2013 Education
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SB13-213Future School Finance Act JOHNSTON / HAMNER The bill creates a new school finance act (the new act), implementation of which is conditional upon passage of a statewide ballot measure to increase state revenues for funding public education. After the statewide ballot measure passes, certain requirements around collecting daily membership and program enrollments and calculating state and local shares of total program will take effect during the first budget year commencing after the election, but the new funding formula and the distribution of state moneys under the provisions of the new act will not take effect until the second budget year commencing after the election. School districts (districts) and charter schools continue to receive funding under the existing "Public School Finance Act of 1994" (the current act) and related statutory provisions until the new act fully takes effect in the second budget year commencing after the election. The new act is similar to the current act in that it starts with the statewide base per pupil funding amount, applies a formula to calculate a district's per pupil funding, increases each district's funding based on the number of at-risk pupils enrolled in the district, and multiplies the per pupil funding amount by the number of pupils enrolled in the district to calculate the district's amount of operational funding (total program) for each budget year. The new act continues to use a specific per pupil amount to fund pupils who are enrolled in multi-district on-line schools (on-line pupils) and pupils who are enrolled in the ASCENT program (ASCENT pupils), which amounts are also included in a district's total program. And the new act continues to fund each district's total program by a combination of local property tax and specific ownership tax revenues and state moneys. The new act differs from the current act in the following general areas:
* Calculation of pupil enrollment;
* Funding for preschool and kindergarten pupils;
* Factors included in the formula for calculating total program;
* The definition of at-risk pupils and the percentage increase in funding for at-risk pupils;
* Minimum per pupil funding;
* On-line pupil funding and ASCENT program funding;
* Calculation of total program for and payment of state moneys to institute charter schools;
* Calculation of state and local shares of total program;
* Authorized mill levy overrides;
* State moneys available to districts and institute charter schools in addition to total program;
* Mid-year recalculation of total program for certain districts and institute charter schools;
* Allocations of funding by districts to charter schools and other schools of the district;
* Review of the return on the investment of funding and cost studies every 4 years;
* Public financial reporting by districts and institute charter schools; and
* State moneys for mid-year recalculation of funding for new and expanding district charter schools. Calculation of pupil enrollment. Under the current act, funding for school districts and charter schools is based on the number of pupils enrolled as of a specific pupil enrollment count date, generally October 1 of each year. The new act uses a school district's or an institute charter school's average daily membership (ADM) as the basis for calculating total program. A district's or institute charter school's membership includes all of the pupils enrolled in the district or the institute charter school, including students enrolled in preschool, but does not include on-line pupils or ASCENT pupils. Districts and institute charter schools must report membership and on-line pupil and ASCENT pupil enrollment on a quarterly basis, reporting the number of pupils enrolled each school day. The department of education (department) will calculate each district's and each institute charter school's ADM for the first and second quarter of the school year, for the first and second halves of each school year, and for the entire school year (averaging period) by totaling the pupils enrolled each school day for the averaging period and dividing by the number of school days in the averaging period. The department will do the same for each district's and institute charter school's on-line pupil ADM and ASCENT program ADM. Each district's and each institute charter school's total program is based on the district's or institute charter school's ADM for the last half of the budget year before the preceding budget year and the first half of the preceding budget year (funding averaging period). Funding for a district or an institute charter school with declining enrollment continues to be based on the greater of the actual ADM or the ADM averaged for up to 5 years. For purposes of averaging over years, a district's ADM does not include preschool program enrollment. Pupil enrollment will substitute for ADM in averaging until there are 5 years of ADM available. In the first and second years of operation for a district charter school or an institute charter school, funding is based on the projected membership or on-line enrollment of the charter school and the ADM or on-line ADM for the first half of the first year of operation. Also, for a district charter school or an institute charter school that is building out grade levels, funding is recalculated mid-year if the district charter school's or the institute charter school's ADM or on-line ADM for the first half of the current year is greater than the ADM or on-line ADM for the funding averaging period. The state pays any increase in a district charter school's funding that results from the recalculation. Funding for preschool and kindergarten pupils. Under the current act, the state funds a restricted number of 3-, 4-, and 5-year-old preschool program pupils who meet eligibility requirements. These preschool pupils are funded as half-day pupils. Each district and each institute charter school may include in its pupil enrollment only as many preschool pupils as it is allowed to enroll out of the total number of funded preschool positions. Under the new act, each district and each institute charter school may enroll all of the 3-, 4-, and 5-year-old preschool program pupils who apply for the program and meet the eligibility requirements. Preschool pupils are still funded as half-day pupils. Under the current act, kindergarten pupils are funded as half-day pupils, but a pupil who repeats kindergarten is funded as a full-day pupil in the second year. Each district and each institute charter school also receives supplemental kindergarten funding based on .08 of a pupil. Under the new act, all kindergarten pupils are funded as full-day pupils. Factors included in the formula for calculating total program. Under the current act, the formula for calculating total program adjusts the statewide base per pupil funding amount by a cost of living factor, personnel costs, nonpersonnel costs, and a size factor. After total program is calculated, the current act reduces each district's total program and the funding for each institute charter school through application of a negative factor. Under the new act, the only factor that adjusts statewide base per pupil funding is the size factor, which is unchanged from the current act, except that it applies only to districts with a funded membership of fewer than 4,300 pupils. The new act does not include a negative factor. The definition of at-risk pupils and the percentage increase in funding for at-risk pupils. Under the current act, at-risk pupils are defined to include pupils who are eligible for free lunch under federal law and pupils with limited English proficiency. A pupil who meets both criteria is only counted once for purposes of at-risk funding. The amount of increase for at-risk funding starts at 12% of per pupil funding and may increase to as much as 30% depending on the size of a district and the concentration of at-risk pupils within the district. The new act creates separate formula weights for at-risk pupils and for English language learners (ELL). The new act defines an at-risk pupil as a pupil who is eligible for free or reduced-price lunch under federal law and defines an ELL as a pupil who is identified and receiving English language proficiency programs under the "English Language Proficiency Act", but a pupil may not be counted as an ELL for more than 5 years. An individual pupil may be counted and receive weighted funding as both an at-risk pupil and an ELL. The department calculates each district's and each institute charter school's at-risk pupil ADM and English language learner ADM. Each district and institute charter school receives at-risk funding starting at 20%, and increasing to as much as 40%, of statewide base per pupil funding multiplied by the at-risk ADM. Each district and institute charter school receives ELL funding starting at 20%, and increasing to as much as 40%, of statewide base per pupil funding multiplied by the English language learner ADM. The increase in the percentage is based on the concentration of at-risk pupils and ELLs in the district or institute charter school. At-risk pupils and ELLs who are enrolled in multi-district on-line schools are included in the at-risk and ELL funding. Minimum per pupil funding. Under the current act, a district receives as total program the greater of total program calculated using the formula and at-risk funding, plus on-line funding and ASCENT program funding, or minimum per pupil funding multiplied by the district's funded pupil count, plus on-line funding and ASCENT program funding. The new act does not include minimum per pupil funding. On-line pupil funding and ASCENT program funding. Under the current act, a district receives funding for each on-line pupil and each pupil enrolled in the ASCENT program at the amount, starting in the 2007-08 budget year, of $6,135 per pupil, which amount has been increased by inflation and decreased by the negative factor each budget year. Under the new act, the per pupil amount for on-line pupil funding and ASCENT program funding is equal to the statewide base per pupil funding for the applicable budget year. A multi-district on-line school receives at-risk funding and ELL funding in addition to the on-line pupil funding. Calculation of total program for and payment of state moneys to institute charter schools. Under the current act, the funding for an institute charter school is based on the total program of the district within which the institute charter school is physically located (accounting district). The department calculates the accounting district's total program, adding the institute charter school's pupil enrollment, and then subtracts the institute charter school's funding from the state share of the accounting district. Under the new act, the department will calculate the total program for each institute charter school using the per pupil funding amount of the accounting district, but using the institute charter school's funded membership, at-risk pupil ADM, English language learner ADM, on-line pupil ADM, if applicable, and ASCENT program ADM, if applicable. Each institute charter school's total program will also include a mill levy equalization per pupil amount that is equal to the total statewide mill levy override for the preceding budget year divided by the statewide district total funded membership, less the ASCENT program ADM, for the preceding budget year. The department will pay the total program for institute charter schools directly from the state public school fund to the state charter school institute for distribution to the institute charter schools. Calculation of state and local shares of total program. Under the current act, a district must levy the lesser of the number of property tax mills that it levied in the previous budget year, or the number of mills it can levy and not exceed the constitutional property tax revenue limits if the district remains subject to TABOR, or 27 mills. The amount of property tax and specific ownership tax that the district receives is the district's local share, and the district's state share is the difference between the district's local share and total program. Under the new act, the department will recalculate each district's total program mill levy using statewide state and local shares of 60% and 40%. The department will apply these percentages in a formula for calculating each district's local share that takes into account the district's real property assessed valuation, median family income, and at-risk pupil percentage. The department will then translate the calculated local share into a number of mills that may increase up to 25 mills, except a district's mill levy cannot be less than the number of mills levied in the preceding budget year, or more than the number of mills that generates property tax revenue in excess of the constitutional property tax revenue limit if the district remains subject to TABOR. The amount generated by the district's total program mill levy plus the amount the district receives in specific ownership tax revenue is the district's local share, and the district's state share is the difference between the district's local share and total program. The department will recalculate each district's total program mill levy in 5 years and then every 6 years thereafter using the district's most recent assessed valuation, median income, and at-risk pupil percentage. If a district's total program mill levy is greater than the number of mills assessed in the preceding budget year, and the district is receiving an amount of state share plus teaching and leadership investment moneys (state funding) that is less than the district previously received in state funding, the district must seek voter approval for a mill levy increase at least once during the period in which the district is expected to assess the total program mill levy. If a district does not assess the full total program mill levy for any reason, the department will calculate the district's state share as if the district did assess the full total program mill levy, but the district will receive hold-harmless moneys in the amount of the difference between what the district received in state share before recalculation and what the district receives in state share after recalculation for the period in which the total program mill levy applies. If a district's total program mill levy generates an amount of property tax revenue that exceeds the district's total program, and the district's total program is decreased under the new act, the district must consider the amount of excess revenue as a portion of the district's mill levy override for cost of living expenses, and the amount counts against the cap on the district's mill levy override for cost of living expenses. If the district's total program mill levy generates property tax revenues that exceed the district's total program plus this excess revenue amount, the district must use the amount received above the excess revenue to replace state categorical program funding that it would otherwise receive from the state. Authorized mill levy overrides. Under the current act, a district may levy a number of mills in addition to its total program mill levy (mill levy overrides). There are 3 types of mill levy overrides in the current act. One is for general operating expenses, and the amount of revenue that a district may generate from this override is capped at the greater of 25% of the district's total program or $200,000. The second authorized mill levy override is for a supplemental cost of living adjustment, but to receive this override, a district must have received voter approval before June 2002. The third authorized mill levy override is for the excess costs of providing full-day kindergarten, including the capital construction costs associated with a full-day kindergarten program. Unde 
05/21/2013 Governor Action - Signed
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