1.1 	A bill for an act
1.2 	relating to education finance; increasing the
1.3 	referendum revenue allowance; amending Minnesota
1.4 	Statutes 2004, section 126C.17, subdivisions 2, 5, 7.
1.5 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.6 	Section 1. Minnesota Statutes 2004, section 126C.17,
1.7 	subdivision 2, is amended to read:
1.8 		Subd. 2.Referendum allowance limit.  (a) Notwithstanding
1.9 	subdivision 1, for fiscal year 2003, a district's referendum
1.10 	allowance must not exceed the greater of:
1.11 	(1) the sum of a district's referendum allowance for fiscal
1.12 	year 1994 times 1.162 plus its referendum conversion allowance
1.13 	for fiscal year 2003, minus $415;
1.14 	(2) 18.2 percent of the formula allowance;
1.15 	(3) for a newly reorganized district created on July 1,
1.16 	2002, the referendum revenue authority for each reorganizing
1.17 	district in the year preceding reorganization divided by its
1.18 	resident marginal cost pupil units for the year preceding
1.19 	reorganization, minus $415; or 
1.20 	(4) for a newly reorganized district created after July 1,
1.21 	2002, the referendum revenue authority for each reorganizing
1.22 	district in the year preceding reorganization divided by its
1.23 	resident marginal cost pupil units for the year preceding
1.24 	reorganization.
1.25 	(b) Notwithstanding subdivision 1, for fiscal year 2004 
2.1 	2007 and later, a district's referendum allowance must not
2.2 	exceed the greater of:
2.3 	(1) the sum of:  (i) a district's referendum allowance for
2.4 	fiscal year 1994 times 1.177 times the annual inflationary
2.5 	increase as calculated under paragraph (c) plus (ii) its
2.6 	referendum conversion allowance for fiscal year 2003, minus
2.7 	(iii) $415;
2.8 	(2) the greater of (i) 18.6 28 percent of the formula
2.9 	allowance or (ii) $855.79 $1,288 times the annual inflationary
2.10 	increase as calculated under paragraph (c); or
2.11 	(3) for a newly reorganized district created after July 1,
2.12 	2002 2006, the referendum revenue authority for each
2.13 	reorganizing district in the year preceding reorganization
2.14 	divided by its resident marginal cost pupil units for the year
2.15 	preceding reorganization.
2.16 	(c) (b) For purposes of this subdivision, for fiscal year
2.17 	2005 and later, "inflationary increase" means one plus the
2.18 	percentage change in the Consumer Price Index for urban
2.19 	consumers, as prepared by the United States Bureau of Labor
2.20 	Standards, for the current fiscal year to fiscal year 2004. For
2.21 	fiscal years 2009 and later, for purposes of paragraph (b),
2.22 	clause (1), the inflationary increase equals the inflationary
2.23 	increase for fiscal year 2008 plus one-fourth of the percentage
2.24 	increase in the formula allowance for that year compared with
2.25 	the formula allowance for fiscal year 2008.
2.26 	
EFFECTIVE DATE. This section is effective for revenue for
2.27 	fiscal year 2007.

2.28 	Sec. 2. Minnesota Statutes 2004, section 126C.17,
2.29 	subdivision 5, is amended to read:
2.30 		Subd. 5.Referendum equalization revenue.  (a) For fiscal
2.31 	year 2003 and later, a district's referendum equalization
2.32 	revenue equals the sum of the first tier referendum equalization
2.33 	revenue and the second tier referendum equalization revenue.
2.34 	(b) A district's first tier referendum equalization revenue
2.35 	equals the district's first tier referendum equalization
2.36 	allowance times the district's resident marginal cost pupil
3.1 	units for that year.
3.2 	(c) For fiscal years 2003 and 2004, a district's first tier
3.3 	referendum equalization allowance equals the lesser of the
3.4 	district's referendum allowance under subdivision 1 or $126.
3.5 	For fiscal year 2005, a district's first tier referendum
3.6 	equalization allowance equals the lesser of the district's
3.7 	referendum allowance under subdivision 1 or $405.For fiscal
3.8 	year 2006 and later, a district's first tier referendum
3.9 	equalization allowance equals the lesser of the district's
3.10 	referendum allowance under subdivision 1 or $500.
3.11 	(d) A district's second tier referendum equalization
3.12 	revenue equals the district's second tier referendum
3.13 	equalization allowance times the district's resident marginal
3.14 	cost pupil units for that year.
3.15 	(e) For fiscal year 2006,a district's second tier
3.16 	referendum equalization allowance equals the lesser of the
3.17 	district's referendum allowance under subdivision 1 or 18.6
3.18 	percent of the formula allowance, minus the district's first
3.19 	tier referendum equalization allowance. For fiscal year 2007
3.20 	and later, a district's second tier referendum equalization
3.21 	allowance equals the lesser of the district's referendum
3.22 	allowance under subdivision 1 or 28 percent of the formula
3.23 	allowance, minus the district's first tier referendum
3.24 	equalization allowance.
3.25 	(f) Notwithstanding paragraph (e), the second tier
3.26 	referendum allowance for a district qualifying for secondary
3.27 	sparsity revenue under section 126C.10, subdivision 7, or
3.28 	elementary sparsity revenue under section 126C.10, subdivision
3.29 	8, equals the district's referendum allowance under subdivision
3.30 	1 minus the district's first tier referendum equalization
3.31 	allowance.
3.32 	
EFFECTIVE DATE. This section is effective for revenue for
3.33 	fiscal year 2007.

3.34 	Sec. 3. Minnesota Statutes 2004, section 126C.17,
3.35 	subdivision 7, is amended to read:
3.36 		Subd. 7.Referendum equalization aid.  (a) A district's
4.1 	referendum equalization aid equals the difference between its
4.2 	referendum equalization revenue and levy.
4.3 	(b) If a district's actual levy for first or second tier
4.4 	referendum equalization revenue is less than its maximum levy
4.5 	limit for that tier, aid shall be proportionately reduced.
4.6 	(c) Notwithstanding paragraph (a), the referendum
4.7 	equalization aid for a district, where the referendum
4.8 	equalization aid under paragraph (a) exceeds 90 percent of the
4.9 	referendum revenue, must not exceed 18.6 28 percent of the
4.10 	formula allowance times the district's resident marginal cost 
4.11 	pupil units.  A district's referendum levy is increased by the
4.12 	amount of any reduction in referendum aid under this paragraph.
4.13 	
EFFECTIVE DATE. This section is effective for revenue for
4.14 	fiscal year 2007.