1.1 	A bill for an act
1.2 	relating to education finance; replacing Minnesota's K-12 funding system with a 
1.3 	foundation aid program;amending Minnesota Statutes 2008, sections 126C.05, 
1.4 	subdivisions 1, 3, 5, 17, by adding subdivisions; 126C.17, subdivisions 1, 2; 
1.5 	126C.20; proposing coding for new law in Minnesota Statutes, chapter 126C; 
1.6 	repealing Minnesota Statutes 2008, sections 125A.76, subdivisions 2, 4, 4a, 5, 7, 
1.7 	8; 125A.78; 125A.79, subdivisions 1, 4, 5, 6, 7, 8; 126C.12, subdivisions 1, 2, 
1.8 	3, 4, 5, 6; 126C.13, subdivisions 4, 5; 126C.15, subdivisions 1, 3, 5; 126C.16, 
1.9 	subdivisions 1, 3; 126C.17, subdivision 3; Minnesota Statutes 2009 Supplement, 
1.10 	sections 125A.76, subdivision 1; 126C.15, subdivisions 2, 4.
1.11 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.12 	Section 1. Minnesota Statutes 2008, section 126C.05, subdivision 1, is amended to read:
1.13 		Subdivision 1.Pupil unit. Pupil units for each Minnesota resident pupil under the 
1.14 	age of 21 or who meets the requirements of section 120A.20, subdivision 1, paragraph (c), 
1.15 	in average daily membership enrolled in the district of residence, in another district under 
1.16 	sections 123A.05 to 123A.08, 124D.03, 124D.08, or 124D.68; in a charter school under 
1.17 	section 124D.10; or for whom the resident district pays tuition under section 123A.18, 
1.18 	123A.22, 123A.30, 123A.32, 123A.44, 123A.488, 123B.88, subdivision 4, 124D.04, 
1.19 	124D.05, 125A.03 to 125A.24, 125A.51, or 125A.65, shall be counted according to this 
1.20 	subdivision. 
1.21 	(a) A prekindergarten pupil with a disability who is enrolled in a program approved 
1.22 	by the commissioner and has an individual education plan is counted as the ratio of the 
1.23 	number of hours of assessment and education service to 825 times 1.25 with a minimum 
1.24 	average daily membership of 0.28, but not more than 1.25 pupil units. 
1.25 	(b) A prekindergarten pupil who is assessed but determined not to be disabled is 
1.26 	counted as the ratio of the number of hours of assessment service to 825 times 1.25. 
2.1 	(c) A kindergarten pupil with a disability who is enrolled in a program approved 
2.2 	by the commissioner is counted as the ratio of the number of hours of assessment and 
2.3 	education services required in the fiscal year by the pupil's individual education program 
2.4 	plan to 875, but not more than one.
2.5 	(d) A kindergarten pupil who is not included in paragraph (c) is counted as .612 1.0
2.6 	pupil units plus the amounts in paragraphs (f) to (h).
2.7 	(e) A pupil who is in any of grades 1 to 3 12 is counted as 1.115 1.0 pupil units for 
2.8 	fiscal year 2000 and thereafter plus the additional weighting in paragraph (h). 
2.9 	(f) A pupil who is any of grades 4 to 6 is counted as 1.06 pupil units for fiscal year 
2.10 	1995 and thereafter pupil's weight under this subdivision is increased by the amounts for 
2.11 	that pupil calculated under subdivisions 3, 17, and 21. 
2.12 	(g) A pupil who is in any of grades 7 to 12 is counted as 1.3 pupil units.
2.13 	(h) A pupil who is in the postsecondary enrollment options program is counted as 
2.14 	1.3 1.0 pupil units.
2.15 	(h) A pupil's weight is increased by the pupil's special education service weighting 
2.16 	and its supplemental service weighting.

2.17 	EFFECTIVE DATE. This section is effective for revenue for fiscal year 2014 
2.18 	and later.

2.19 	Sec. 2. Minnesota Statutes 2008, section 126C.05, subdivision 3, is amended to read:
2.20 		Subd. 3.Compensation revenue pupil units. Compensation revenue pupil units 
2.21 	for fiscal year 1998 and thereafter must be computed according to this subdivision.
2.22 	(a) The compensation revenue concentration percentage for each building in a 
2.23 	district equals the product of 100 times the ratio of:
2.24 	(1) the sum of the number of pupils enrolled in the buildingA pupil eligible 
2.25 	to receive free lunch plus one-half of the pupils eligible to receive reduced pricedor 
2.26 	reduced-price lunch on October 1 of the previous fiscal year; to
2.27 	(2) the number of pupils enrolled in the building on October 1 of the previous fiscal 
2.28 	year has a compensation revenue pupil weighting of ....
2.29 	(b) The compensation revenue pupil weighting factor for a building equals the 
2.30 	lesser of one or the quotient obtained by dividing the building'scompensation revenue 
2.31 	concentration percentage by 80.0.
2.32 	(c) The compensation revenue pupil units for a building equals the product of:
2.33 	(1) the sum of the number of pupils enrolled in the building eligible to receive free 
2.34 	lunch and one-half of the pupils eligible to receive reduced priced lunch on October 1 
2.35 	of the previous fiscal year; times
3.1 	(2) the compensation revenue pupil weighting factor for the building; times
3.2 	(3) .60.
3.3 	(d)(b) Notwithstanding paragraphs paragraph  (a) to (c), for charter schools and 
3.4 	contracted alternative programs in the first year of operation, compensation revenue pupil 
3.5 	units shall be computed using data for the current fiscal year. If the charter school or 
3.6 	contracted alternative program begins operation after October 1, compensatory revenue 
3.7 	pupil units shall be computed based on pupils enrolled on an alternate date determined by 
3.8 	the commissioner, and the compensation revenue pupil units shall be prorated based on 
3.9 	the ratio of the number of days of student instruction to 170 days.
3.10 	(e) The percentages in this subdivision must be based on the count of individual 
3.11 	pupils and not on a building average or minimum.

3.12 	EFFECTIVE DATE. This section is effective for revenue for fiscal year 2014 
3.13 	and later.

3.14 	Sec. 3. Minnesota Statutes 2008, section 126C.05, subdivision 5, is amended to read:
3.15 		Subd. 5.Adjusted pupil units. (a) Adjusted pupil units for a district or charter 
3.16 	school means the sum of:
3.17 	(1) the number of pupil units served, according to subdivision 7, plus
3.18 	(2) pupil units according to subdivision 1 for whom the district or charter school 
3.19 	pays tuition under section 123A.18, 123A.22, 123A.30, 123A.32, 123A.44, 123A.488, 
3.20 	123B.88, subdivision 4, 124D.04, 124D.05, 125A.03 to 125A.24, 125A.51, or 125A.65, 
3.21 	minus 
3.22 	(3) pupil units according to subdivision 1 for whom the district or charter school 
3.23 	receives tuition under section 123A.18, 123A.22, 123A.30, 123A.32, 123A.44, 123A.488, 
3.24 	123B.88, subdivision 4, 124D.04, 124D.05, 125A.03 to 125A.24, 125A.51, or 125A.65. 
3.25 	(b) Adjusted marginal cost pupil units means the greater of:
3.26 	(1) the sum of .77 times the pupil units defined in paragraph (a) for the current school 
3.27 	year and .23 times the pupil units defined in paragraph (a) for the previous school year; or
3.28 	(2) the number of adjusted pupil units defined in paragraph (a) for the current school 
3.29 	year.

3.30 	EFFECTIVE DATE. This section is effective for revenue for fiscal year 2014 
3.31 	and later.

3.32 	Sec. 4. Minnesota Statutes 2008, section 126C.05, subdivision 17, is amended to read:
4.1 		Subd. 17.LEP pupil units. (a) Limited English proficiency pupil units for fiscal 
4.2 	year 2004 and thereafter shall be determined according to this subdivision.
4.3 	(b) The limited English proficiency concentration percentage for a district equals the 
4.4 	product of 100 times the ratio of:
4.5 	(1) the number of eligible pupils of limited English proficiency in average daily 
4.6 	membership enrolled in the district during the current fiscal year; to
4.7 	(2) the number of pupils in average daily membership enrolled in the district.
4.8 	(c) The limited English proficiency pupil units for each eligible pupil of limited 
4.9 	English proficiency in average daily membership equals the lesser of one or the quotient 
4.10 	obtained by dividing the limited English proficiency concentration percentage for the 
4.11 	pupil's district of enrollment by 11.5.
4.12 	(d) Limited English proficiency pupil units shall be counted by the district of 
4.13 	enrollment.
4.14 	(e) Notwithstanding paragraph (d), for the purposes of this subdivision, pupils 
4.15 	enrolled in a cooperative or intermediate school district shall be counted by the district of 
4.16 	residence.
4.17 	(f) For the purposes of this subdivision, the terms defined in section 124D.59 have 
4.18 	the same meaning. A limited English proficiency pupil has a pupil weighting of ....

4.19 	EFFECTIVE DATE. This section is effective for revenue for fiscal year 2014 
4.20 	and later.

4.21 	Sec. 5. Minnesota Statutes 2008, section 126C.05, is amended by adding a subdivision 
4.22 	to read:
4.23 		Subd. 21.Special education pupil weights. (a) A pupil who qualifies for special 
4.24 	education services under chapter 125A generates additional pupil weights as follows:
4.25 	(1) for pupils in the lowest category of service ...;
4.26 	(2) for pupils in the middle category of service ...; and
4.27 	(3) for pupils in the highest category of service ....
4.28 	(b) The commissioner must review the special education service categories and by 
4.29 	February 1 of each odd-numbered year recommend any changes in the categories or 
4.30 	weights to the education committees of the legislature.

4.31 	EFFECTIVE DATE. This section is effective for revenue for fiscal year 2014 
4.32 	and later.

5.1 	Sec. 6. Minnesota Statutes 2008, section 126C.05, is amended by adding a subdivision 
5.2 	to read:
5.3 		Subd. 22.Supplemental services weight. A district's supplemental services weight 
5.4 	equals the sum of its compensatory pupil weight and its limited English proficiency 
5.5 	pupil weight.

5.6 	EFFECTIVE DATE. This section is effective for revenue for fiscal year 2014 
5.7 	and later.

5.8 	Sec. 7. [126C.105] FOUNDATION AID PROGRAM DEFINITIONS.
5.9 		Subdivision 1.State total cost per pupil. The statewide district cost per pupil 
5.10 	equals the total general fund expenditures of all districts in the previous school year 
5.11 	divided by the adjusted pupil units for that year.
5.12 		Subd. 2.District total cost per pupil. Each district's total cost per pupil equals 
5.13 	the district's total general fund expenditures for the previous year divided by the adjusted 
5.14 	pupil units for that year.
5.15 		Subd. 3.Maximum district cost per pupil. A district's maximum district cost per 
5.16 	pupil equals 105 percent of its total cost per pupil.
5.17 		Subd. 4.Foundation level percent. The foundation level percentage equals ....
5.18 		Subd. 5.Allowable growth. Allowable growth means ... percent per year for 
5.19 	fiscal years 2015 and later.

5.20 	EFFECTIVE DATE. This section is effective for revenue for fiscal year 2014 
5.21 	and later.

5.22 	Sec. 8. [126C.106] FOUNDATION AID PROGRAM.
5.23 		Subdivision 1.Uniform levy. Each school district's uniform levy equals the 
5.24 	amount raised by a levy of ... percent times the net tax capacity of the district for the 
5.25 	year preceding the year the levy is certified.
5.26 		Subd. 2.Foundation aid. The foundation aid for a district equals the greater of: 
5.27 	(1) zero; or (2) the difference between (i) the product of the foundation level percentage 
5.28 	and statewide the state cost per pupil, and (ii) the amount raised by the uniform levy 
5.29 	in that district.
5.30 		Subd. 3.Additional revenue. A school district may make an equalized levy for 
5.31 	the difference between the sum of its uniform levy and foundation aid and its maximum 
5.32 	district cost per pupil.
6.1 		Subd. 4.Instructional support program revenue. Upon annual adoption of a 
6.2 	written resolution by the school board, a district may make a levy not to exceed ten percent 
6.3 	of the district's total cost per pupil for instructional support programs.
6.4 		Subd. 5.Instructional support program levy. A school district's instructional 
6.5 	support program levy equals the district's approved instructional support revenue times the 
6.6 	lesser of one, or the ratio of the quotient derived by dividing the district's net tax capacity 
6.7 	for the year preceding the year the levy is certified by the district's adjusted pupil units for 
6.8 	the school year to which the levy is attributable to $10,000.
6.9 		Subd. 6.Instructional support program aid. A district's instructional support 
6.10 	program aid is equal to the difference between its instructional support revenue and its 
6.11 	instructional support levy.
6.12 		Subd. 7.Special education weights. The commissioner of education must meet 
6.13 	with school district special education officials, advocates for special education services, 
6.14 	and parents of disabled students to categorize the special instructional services and 
6.15 	determine the student weights for each category. The commissioner must report the initial 
6.16 	categories and student weights to the education committees of the legislature by February 
6.17 	1, 2012. The categories and pupil weights become effective unless the legislature acts to 
6.18 	enact different weights or categories within 60 days of the commissioner's report.
6.19 		Subd. 8.Supplemental services weights. The commissioner of education, after 
6.20 	consultation with school officials and other interested parties, must establish the pupil 
6.21 	weights for compensatory services, limited English proficiency services, and other 
6.22 	services as determined by the commissioner.

6.23 	EFFECTIVE DATE. This section is effective for revenue for fiscal year 2014 
6.24 	and later.

6.25 	Sec. 9. Minnesota Statutes 2008, section 126C.17, subdivision 1, is amended to read:
6.26 		Subdivision 1.Referendum allowance. (a) A district that does not have 
6.27 	instructional support levy approved by its board of directors under section 126C.106 
6.28 	may request revenue under this section. For fiscal year 2003 2014 and later, a district's 
6.29 	initial referendum revenue allowance equals the sum of the allowance under section 
6.30 	126C.16, subdivision 2, plus any additional allowance per resident marginal cost pupil 
6.31 	unit authorized under subdivision 9 before May 1, 2001, for fiscal year 2002 and later, 
6.32 	plus the referendum conversion allowance approved under subdivision 13, minus $415. 
6.33 	For districts with more than one referendum authority, the reduction must be computed 
6.34 	separately for each authority allowance for the preceding year. The reduction must be 
6.35 	applied first to the referendum conversion allowance and next to the authority with the 
7.1 	earliest expiration date. A district's initial referendum revenue allowance may not be 
7.2 	less than zero.
7.3 	(b) For fiscal year 2003, a district's referendum revenue allowance equals the initial 
7.4 	referendum allowance plus any additional allowance per resident marginal cost pupil unit 
7.5 	authorized under subdivision 9 between April 30, 2001, and December 30, 2001, for 
7.6 	fiscal year 2003 and later A district's referendum allowance is reduced by the amounts of 
7.7 	any expiring referenda authority.
7.8 	(c) For fiscal year 2004 and later, a district's referendum revenue allowance equals 
7.9 	the sum of:
7.10 	(1) the product of (i) the ratio of the resident marginal cost pupil units the district 
7.11 	would have counted for fiscal year 2004 under Minnesota Statutes 2002, section 126C.05, 
7.12 	to the district's resident marginal cost pupil units for fiscal year 2004, times (ii) the initial 
7.13 	referendum allowance plus any additional allowance per resident marginal cost pupil unit 
7.14 	authorized under subdivision 9 between April 30, 2001, and May 30, 2003, for fiscal 
7.15 	year 2003 and later, plus
7.16 	(2) any additional allowance per resident marginal cost pupil unit authorized under 
7.17 	subdivision 9 after May 30, 2003, for fiscal year 2005 and later.

7.18 	EFFECTIVE DATE. This section is effective for revenue for fiscal year 2014 
7.19 	and later.

7.20 	Sec. 10. Minnesota Statutes 2008, section 126C.17, subdivision 2, is amended to read:
7.21 		Subd. 2.Referendum allowance limit. (a) Notwithstanding subdivision 1, for fiscal 
7.22 	year 2007 2014 and later, a district's referendum allowance must not exceed the greater of:
7.23 	(1) the sum of: (i) a district's referendum allowance for fiscal year 1994 times 
7.24 	1.177 times the annual inflationary increase as calculated under paragraph (b) plus (ii) 
7.25 	its referendum conversion allowance for fiscal year 2003, minus (iii) $215 the district's 
7.26 	unexpired authority under subdivision 1; or
7.27 	(2) the greater of (i): 26 percent of the formula allowance or (ii) $1,294 times the 
7.28 	annual inflationary increase as calculated under paragraph (b); or
7.29 	(3) for a newly reorganized district created after July 1, 2006, the referendum 
7.30 	revenue authority for each reorganizing district in the year preceding reorganization 
7.31 	divided by its resident marginal cost pupil units for the year preceding reorganization ten 
7.32 	percent of the district's total cost per pupil for instructional programs.
7.33 	(b) For purposes of this subdivision, for fiscal year 2005 and later, "inflationary 
7.34 	increase" means one plus the percentage change in the Consumer Price Index for urban 
7.35 	consumers, as prepared by the United States Bureau of Labor Standards, for the current 
8.1 	fiscal year to fiscal year 2004. For fiscal years 2009 and later, for purposes of paragraph 
8.2 	(a), clause (1), the inflationary increase equals the inflationary increase for fiscal year 
8.3 	2008 plus one-fourth of the percentage increase in the formula allowance for that year 
8.4 	compared with the formula allowance for fiscal year 2008.

8.5 	EFFECTIVE DATE. This section is effective for revenue for fiscal year 2014 
8.6 	and later.

8.7 	Sec. 11. Minnesota Statutes 2008, section 126C.20, is amended to read:
8.8 	126C.20 ANNUAL GENERAL EDUCATION FOUNDATION AID 
8.9 	APPROPRIATION.
8.10 	There is annually appropriated from the general fund to the department the amount 
8.11 	necessary for general education the aid required under this chapter for the foundation 
8.12 	aid program. This amount must be reduced by the amount of any money specifically 
8.13 	appropriated for the same purpose in any year from any state fund.

8.14 	EFFECTIVE DATE. This section is effective for revenue for fiscal year 2014 
8.15 	and later.

8.16 	Sec. 12. SPECIAL EDUCATION MAINTENANCE OF EFFORT.
 8.17 	Notwithstanding any law to the contrary, a school district or charter school's special 
8.18 	education maintenance of effort requirements are not affected by the change from a cost 
8.19 	reimbursement funding system to a pupil weighting system of funding special education 
8.20 	services.

8.21 	EFFECTIVE DATE. This section is effective for revenue for fiscal year 2014 
8.22 	and later.

8.23 	Sec. 13. REVISOR'S INSTRUCTION.
 8.24 	The revisor of statutes shall change all references from the general education revenue 
8.25 	program to the foundation aid program.

8.26 	EFFECTIVE DATE. This section is effective for revenue for fiscal year 2014 
8.27 	and later.

8.28 	Sec. 14.  REPEALER.
 8.29 	(a) Minnesota Statutes 2008, sections 125A.76, subdivisions 2, 4, 4a, 5, 7, and 8; 
8.30 	125A.78; 125A.79, subdivisions 1, 4, 5, 6, 7, and 8; 126C.12, subdivisions 1, 2, 3, 4, 
9.1 	5, and 6; 126C.13, subdivisions 4 and 5; 126C.15, subdivisions 1, 3, and 5; 126C.16, 
9.2 	subdivisions 1 and 3; and 126C.17, subdivision 3, are repealed.
9.3 	(b) Minnesota Statutes 2009 Supplement, sections 125A.76, subdivision 1; and 
9.4 	126C.15, subdivisions 2 and 4, are repealed.

9.5 	EFFECTIVE DATE. This section is effective for revenue for fiscal year 2014 
9.6 	and later.