Brief ⁽¹⁾

HB 2578 modifies the school finance formula, addresses other education policy matters, contains appropriations, and increases certain taxes in connection therewith. The main provisions are described below:

School Formula Changes

• Base State Aid Per Pupil (BSAPP). BSAPP is increased by $110--from $3,820 in the 2000-01 school year to $3,930 in 2001-02 and thereafter.
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• Correlation Weight. Correlation weight is applied to all school districts having enrollments of 1,700 and over. (The weight currently applies to all districts with enrollments of 1,725 and over.) This change increases the weight's percentage from 6.3211 to 7.2242.
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• Special Education. State funding for special education is converted from a categorical state aid program to a pupil weighting component of the school finance law. Beginning in the 2001-02 school year, the full-time equivalent (FTE) exceptional pupil weighting is 3.22 for exceptional children with severe disabilities and 0.72 for all other exceptional children.
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• "Success in School State Aid"--Extended Learning Time. Each year school districts will receive $44 per FTE pupil. These funds are to be used for extended learning time. In order to qualify for this aid, a school district must submit an approvable plan to the State Board of Education. The district's plan may be for any of the following purposes:
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The plan may schedule the extended learning time before or after regular school hours, on weekends, or during the summer months. The plan must include an intensive research based reading intervention component and an evaluation procedure.

• At-Risk Pupils. The at-risk pupil weighting is increased from 0.09 in the 2000-01 school year to 0.11 in 2001-02 and thereafter. An amount equal to 0.01 will be used by the district for achieving mastery of basic reading skills by completion of the third grade in accordance with standards established by the State Board of Education. A school district must include information in its at-risk pupil assistance plan as the State Board of Education requires about the district's remediation strategies and its results in achieving the State Board's third grade reading mastery standards. A school district's report must include information documenting remediation strategies and improvement made by pupils who performed below the expected standard on the State Board's second grade diagnostic reading test. A school district whose third grade pupils substantially meet the State Board standards for mastery of third grade reading skills, upon request, may be released by the Board from the requirement to dedicate a specific portion of the at-risk weight to this reading initiative.
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• Four Year Old At-Risk Pupils. The four year old at-risk pupil competitive grant program is expanded by 436 pupils--from 2,230 in the 2000-01 school year to 2,666 in 2001-02 and thereafter.
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• Kindergarten Pupils. Pupils who attend kindergarten programs that last at least six hours will be counted at 0.6 full-time equivalent (FTE) in 2001-02, 0.7 FTE in 2002-03, 0.8 FTE in 2003-04, 0.9 FTE in 2004-05, and 1.0 FTE in 2005-06 and thereafter. (Currently, pupils who attend kindergarten are counted at 0.5 FTE.)
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Other Education Policy Changes/Initiatives

• National Board for Professional Teaching Standards Certification Initiative. The law is amended to increase from $1,000 to $5,000 the amount of incentive bonuses paid to teachers who have earned certification by the National Professional Teaching Standards Board. In addition, the school district will receive $3,000 per year for each such teacher in support of staff development programs in schools in which the national board certified teachers are located. Districts receive money under this program in the form of grants. The portion of the grant attributable to reimbursement of the district for payment of incentive bonuses to teachers is deposited in the school district's general fund and the remainder is deposited in the school district's inservice education fund.
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• Exemplary School Recognition Award Program. Public schools that meet the building standard of excellence based on State Board of Education criteria under the Quality Performance Accreditation (QPA) system in consideration of attainment or significant and continuous progress of pupils toward advanced or proficient performance or substantial increase in the high school graduation rate are entitled to the exemplary school recognition award. Subject to available appropriations, the amount of this award may not exceed $50 per pupil in attendance at the exemplary school. The reward a district receives is deposited in the district's general fund and is credited to the account of the exemplary school. The funds may be spent whether or not they were budgeted. The exemplary school's site council determines the purposes for which the award is spent.
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• Alternative Compensation Plans (Rewarding Outstanding Teachers). School district boards are authorized to establish and maintain an alternative teacher compensation plan and apply for a grant of state moneys to finance all or a portion of the amount budgeted for maintenance of the plan. An "alternative teacher compensation plan" is one that includes components of peer mentoring and peer evaluation and that bases pay increases or differential pay rates on the demonstration of excellence or significant improvement in skills, knowledge, and performance.
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In order to be eligible to receive this state grant, a school board must submit to the State Board of Education an application which includes a description of the plan. A grant recipient school district must submit reports to the State Board as it requires.

The State Board of Education will adopt rules and regulations for the administration of this program and will:

A state grant may not exceed the amount spent by the school district in the maintenance of a plan. The grant money a district receives must be deposited in the school district general fund and is treated as a reimbursement for purposes of the school finance law.

Appropriations

• The bill includes the following State General Fund appropriations to the State Department of Education to fund the enhancements contained in the bill.

Taxes

• Uniform Property Tax Levy. The uniform school district property tax rate of 20 mills and the $20,000 residential exemption are continued for 2001 and 2002.
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• Sales and Compensating Use Taxes. The state sales and compensating use taxes are increased from 4.9 to 5.1 percent on June 1, 2001. Demand transfers from the State General Fund (SGF) to the Local Ad Valorem Tax Reduction Fund and City and County Revenue Sharing Fund are adjusted for the next five fiscal years so that the full amount attributable to the 0.2 percentage point increase accrues to the benefit of the SGF.
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• Motor Fuel Taxes. Motor fuel taxes are increased by 2.0 cents per gallon, effective June 1, 2001. Also, the 1.0 cent increase currently scheduled for implementation on July 1, 2001, is accelerated by one month--to June 1, 2001. Liquified petroleum taxes also are adjusted commensurately. After June 1, 2001, the state tax on gasoline and gasohol would be 23.0 cents per gallon and, on diesel fuel, 25.0 cents per gallon. Motor fuel tax allocations to the Special City and County Highway Fund are adjusted so that the State Highway Fund will receive the full benefit of the fuel tax increase. Commensurately, the amount attributable to the statutory transfer of sales tax receipts from the SGF to the State Highway Fund will be reduced for the next five fiscal years by the amount produced by the 2.0 cent increase in fuel taxes.

• Food Sales Tax Refund. The food sales tax refund is increased as follows:
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HB 2578 contains the Governor's school funding enhancement recommendations of March 13, 2001.

1. *Supplemental notes are prepared by the Legislative Research Department and do not express legislative intent. The supplemental note and fiscal note for this bill may be accessed on the Internet at http://www.ink.org/public/legislative/fulltext.cgi