance shall 
 not issue warrants under subdivision 2 for the payment of 
 principal or interest on any debt obligations for which a 
 district did not, prior to their issuance, obligate itself to be 
 bound by the provisions of this section. 

    Subd. 10.    Continuing disclosure agreements.  The 
 commissioner of finance may enter into written agreements or 
 contracts relating to the continuing disclosure of information 
 needed to facilitate the ability of school districts to issue 
 debt obligations according to federal securities laws, rules, 
 and regulations, including securities and exchange commission 
 rules and regulations, section 240.15c2-12.  Such agreements or 
 contracts may be in any form the commissioner of finance deems 
 reasonable and in the state's best interests. 

    HIST: 1993 c 224 art 1 s 6; 1Sp1995 c 3 art 16 s 13; 1998 c 
 397 art 7 s 87-94,164; art 11 s 3; 1998 c 398 art 4 s 2; 1999 c 
 241 art 4 s 13; 1999 c 248 s 1 

     126C.56 Sale of certificates; disbursement of proceeds. 

    Subdivision 1.    Public sale.  The clerk of the board 
 shall give notice of the proposed sale as required by chapter 
 475.  At the time and place so fixed, such certificates may be 
 sold by the board, or its officers if authorized by the board, 
 to the bidder who will agree to purchase the same on terms 
 deemed most favorable to the district.  Such certificates shall 
 be executed and delivered as required by chapter 475.  The money 
 so received shall be disbursed solely for the purposes for which 
 such taxes are levied or aids are receivable.  The purchaser of 
 such certificates shall not be obligated to see to such 
 application of the proceeds. 

    Subd. 2.    Public sale exception.  Public sale of tax 
 and aid anticipation certificates of indebtedness according to 
 subdivision 1 shall not be required (1) if the proposed 
 borrowing is in an amount less than $400,000, and if the sum of 
 all outstanding tax and aid anticipation certificates issued by 
 the board within the preceding six months does not exceed 
 $400,000 or, (2) if the certificates mature no later than 13 
 months after their date of issue.  If no public sale is held, 
 the certificates of indebtedness may be sold in accordance with 
 the most favorable of two or more proposals solicited privately 
 or the interest rates may be determined by direct negotiation.  

    HIST: 1963 c 371 s 6; 1974 c 406 s 15; 1978 c 764 s 74; 
 1Sp1985 c 12 art 7 s 20; 1987 c 344 s 1; 1998 c 397 art 7 s 164 

     126C.60 Loans to distressed districts. 

    Financial aid to distressed districts is governed by the 
 provisions of the Maximum Effort School Aid Law.  

    HIST: Ex1959 c 71 art 5 s 35; 1998 c 397 art 7 s 43,164 

     126C.61 Citation, Maximum Effort School Aid Law.  

    Sections 126C.61 to 126C.72 may be cited as the "Maximum 
 Effort School Aid Law."  

    HIST: Ex1959 c 27 s 1; 1994 c 465 art 2 s 1; 1998 c 397 art 7 
 s 164; art 11 s 3 

     126C.62 Policy and purpose. 

    The rates of increase in school population in Minnesota and 
 population shifts and economic changes in recent years, and 
 anticipated in future years, have required and will require 
 large expenditures for performing the duty of the state and its 
 subdivisions to provide a general and uniform system of public 
 schools.  The state policy has been to require these school 
 costs to be borne primarily by the local subdivisions.  In most 
 instances the local subdivisions have been, and will be, able to 
 provide the required funds by local taxation as supplemented by 
 the aids usually given to all districts from state income tax 
 and other state aids.  There are, however, exceptional cases due 
 to local conditions not found in most other districts where, 
 either temporarily or over a considerable period of years, the 
 costs will exceed the maximum which the local taxpayers can be 
 reasonably expected to bear.  In some districts having bonds of 
 several issues outstanding, debt service tax levy requirements 
 are excessive for some years because of heavy bond principal 
 payments accumulating in some of the years due to overlapping or 
 short term issues.  The policy and purpose of sections 126C.61 
 to 126C.72 is to utilize the credit of the state, to a limited 
 degree, to relieve those school districts, but only those, where 
 the maximum effort by the district is inadequate to provide the 
 necessary money.  It is also the purpose of sections 126C.61 to 
 126C.72 to promote efficient use of school buildings.  To that 
 end, a district that receives a maximum effort loan is 
 encouraged to design and use its facility to integrate social 
 services and library services. 

    HIST: Ex1959 c 27 s 2; 1993 c 224 art 5 s 12; 1994 c 465 art 2 
 s 1; 1998 c 397 art 7 s 44,164; art 11 s 3 

     126C.63 Definitions. 

    Subdivision 1.    Scope.  As used in sections 126C.63 to 
 126C.72, the terms defined in this section shall have the 
 meanings given them. 

    Subd. 2.    District.  "District" means any school 
 district defined in the Education Code. 

    Subd. 3.    Indebtedness; debt.  "Indebtedness" or 
 "debt" means the net debt of any district computed according to 
 section 475.51, subdivision 4, excluding loans made under 
 sections 126C.61 to 126C.72. 

    Subd. 4.    Debt service fund.  "Debt service fund" 
 means the aggregate of all funds maintained by a district which 
 are appropriated to payment of principal of and interest on its 
 debts as required by chapter 475. 

    Subd. 5.    Levy.  "Levy" means a district's net debt 
 service levy after the reduction of debt service equalization 
 aid under section 123B.53, subdivision 6.  For taxes payable in 
 1994 and later, each district's maximum effort debt service levy 
 for purposes of subdivision 8, must be reduced by an equal 
 number of percentage points if the commissioner determines that 
 the levy reduction will not result in a statewide property tax 
 as would be required under Minnesota Statutes 1992, section 
 124.46, subdivision 3.  A district's levy that is adjusted under 
 this section must not be reduced below 22.3 percent of the 
 district's adjusted net tax capacity. 

    Subd. 6.    Debt service levy.  "Debt service levy" 
 means the levy for all debt service fund purposes in accordance 
 with chapter 475. 

    Subd. 7.    Required debt service levy.  "Required debt 
 service levy" means the total dollar amount needed to be 
 included in the taxes levied by the district in any year for 
 payment of interest and principal falling due on its debts prior 
 to collection of the next ensuing year's debt service levy. 

    Subd. 8.    Maximum effort debt service levy.  "Maximum 
 effort debt service levy" means the lesser of: 

    (1) a levy in whichever of the following amounts is 
 applicable: 

    (a) in any district receiving a debt service loan for a 
 debt service levy payable in 2002 and thereafter, or granted a 
 capital loan after January 1, 2001, a levy in total dollar 
 amount computed at a rate of 30 percent of adjusted net tax 
 capacity for taxes payable in 2002 and thereafter; 

    (b) in any district receiving a debt service loan for a 
 debt service levy payable in 1991 and thereafter, or granted a 
 capital loan after January 1, 1990, a levy in a total dollar 
 amount computed at a rate of 24 percent of adjusted net tax 
 capacity for taxes payable in 1991 and thereafter; 

    (c) in any district granted a debt service loan after July 
 31, 1981, or granted a capital loan which is approved after July 
 31, 1981, a levy in a total dollar amount computed as a tax rate 
 of 21.92 percent on the adjusted net tax capacity for taxes 
 payable in 1991 and thereafter; or 

    (2) a levy in any district for which a capital loan was 
 approved prior to August 1, 1981, a levy in a total dollar 
 amount equal to the sum of the amount of the required debt 
 service levy and an amount which when levied annually will in 
 the opinion of the commissioner be sufficient to retire the 
 remaining interest and principal on any outstanding loans from 
 the state within 30 years of the original date when the capital 
 loan was granted.  

    The board in any district affected by the provisions of 
 clause (2) may elect instead to determine the amount of its levy 
 according to the provisions of clause (1).  If a district's 
 capital loan is not paid within 30 years because it elects to 
 determine the amount of its levy according to the provisions of 
 clause (2), the liability of the district for the amount of the 
 difference between the amount it levied under clause (2) and the 
 amount it would have levied under clause (1), and for interest 
 on the amount of that difference, must not be satisfied and 
 discharged pursuant to Minnesota Statutes 1988, or an earlier 
 edition of Minnesota Statutes if applicable, section 124.43, 
 subdivision 4. 

    Subd. 9.    Adjusted net tax capacity.  "Adjusted net 
 tax capacity" means, as of any date, the net tax capacity of all 
 taxable property most recently determined by the commissioner of 
 revenue in accordance with the provisions of section 127A.48.  
 "Market value" means the value of all taxable property in the 
 district on which its net debt limit is based as provided in 
 section 475.53, subdivision 4.  

    Subd. 10.    Fund.  "Fund" means the "maximum effort 
 school loan fund." 

    Subd. 11.    School loan bonds.  "School loan bonds" 
 means bonds issued by the state under section 126C.72 to support 
 the fund and to refund bonds or certificates of indebtedness 
 previously issued for that purpose. 

    Subd. 12.    Net proceeds.  "Net proceeds" of bonds 
 means the amounts received upon their sale less expenses 
 incident to their issuance, sale, and delivery and the amount 
 required to pay and redeem any bonds or certificates of 
 indebtedness refunded thereby. 

    Subd. 13.    Year.  "Year" means the school year ending 
 on and including June 30 in each calendar year. 

    HIST: Ex1959 c 27 s 3; 1961 c 562 s 4,5; 1963 c 601 s 1; 1965 
 c 875 s 1,2; 1967 c 583 s 1; 1969 c 6 s 21; 1969 c 1056 s 1,2; 
 1973 c 773 s 1; 1975 c 432 s 51-54; 1977 c 447 art 6 s 5; 1978 c 
 706 s 33; 1978 c 764 s 63; 1980 c 545 s 1; 1981 c 358 art 1 s 
 48; art 9 s 1; 1982 c 548 art 6 s 17; 1987 c 268 art 7 s 11; 
 1988 c 719 art 5 s 84; 1989 c 329 art 13 s 2,20; 1Sp1989 c 1 art 
 2 s 11; 1990 c 562 art 11 s 2; 1993 c 224 art 5 s 13; 1994 c 465 
 art 2 s 1; 1Sp1995 c 3 art 16 s 13; 1998 c 397 art 7 s 
 45-47,164; art 11 s 3; 1999 c 241 art 4 s 14,15; 1Sp2001 c 5 art 
 2 s 20; 1Sp2001 c 6 art 1 s 55 subd 2; art 4 s 16 

     126C.64 Net debt; determination. 

    In computing "net debt" and in determining whether a 
 district is eligible for a state loan, state loans to the 
 district shall not be considered, notwithstanding the provisions 
 of any other general or special law.  

    HIST: 1967 c 583 s 7; 1998 c 397 art 7 s 48,164 

     126C.65 Fund established; division into accounts. 

    Subdivision 1.    Maximum effort school loan fund.  A 
 "maximum effort school loan fund" for administration of moneys 
 to be received and disbursed as authorized and required by 
 sections 126C.61 to 126C.72 must be maintained in the state 
 treasury.  The fund must be divided into three accounts for the 
 purposes specified in subdivisions 2, 3, 4, and 5.  

    Subd. 2.    Debt service loan account.  A debt service 
 loan account must be maintained out of which loans under section 
 126C.68 must be made.  All money appropriated to the fund by 
 section 126C.66 shall be paid into this account initially.  

    Subd. 3.    Capital loan account.  A capital loan 
 account must be maintained out of which loans under section 
 126C.69 must be made.  On November 1 all moneys in the debt 
 service loan account in excess of those for debt service loans 
 then agreed to be made must be transferred to the capital loan 
 account.  On July 1, all moneys in the capital loan account in 
 excess of those required for capital loans theretofore agreed to 
 be made must be transferred to the debt service loan account.  

    Subd. 4.    Loan repayment account.  A loan repayment 
 account must be maintained.  All principal and interest paid by 
 districts on debt service loans and capital loans made under 
 section 126C.68 or 126C.69 must be paid into the account.  The 
 state's cost of administering the Maximum Effort School Aid Law 
 must be paid out of this account, to an amount not exceeding 
 $10,000 in any year.  As soon as possible in each year after the 
 committee has determined the ratio existing between the correct 
 market value of all taxable property in each school district in 
 the state and the "market value in money" of such property as 
 recorded in accordance with section 270.13, the commissioner of 
 revenue shall prepare a list of all such ratios.  The clerical 
 costs of preparing the list must be paid as a cost of 
 administration of the Maximum Effort School Aid Law.  The 
 documents division of the department of administration may 
 publish and sell copies of the list.  The sums required to pay 
 the principal of and interest on all school loan bonds as 
 provided in section 126C.72 must be transferred out of the loan 
 repayment account to the state bond fund. 

    Subd. 5.    Excess money in loan repayment account.  The 
 commissioner shall transfer from the loan repayment account to 
 the credit of the debt service loan account on November 1 of 
 each year all money deposited to the credit of the loan 
 repayment account that is not required for the payment of 
 principal and interest and costs as prescribed in subdivision 4 
 but that is needed for debt service loans in the fiscal year 
 beginning July 1, and those moneys are annually appropriated to 
 that account for the purposes prescribed by the Maximum Effort 
 School Aid Law.  Money deposited to the credit of the loan 
 repayment account and not required for the transfers or for the 
 payment of principal and interest due on school loan bonds may 
 be invested and reinvested in securities which are general 
 obligations of the United States or the state of Minnesota.  
 When all school loan bonds have been fully paid with interest 
 accrued thereon, the balance remaining in the account must be 
 transferred to the state bond fund. 

    HIST: Ex1959 c 27 s 4; 1961 c 752 s 1,2; 1963 c 601 s 2; 1965 
 c 875 s 3; 1973 c 582 s 3; 1975 c 339 s 8; 1981 c 358 art 9 s 2; 
 1990 c 562 art 11 s 3,4; 1991 c 45 s 1,2; 1994 c 465 art 2 s 1; 
 1998 c 397 art 7 s 49,164; art 11 s 3 

     126C.66 Appropriation. 

    Subdivision 1.    Appropriation.  In addition to all 
 sums which have been or may hereafter be appropriated by any 
 law, the net proceeds of sale of any state school loan bonds 
 authorized to be issued under section 126C.72, and all income 
 received from the investment of said net proceeds is hereby 
 appropriated to the school loan bond account in the state bond 
 fund. 

    Subd. 2.    Remaining money.  Any amounts remaining in 
 the fund on July 1, including any unused portion of the 
 appropriation made in subdivision 1, must be available for use 
 by the commissioner in making further debt service loans and 
 capital loans. 

    Subd. 3.    Principal interest payments.  All payments 
 of principal and interest on debt service notes or capital loan 
 contracts, as received by the commissioner, are appropriated to 
 the loan repayment account.  

    HIST: Ex1959 c 27 s 5; 1963 c 601 s 3; 1967 c 583 s 2; 1981 c 
 358 art 9 s 3; 1991 c 45 s 3; 1998 c 397 art 7 s 50,164; art 11 
 s 3

     126C.67 School loans. 

    Subdivision 1.    Consideration by commissioner.  The 
 commissioner shall receive and consider applications for and 
 grant or deny loans under sections 126C.61 to 126C.72. 

    Subd. 2.    Application forms; rules.  The commissioner, 
 with the assistance of the attorney general or a designated 
 assistant, shall prepare forms of applications for debt service 
 loans and capital loans and instruments evidencing the loans.  
 The commissioner must promulgate rules to facilitate the 
 commissioner's operations in compliance with sections 126C.61 to 
 126C.72.  The rules are subject to chapter 14. 

    Subd. 3.    Clerk.  The commissioner may employ a clerk 
 to administer the Maximum Effort School Aid Law.  The 
 commissioner may fix the clerk's compensation, which must be 
 paid out of the loan repayment account of the fund. 

    HIST: Ex1959 c 27 s 6; 1961 c 562 s 6; 1969 c 6 s 22; 1973 c 
 582 s 3; 1975 c 61 s 9; 1975 c 162 s 30; 1976 c 2 s 60; 1978 c 
 706 s 34; 1981 c 358 art 9 s 4; 1982 c 424 s 130; 1982 c 560 s 
 44; 1986 c 444; 1994 c 465 art 2 s 1; 1995 c 233 art 2 s 56; 
 1997 c 187 art 5 s 16; 1998 c 397 art 7 s 51,52,164; art 11 s 3; 
 1998 c 398 art 5 s 55 

     126C.68 Debt service loans. 

    Subdivision 1.    Qualification; application; award; 
 interest.  Any district in which the required levy for debt 
 service in any year will exceed its maximum effort debt service 
 levy by ten percent or by $5,000, whichever is less, is 
 qualified for a debt service loan hereunder in an amount not 
 exceeding the amount applied for, and not exceeding one percent 
 of the net debt of the district, and not exceeding the 
 difference between the required and the maximum effort debt 
 service levy in that year.  Applications must be filed with the 
 commissioner in each calendar year up to and including July 1.  
 The commissioner shall determine whether the applicant is 
 entitled to a loan and the amount thereof, and on or before 
 October 1 shall certify to each applicant district the amount 
 granted and its due date.  The commissioner shall notify the 
 county auditor of each county in which the district is located 
 that the amount certified is available and appropriated for 
 payment of principal and interest on its outstanding bonds.  The 
 auditors shall reduce by that amount the taxes otherwise 
 leviable as the district's debt service levy on the tax rolls 
 for that year.  Each debt service loan shall bear interest from 
 its date at a rate equal to the average annual rate payable on 
 Minnesota state school loan bonds most recently issued prior to 
 the disbursement of the loan to the district, but in no event 
 less than 3-1/2 percent per annum on the principal amount from 
 time to time remaining unpaid.  Interest is payable on December 
 15 of the year following that in which the loan is received and 
 annually thereafter. 

    Subd. 2.    Note.  Each debt service loan must be 
 evidenced by a note executed on behalf of the district by the 
 signatures of its chair or vice-chair and the school district 
 clerk.  The note must be dated November 1 of the year in which 
 executed, and must state its principal amount, interest rate, 
 and that it is payable at the commissioner's office.  The note 
 must have printed thereon, or the commissioner shall attach 
 thereto, a grill for entry of the date and amount of each 
 payment and allocations of each payment to accrued interest or 
 principal.  The note must also include a certificate to be 
 executed by the county auditor of each county in which any 
 portion of the district is situated, prior to the delivery of 
 the note, stating that the county auditor has entered the debt 
 service loan evidenced thereby in the auditor's bond register.  
 The notes must be delivered to the commissioner not later than 
 November 15 of the year in which executed.  The commissioner 
 shall cause a record to be made and preserved showing the 
 obligor district and the date and principal amount of each note. 

    Subd. 3.    Warrant.  The commissioner shall issue to 
 each district whose note has been so received a warrant on the 
 debt service loan account of the maximum effort school loan 
 fund, payable on presentation to the state treasurer out of any 
 money in such account.  The warrant shall be issued by the 
 commissioner in sufficient time to coincide with the next date 
 on which the district is obligated to make principal or interest 
 payments on its bonded debt in the ensuing year.  Interest must 
 accrue from the date such warrant is issued.  The proceeds 
 thereof must be used by the district to pay principal or 
 interest on its bonded debt falling due in the ensuing year.  

    Subd. 4.    Levy.  Each district receiving a debt 
 service loan shall levy for debt service in that year and each 
 year thereafter, until all its debts to the fund are paid, (a) 
 the amount of its maximum effort debt service levy, or (b) the 
 amount of its required debt service levy less the amount of any 
 debt service loan in that year, whichever is greater.  The 
 district shall remit payments to the commissioner according to 
 section 126C.71.  By September 30, the commissioner shall notify 
 the county auditor of each county containing taxable property 
 situated within the school district of the amount of the maximum 
 effort debt service levy of the district for that year, and said 
 county auditor or auditors shall extend upon the tax rolls an ad 
 valorem tax upon all taxable property within the district in the 
 aggregate amount so certified.  

    HIST: Ex1959 c 27 s 7; 1961 c 752 s 3,4; 1965 c 875 s 4,5; 
 1969 c 1056 s 3,4; 1973 c 492 s 14; 1975 c 432 s 55-57; 1981 c 
 358 art 9 s 5,6; 1986 c 444; 1989 c 271 s 29; 1Sp1989 c 1 art 9 
 s 2,3; 1Sp1997 c 4 art 4 s 12; 1998 c 397 art 7 s 53,164; art 11 
 s 3 

     126C.69 Capital loans. 

    Subdivision 1.    Capital loan requests and uses.  
 Capital loans are available only to qualifying districts.  
 Capital loans must not be used for the construction of swimming 
 pools, ice arenas, athletic facilities, auditoriums, bus 
 garages, or heating system improvements.  Proceeds of the loans 
 may be used only for sites for education facilities and for 
 acquiring, bettering, furnishing, or equipping education 
 facilities.  Contracts must be entered into within 18 months 
 after the date on which each loan is granted.  For purposes of 
 this section, "education facilities" includes space for Head 
 Start programs and social service programs. 

    Subd. 2.    Capital loans eligibility.  Beginning July 
 1, 1999, a district is not eligible for a capital loan unless 
 the district's estimated net debt tax rate as computed by the 
 commissioner after debt service equalization aid would be more 
 than 30 percent of adjusted net tax capacity.  The estimate must 
 assume a 20-year maturity schedule for new debt. 

    Subd. 3.    District request for review and comment.  A 
 district or a joint powers district that intends to apply for a 
 capital loan must submit a proposal to the commissioner for 
 review and comment according to section 123B.71 by July 1 of an 
 odd-numbered year.  The commissioner shall prepare a review and 
 comment on the proposed facility, regardless of the amount of 
 the capital expenditure required to construct the facility.  In 
 addition to the information provided under section 123B.71, 
 subdivision 9, the commissioner shall require that predesign 
 packages comparable to those required under section 16B.335 be 
 prepared by the applicant school district.  The predesign 
 packages must be sufficient to define the scope, cost, and 
 schedule of the project and must demonstrate that the project 
 has been analyzed according to appropriate space needs standards 
 and also consider the following criteria in determining whether 
 to make a positive review and comment.  

    (a) To grant a positive review and comment the commissioner 
 shall determine that all of the following conditions are met: 

    (1) the facilities are needed for pupils for whom no 
 adequate facilities exist or will exist; 

    (2) there is evidence to indicate that the facilities will 
 have a useful public purpose for at least the term of the bonds; 

    (3) no form of cooperation with another district would 
 provide the necessary facilities; 

    (4) the facilities are comparable in size and quality to 
 facilities recently constructed in other districts that have 
 similar enrollments; 

    (5) the facilities are comparable in size and quality to 
 facilities recently constructed in other districts that are 
 financed without a capital loan; 

    (6) the district is projected to have adequate funds in its 
 general operating budget to support a quality education for its 
 students for at least the next five years; 

    (7) the current facility poses a threat to the life, 
 health, and safety of pupils, and cannot reasonably be brought 
 into compliance with fire, health, or life safety codes; 

    (8) the district has made a good faith effort, as evidenced 
 by its maintenance expenditures, to adequately maintain the 
 existing facility during the previous ten years and to comply 
 with fire, health, and life safety codes and state and federal 
 requirements for handicapped accessibility; 

    (9) the district has made a good faith effort to encourage 
 integration of social service programs within the new facility; 

    (10) evaluations by boards of adjacent districts have been 
 received; and 

    (11) the proposal includes a comprehensive technology plan 
 that assures information access for the students, parents, and 
 community. 

    (b) The commissioner may grant a negative review and 
 comment if: 

    (1) the state demographer has examined the population of 
 the communities to be served by the facility and determined that 
 the communities have not grown during the previous five years; 

    (2) the state demographer determines that the economic and 
 population bases of the communities to be served by the facility 
 are not likely to grow or to remain at a level sufficient, 
 during the next ten years, to ensure use of the entire facility; 

    (3) the need for facilities could be met within the 
 district or adjacent districts at a comparable cost by leasing, 
 repairing, remodeling, or sharing existing facilities or by 
 using temporary facilities; 

    (4) the district plans do not include cooperation and 
 collaboration with health and human services agencies and other 
 political subdivisions; or 

    (5) if the application is for new construction, an existing 
 facility that would meet the district's needs could be purchased 
 at a comparable cost from any other source within the area. 

    Subd. 4.    Multiple district proposals; review and 
 comment.  In addition to the requirements of subdivision 3, 
 the commissioner may use additional requirements to determine a 
 positive review and comment on projects that are designed to 
 serve more than one district.  These requirements may include:  

    (1) reducing or increasing the number of districts that 
 plan to use the facility; 

    (2) location of the facility; and 

    (3) formation of a joint powers agreement among the 
 participating districts.  

    Subd. 5.    Adjacent district comments.  The district 
 must present the proposed project to the board of each adjacent 
 district at a public meeting of that district.  The board of an 
 adjacent district must make a written evaluation of how the 
 project will affect the future education and building needs of 
 the adjacent district.  The board must submit the evaluation to 
 the applying district within 30 days of the meeting. 

    Subd. 6.    District application for capital loan.  The 
 school board of a district desiring a capital loan shall adopt a 
 resolution stating the amount proposed to be borrowed, the 
 purpose for which the debt is to be incurred, and an estimate of 
 the dates when the facilities for which the loan is requested 
 will be contracted for and completed.  Applications for loans 
 must be accompanied by a copy of the adopted board resolution 
 and copies of the adjacent district evaluations.  The 
 commissioner shall retain the evaluation as part of a permanent 
 record of the district submitting the evaluation. 

    Applications must be in the form and accompanied by the 
 additional data required by the commissioner.  Applications must 
 be received by the commissioner by September 1 of an 
 odd-numbered year.  A district must resubmit an application each 
 odd-numbered year.  Capital loan applications that do not 
 receive voter approval or are not approved in law cancel July 1 
 of the year following application.  When an application is 
 received, the commissioner shall obtain from the commissioner of 
 revenue the information in the revenue department's official 
 records that is required to be used in computing the debt limit 
 of the district under section 475.53, subdivision 4. 

    Subd. 7.    Commissioner review; district proposals.  By 
 November 1 of each odd-numbered year, the commissioner must 
 review all applications for capital loans that have received a 
 positive review and comment.  When reviewing applications, the 
 commissioner must consider whether the criteria in subdivision 3 
 have been met.  The commissioner may not approve an application 
 if all of the required deadlines have not been met.  The 
 commissioner may either approve or reject an application for a 
 capital loan. 

    Subd. 8.    Recommendations of the commissioner.  The 
 commissioner shall examine and consider applications for capital 
 loans that have been approved and promptly notify any district 
 rejected of the decision.  

    The commissioner shall report each capital loan that has 
 been approved by the commissioner and that has received voter 
 approval to the education committees of the legislature by 
 January 1 of each even-numbered year.  The commissioner must not 
 report a capital loan that has not received voter approval.  The 
 commissioner shall also report on the money remaining in the 
 capital loan account and, if necessary, request that another 
 bond issue be authorized. 

    Subd. 9.    Loan amount limits.  (a) A loan must not be 
 recommended for approval for a district exceeding an amount 
 computed as follows: 

    (1) the amount requested by the district under subdivision 
 6; 

    (2) plus the aggregate principal amount of general 
 obligation bonds of the district outstanding on June 30 of the 
 year following the year the application was received, not 
 exceeding the limitation on net debt of the district in section 
 475.53, subdivision 4, or 450 percent of its adjusted net tax 
 capacity as most recently determined, whichever is less; 

    (3) less the maximum net debt permissible for the district 
 on December 1 of the year the application is received, under the 
 limitation in section 475.53, subdivision 4, or 450 percent of 
 its adjusted net tax capacity as most recently determined, 
 whichever is less; 

    (4) less any amount by which the amount voted exceeds the 
 total cost of the facilities for which the loan is granted.  

    (b) The loan may be approved in an amount computed as 
 provided in paragraph (a), clauses (1) to (3), subject to later 
 reduction according to paragraph (a), clause (4). 

    Subd. 10.    Legislative action.  Each capital loan must 
 be approved in a law. 

    If the aggregate amount of the capital loans exceeds the 
 amount that is or can be made available, the commissioner shall 
 allot the available amount among any number of qualified 
 applicant districts, according to the commissioner's judgment 
 and discretion, based upon the districts' respective needs. 

    Subd. 11.    District referendum.  After receipt of the 
 review and comment on the project and before January 1 of the 
 even-numbered year, the question authorizing the borrowing of 
 money for the facilities must be submitted by the school board 
 to the voters of the district at a regular or special election.  
 The question submitted must state the total amount to be 
 borrowed from all sources.  Approval of a majority of those 
 voting on the question is sufficient to authorize the issuance 
 of the obligations on public sale in accordance with chapter 
 475.  The face of the ballot must include the following 
 statement:  "APPROVAL OF THIS QUESTION DOES NOT GUARANTEE THAT 
 THE SCHOOL DISTRICT WILL RECEIVE A CAPITAL LOAN FROM THE STATE.  
 THE LOAN MUST BE APPROVED BY THE STATE LEGISLATURE AND IS 
 DEPENDENT ON AVAILABLE FUNDING."  The district must mail to the 
 commissioner a certificate by the clerk showing the vote at the 
 election. 

    Subd. 12.    Contract.  (a) Each capital loan must be 
 evidenced by a contract between the district and the state 
 acting through the commissioner.  The contract must obligate the 
 state to reimburse the district, from the maximum effort school 
 loan fund, for eligible capital expenses for construction of the 
 facility for which the loan is granted, an amount computed as 
 provided in subdivision 9.  The commissioner must receive from 
 the district a certified resolution of the board estimating the 
 costs of construction and reciting that contracts for 
 construction of the facilities for which the loan is granted 
 have been awarded, that bonds of the district have been issued 
 and sold in the amount necessary to pay all estimated costs of 
 construction in excess of the amount of the loan, and that all 
 work, when completed, meets or exceeds standards established in 
 the State Building Code.  The contract must obligate the 
 district to repay the loan out of the excesses of its maximum 
 effort debt service levy over its required debt service levy, 
 including interest at a rate equal to the weighted average 
 annual rate payable on Minnesota state school loan bonds issued 
 or reissued for the project. 

    (b) The district must each year, as long as it is indebted 
 to the state, levy for debt service (i) the amount of its 
 maximum effort debt service levy or (ii) the amount of its 
 required debt service levy, whichever is greater, except as the 
 required debt service levy may be reduced by a loan under 
 section 126C.68.  The district shall remit payments to the 
 commissioner according to section 126C.71. 

    (c) The commissioner shall supervise the collection of 
 outstanding accounts due the fund and may, by notice to the 
 proper county auditor, require the maximum levy to be made as 
 required in this subdivision.  Interest on capital loans must be 
 paid on December 15 of the year after the year the loan is 
 granted and annually in later years.  By September 30, the 
 commissioner shall notify the county auditor of each county 
 containing taxable property situated within the district of the 
 amount of the maximum effort debt service levy of the district 
 for that year.  The county auditor or auditors shall extend upon 
 the tax rolls an ad valorem tax upon all taxable property within 
 the district in the aggregate amount so certified. 

    Subd. 13.    Loan forgiveness.  If any capital loan is 
 not paid within 50 years after it is granted from maximum effort 
 debt service levies in excess of required debt service levies, 
 the liability of the district on the loan is satisfied and 
 discharged and interest on the loan ceases. 

    Subd. 14.    Participation by county auditor; record of 
 contract; payment of loan.  The district must file a copy of 
 the capital loan contract with the county auditor of each county 
 in which any part of the district is situated.  The county 
 auditor shall enter the capital loan, evidenced by the contract, 
 in the auditor's bond register.  The commissioner shall keep a 
 record of each capital loan and contract showing the name and 
 address of the district, the date of the contract, and the 
 amount of the loan initially approved.  On receipt of the 
 resolution required in subdivision 12, the commissioner shall 
 issue warrants, which may be dispersed in accordance with the 
 schedule in the contract, on the capital loan account for the 
 amount that may be disbursed under subdivision 1.  Interest on 
 each disbursement of the capital loan amount accrues from the 
 date on which the state treasurer issues the warrant. 

    Subd. 15.    Bond sale limitations.  (a) A district 
 having an outstanding state loan must not issue and sell any 
 bonds on the public market, except to refund state loans, unless 
 it agrees to make the maximum effort debt service levy in each 
 later year at the higher rate provided in section 126C.63, 
 subdivision 8, and unless it schedules the maturities of the 
 bonds according to section 475.54, subdivision 2.  A district 
 that refunds bonds at a lower interest rate may continue to make 
 the maximum effort debt service levy in each later year at the 
 current rate provided in section 126C.63, subdivision 8, if the 
 district can demonstrate to the commissioner's satisfaction that 
 the district's repayments of the state loan will not be reduced 
 below the previous year's level.  The district must report each 
 sale to the commissioner. 

    (b) For a capital loan issued prior to July 1, 2001, after 
 the district's capital loan has been outstanding for 30 years, 
 the district must not issue bonds on the public market except to 
 refund the loan. 

    (c) For a capital loan issued on or after July 1, 2001, 
 after the district's capital loan has been outstanding for 20 
 years, the district must not issue bonds on the public market 
 except to refund the loan. 

    HIST: 1990 c 562 art 11 s 5; 1992 c 499 art 5 s 6; 1993 c 224 
 art 5 s 14-17; 1Sp1995 c 2 art 1 s 27-31; 1Sp1995 c 3 art 1 s 
 16; art 16 s 13; 1Sp1997 c 4 art 4 s 13,14; 1998 c 397 art 7 s 
 54-62,164; art 11 s 3; 1998 c 398 art 5 s 55; 1999 c 241 art 4 s 
 16,17; 2000 c 489 art 5 s 12; 1Sp2001 c 5 art 2 s 21-25; 1Sp2001 
 c 6 art 1 s 55 subd 2; art 4 s 17,18 

     126C.70 Prepayments. 

    A district may at any time pay the entire principal or part 
 thereof and interest then due on a note or contract held by the 
 state, out of any moneys not needed for school purposes.  The 
 district may issue and sell its refunding bonds in accordance 
 with chapter 475, for such purpose, by actions of its school 
 board and without the necessity of a vote by its electors, if 
 such refunding bonds plus its net debt does not exceed the debt 
 limit prescribed by chapter 475.  Any such refunding bonds may 
 bear interest at a rate or rates higher or lower than the rate 
 payable on the loan or loans refunded thereby.  

    HIST: Ex1959 c 27 s 9; 1961 c 752 s 7; 1998 c 397 art 7 s 
 63,164 

     126C.71 Payment and applications of payment. 

    Subdivision 1.    Payment.  (a) On November 20 of each 
 year, each district having an outstanding capital loan or debt 
 service loan shall compute the excess amount in the debt 
 redemption fund.  The commissioner shall prescribe the form and 
 calculation to be used in computing the excess amount.  A 
 completed copy of this form shall be sent to the commissioner 
 before December 1 of each year.  The commissioner may recompute 
 the excess amount and shall promptly notify the district of the 
 recomputed amount. 

    (b) On December 15 of each year, the district shall remit 
 to the commissioner an amount equal to the greater of: 

    (i) the excess amount in the debt redemption fund; or 

    (ii) the amount by which the maximum effort debt service 
 levy exceeds the required debt service levy for that calendar 
 year. 

 Any late payments shall be assessed an interest charge using the 
 interest rates specified for the debt service notes and capital 
 loan contracts. 

    (c) If a payment required under the Maximum Effort School 
 Aid Law is not made within 30 days, the commissioner may reduce 
 any subsequent payments due the district under this chapter and 
 chapters 120B, 122A, 123A, 123B, 124D, 125A, and 127A by the 
 amount due, after providing written notice to the district. 

    Subd. 2.    Application of payments.  The commissioner 
 shall apply payments received under the Maximum Effort School 
 Aid Law and aids withheld according to subdivision 1, paragraph 
 (b), as follows:  First, to payment of interest accrued on its 
 notes, if any; second, to interest on its contracts, if any; 
 third, toward principal of its notes, if any; and last, toward 
 principal of its contracts, if any.  While more than one note or 
 more than one contract is held, priority of payment of interest 
 must be given to the one of earliest date, and after interest 
 accrued on all notes is paid, similar priority shall be given in 
 the application of any remaining amount to the payment of 
 principal.  In any year when the receipts from a district are 
 not sufficient to pay the interest accrued on any of its notes 
 or contracts, the deficiency must be added to the principal, and 
 the commissioner shall notify the district and each county 
 auditor concerned of the new amount of principal of the note or 
 contract.  

    HIST: Ex1959 c 27 s 10; 1975 c 432 s 62; 1Sp1997 c 4 art 4 s 
 15; 1998 c 397 art 7 s 64,164; art 11 s 3 

     126C.72 Issuance and sale of bonds. 

    Subdivision 1.    Certification.  On or before October 1 
 in each year, the commissioner shall certify to the commissioner 
 of finance the amount anticipated to be needed for debt service 
 loans and capital loans to be made under the Maximum Effort 
 School Aid Law prior to October 1 in the following year.  Each 
 such certification of the commissioner shall also state an 
 estimate of the dates and amounts the certified amount will be 
 needed in the maximum effort school loan fund and an estimate as 
 to the years and amounts in which payments on debt service loans 
 and capital loans will be received.  

    Subd. 2.    Issuance and sale of bonds; commissioner of 
 finance.  Upon receipt of each such certification, subject to 
 authorization as provided in subdivision 4, the commissioner of 
 finance shall from time to time as needed issue and sell state 
 of Minnesota school loan bonds in the aggregate principal amount 
 stated in the commissioner's certificate, for the prompt and 
 full payment of which, with the interest thereon, the full 
 faith, credit, and taxing powers of the state are hereby 
 irrevocably pledged.  The commissioner of finance shall credit 
 the net proceeds of the sale of the bonds to the purposes for 
 which they are appropriated by section 126C.66, subdivision 1.  
 The bonds shall be issued and sold at such price, in such 
 manner, in such number of series, at such times, and in such 
 form and denominations, shall bear such dates of issue and of 
 maturity, either without option of prior redemption or subject 
 to prepayment upon such notice and at such times and prices, 
 shall bear interest at such rate or rates and payable at such 
 intervals, shall be payable at such bank or banks within or 
 without the state, with such provisions for registration, 
 conversion, and exchange, and for the issuance of notes in 
 anticipation of the sale and delivery of definitive bonds, and 
 in accordance with such further provisions as the commissioner 
 of finance shall determine subject to the limitations stated in 
 this subdivision (but not subject to chapter 14, including 
 section 14.386).  The maturity date must not be more than 20 
 years after the date of issue of any bond and the principal 
 amounts.  The due dates must conform as near as may be with the 
 commissioner's estimates of dates and amounts of payments to be 
 received on debt service and capital loans.  The bonds and any 
 interest coupons attached to them must be executed by the 
 commissioner of finance and attested by the state treasurer 
 under their official seals.  The signatures of these officers 
 and their seals may be printed, lithographed, stamped, engraved, 
 or otherwise reproduced thereon.  Each bond must be 
 authenticated by the manual signature on its face of one of the 
 officers or a person authorized to sign on behalf of a bank or 
 trust company designated by the commissioner to act as registrar 
 or other authenticating agent.  The commissioner of finance is 
 authorized and directed to ascertain and certify to purchasers 
 of the bonds the performance and existence of all acts, 
 conditions, and things necessary to make them valid and binding 
 general obligations of the state of Minnesota in accordance with 
 their terms.  

    Subd. 3.    School loan bond account.  The commissioner 
 of finance shall maintain a separate school loan bond account in 
 the state bond fund, showing all money transferred to that fund 
 for the payment of school loan bonds and all income received 
 from the investment of such money.  On December 1, the 
 commissioner of finance shall transfer to the bond account as 
 much of the money then on hand in the loan repayment account in 
 the maximum effort school loan fund as will be sufficient, with 
 the balance then on hand in said bond account, to pay all 
 principal and interest due and to become due within the next 
 ensuing year and July 1 in the second ensuing year on school 
 loan bonds issued and sold pursuant to this section.  If money 
 is not available for the transfer in the full amount required, 
 and if any principal or interest on school loan bonds should 
 become due at any time when there is not on hand a sufficient 
 amount from any of the sources herein appropriated for the 
 payment thereof, the moneys must be paid out of the general fund 
 in the state treasury according to section 16A.641, and the 
 amount necessary therefor is hereby appropriated. 

    Subd. 4.    Authority for issuance of bonds.  Bonds 
 shall be issued pursuant to this section only when authorized by 
 a law specifying the purpose thereof and the maximum amount of 
 the proceeds authorized to be expended for that purpose.  Any 
 act authorizing the issuance of bonds in the manner provided in 
 this section shall, together with this section, constitute 
 complete authority for the issue, and the bonds shall not be 
 subject to the restrictions or limitations contained in any 
 other law.  Bonds issued pursuant hereto may be sold at public 
 or private sale and shall be deemed "authorized securities" 
 within the provisions of section 50.14 and acts amendatory 
 thereof or supplemental thereto. 

    HIST: Ex1959 c 27 s 12; 1963 c 601 s 4; 1965 c 875 s 13; 1969 
 c 399 s 49; 1973 c 492 s 14; 1980 c 509 s 34; 1980 c 607 art 14 
 s 29; 1982 c 424 s 130; 1983 c 301 s 135; 1Sp1985 c 14 art 4 s 
 22; 1986 c 444; 1991 c 45 s 4; 1994 c 647 art 5 s 4; 1995 c 233 
 art 2 s 56; 1997 c 187 art 5 s 17; 1998 c 397 art 7 s 65,164; 
 art 11 s 3