1.1 	A bill for an act
1.2 	relating to education; providing for a performance-based pay system for teachers;
1.3 	amending Minnesota Statutes 2012, sections 124D.10, by adding a subdivision; 
1.4 	126C.10, by adding subdivisions; Minnesota Statutes 2013 Supplement, sections 
1.5 	122A.40, subdivision 8; 122A.41, subdivision 5; 124D.11, subdivision 1; 
1.6 	126C.10, subdivision 1; 126C.13, subdivision 4; proposing coding for new law in 
1.7 	Minnesota Statutes, chapter 136D; repealing Minnesota Statutes 2012, sections 
1.8 	122A.413; 122A.414; 122A.4144; 122A.415, subdivisions 1, 3; 122A.4155; 
1.9 	122A.416; Minnesota Statutes 2013 Supplement, section 122A.415, subdivisions 
1.10 	4, 5, 6.
1.11 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.12 	Section 1. Minnesota Statutes 2013 Supplement, section 122A.40, subdivision 8, 
1.13 	is amended to read:
1.14 		Subd. 8.Development, evaluation, and peer coaching for continuing contract 
1.15 	teachers, and performance-linked pay. (a) To improve student learning and success and 
1.16 	to support teachers' roles in improving students' educational achievement, a school board 
1.17 	and an exclusive representative of the teachers in the district, consistent with paragraph 
1.18 	(b), may develop a teacher evaluation and peer review process for probationary and 
1.19 	continuing contract teachers through joint agreement and, consistent with paragraph (d), 
1.20 	may develop a performance pay system. If a school board and the exclusive representative 
1.21 	of the teachers do not agree to an annual teacher evaluation and peer review process, then 
1.22 	the school board and the exclusive representative of the teachers must implement the plan 
1.23 	for evaluation and review under paragraph (c). The process must include having trained 
1.24 	observers serve as peer coaches or having teachers participate in professional learning 
1.25 	communities, consistent with paragraph (b).
2.1 	(b) To develop, improve, and support qualified teachers and effective teaching 
2.2 	practices and improve student learning and success, the annual evaluation process for 
2.3 	teachers:
2.4 	(1) must, for probationary teachers, provide for all evaluations required under 
2.5 	subdivision 5;
2.6 	(2) must establish a three-year professional review cycle for each teacher that 
2.7 	includes an individual growth and development plan, a peer review process, the 
2.8 	opportunity to participate in a professional learning community under paragraph (a), and 
2.9 	at least one summative evaluation performed by a qualified and trained evaluator such as a 
2.10 	school administrator. For the years when a tenured teacher is not evaluated by a qualified 
2.11 	and trained evaluator, the teacher must be evaluated by a peer review;
2.12 	(3) must be based on professional teaching standards established in rule;
2.13 	(4) must coordinate staff development activities under sections 122A.60 and 
2.14 	122A.61 with this evaluation process and teachers' evaluation outcomes;
2.15 	(5) may provide time during the school day and school year for peer coaching and 
2.16 	teacher collaboration;
2.17 	(6) may include mentoring and induction programs;
2.18 	(7) must include an option for teachers to develop and present a portfolio 
2.19 	demonstrating evidence of reflection and professional growth, consistent with section 
2.20 	122A.18, subdivision 4, paragraph (b), and include teachers' own performance assessment 
2.21 	based on student work samples and examples of teachers' work, which may include video 
2.22 	among other activities for the summative evaluation;
2.23 	(8) must use data from valid and reliable assessments aligned to state and local 
2.24 	academic standards and must use state and local measures of student growth that may 
2.25 	include value-added models or student learning goals to determine 35 percent of teacher 
2.26 	evaluation results;
2.27 	(9) must use longitudinal data on student engagement and connection, and other 
2.28 	student outcome measures explicitly aligned with the elements of curriculum for which 
2.29 	teachers are responsible;
2.30 	(10) must require qualified and trained evaluators such as school administrators to 
2.31 	perform summative evaluations;
2.32 	(11) must give teachers not meeting professional teaching standards under clauses 
2.33 	(3) through (10) support to improve through a teacher improvement process that includes 
2.34 	established goals and timelines; and
2.35 	(12) must discipline a teacher for not making adequate progress in the teacher 
2.36 	improvement process under clause (11) that may include a last chance warning, 
3.1 	termination, discharge, nonrenewal, transfer to a different position, a leave of absence, or 
3.2 	other discipline a school administrator determines is appropriate.
3.3 	Data on individual teachers generated under this subdivision are personnel data 
3.4 	under section 13.43.
3.5 	(c) The department, in consultation with parents who may represent parent 
3.6 	organizations and teacher and administrator representatives appointed by their respective 
3.7 	organizations, representing the Board of Teaching, the Minnesota Association of School 
3.8 	Administrators, the Minnesota School Boards Association, the Minnesota Elementary 
3.9 	and Secondary Principals Associations, Education Minnesota, and representatives of 
3.10 	the Minnesota Assessment Group, the Minnesota Business Partnership, the Minnesota 
3.11 	Chamber of Commerce, and Minnesota postsecondary institutions with research expertise 
3.12 	in teacher evaluation, must create and publish a teacher evaluation process that complies 
3.13 	with the requirements in paragraph (b) and applies to all teachers under this section and 
3.14 	section 122A.41 for whom no agreement exists under paragraph (a) for an annual teacher 
3.15 	evaluation and peer review process. The teacher evaluation process created under this 
3.16 	subdivision does not create additional due process rights for probationary teachers under 
3.17 	subdivision 5.
3.18 	(d) To provide incentives to encourage teachers to improve their knowledge and 
3.19 	instructional skills to improve student learning and for school districts to recruit and retain 
3.20 	highly qualified teachers and encourage highly qualified teachers to undertake challenging 
3.21 	assignments, the performance pay system must, consistent with paragraph (b):
3.22 	(1) identify assessment and evaluation tools to measure student performance and 
3.23 	progress;
3.24 	(2) establish performance goals and benchmarks for improvement;
3.25 	(3) describe how teachers can achieve career advancement and additional 
3.26 	compensation;
3.27 	(4) describe how the school district will provide teachers with career advancement 
3.28 	options that allow teachers to retain primary roles in student instruction and facilitate 
3.29 	site-focused professional development that helps other teachers improve their skills;
3.30 	(5) reform the "steps and lanes" salary schedule, prevent any teacher's compensation 
3.31 	paid before implementing the pay system from being reduced as a result of participating 
3.32 	in this system, and base all compensation increases while the performance pay system 
3.33 	is in place on teacher performance; and
3.34 	(6) be negotiated and adopted according to the Public Employment Labor Relations 
3.35 	Act under chapter 179A, except that notwithstanding section 179A.20, subdivision 3, a 
3.36 	district may enter into a contract for a term of two or four years.
4.1 	(e) Notwithstanding section 179A.20 or other law to the contrary, a school board and 
4.2 	the exclusive representative of the teachers may agree to reopen a collective bargaining 
4.3 	agreement for the purpose of entering into a performance pay system agreement under 
4.4 	paragraph (d). Negotiations for a contract reopened under this section must be limited to 
4.5 	issues related to the performance pay system.

4.6 	EFFECTIVE DATE. This section is effective the day following final enactment 
4.7 	and applies to the 2015-2016 school year and later.

4.8 	Sec. 2. Minnesota Statutes 2013 Supplement, section 122A.41, subdivision 5, is 
4.9 	amended to read:
4.10 		Subd. 5.Development, evaluation, and peer coaching for continuing contract 
4.11 	teachers, and performance-linked pay. (a) To improve student learning and success and 
4.12 	to support teachers' roles in improving students' educational achievement, a school board 
4.13 	and an exclusive representative of the teachers in the district, consistent with paragraph 
4.14 	(b), may develop an annual teacher evaluation and peer review process for probationary 
4.15 	and nonprobationary teachers through joint agreement and consistent with paragraph (d), 
4.16 	may develop a performance pay system. If a school board and the exclusive representative 
4.17 	of the teachers in the district do not agree to an annual teacher evaluation and peer review 
4.18 	process, then the school board and the exclusive representative of the teachers must 
4.19 	implement the plan for evaluation and review developed under paragraph (c). The process 
4.20 	must include having trained observers serve as peer coaches or having teachers participate 
4.21 	in professional learning communities, consistent with paragraph (b).
4.22 	(b) To develop, improve, and support qualified teachers and effective teaching 
4.23 	practices and improve student learning and success, the annual evaluation process for 
4.24 	teachers:
4.25 	(1) must, for probationary teachers, provide for all evaluations required under 
4.26 	subdivision 2;
4.27 	(2) must establish a three-year professional review cycle for each teacher that 
4.28 	includes an individual growth and development plan, a peer review process, the 
4.29 	opportunity to participate in a professional learning community under paragraph (a), and 
4.30 	at least one summative evaluation performed by a qualified and trained evaluator such 
4.31 	as a school administrator;
4.32 	(3) must be based on professional teaching standards established in rule;
4.33 	(4) must coordinate staff development activities under sections 122A.60 and 
4.34 	122A.61 with this evaluation process and teachers' evaluation outcomes;
5.1 	(5) may provide time during the school day and school year for peer coaching and 
5.2 	teacher collaboration;
5.3 	(6) may include mentoring and induction programs;
5.4 	(7) must include an option for teachers to develop and present a portfolio 
5.5 	demonstrating evidence of reflection and professional growth, consistent with section 
5.6 	122A.18, subdivision 4, paragraph (b), and include teachers' own performance assessment 
5.7 	based on student work samples and examples of teachers' work, which may include video 
5.8 	among other activities for the summative evaluation;
5.9 	(8) must use data from valid and reliable assessments aligned to state and local 
5.10 	academic standards and must use state and local measures of student growth that may 
5.11 	include value-added models or student learning goals to determine 35 percent of teacher 
5.12 	evaluation results;
5.13 	(9) must use longitudinal data on student engagement and connection and other 
5.14 	student outcome measures explicitly aligned with the elements of curriculum for which 
5.15 	teachers are responsible;
5.16 	(10) must require qualified and trained evaluators such as school administrators to 
5.17 	perform summative evaluations;
5.18 	(11) must give teachers not meeting professional teaching standards under clauses 
5.19 	(3) through (10) support to improve through a teacher improvement process that includes 
5.20 	established goals and timelines; and
5.21 	(12) must discipline a teacher for not making adequate progress in the teacher 
5.22 	improvement process under clause (11) that may include a last chance warning, 
5.23 	termination, discharge, nonrenewal, transfer to a different position, a leave of absence, or 
5.24 	other discipline a school administrator determines is appropriate.
5.25 	Data on individual teachers generated under this subdivision are personnel data 
5.26 	under section 13.43.
5.27 	(c) The department, in consultation with parents who may represent parent 
5.28 	organizations and teacher and administrator representatives appointed by their respective 
5.29 	organizations, representing the Board of Teaching, the Minnesota Association of School 
5.30 	Administrators, the Minnesota School Boards Association, the Minnesota Elementary 
5.31 	and Secondary Principals Associations, Education Minnesota, and representatives of 
5.32 	the Minnesota Assessment Group, the Minnesota Business Partnership, the Minnesota 
5.33 	Chamber of Commerce, and Minnesota postsecondary institutions with research expertise 
5.34 	in teacher evaluation, must create and publish a teacher evaluation process that complies 
5.35 	with the requirements in paragraph (b) and applies to all teachers under this section and 
5.36 	section 122A.40 for whom no agreement exists under paragraph (a) for an annual teacher 
6.1 	evaluation and peer review process. The teacher evaluation process created under this 
6.2 	subdivision does not create additional due process rights for probationary teachers under 
6.3 	subdivision 2.
6.4 	(d) To provide incentives to encourage teachers to improve their knowledge and 
6.5 	instructional skills to improve student learning and for school districts to recruit and retain 
6.6 	highly qualified teachers and encourage highly qualified teachers to undertake challenging 
6.7 	assignments, the performance pay system must, consistent with paragraph (b):
6.8 	(1) identify assessment and evaluation tools to measure student performance and 
6.9 	progress;
6.10 	(2) establish performance goals and benchmarks for improvement;
6.11 	(3) describe how teachers can achieve career advancement and additional 
6.12 	compensation;
6.13 	(4) describe how the school district will provide teachers with career advancement 
6.14 	options that allow teachers to retain primary roles in student instruction and facilitate 
6.15 	site-focused professional development that helps other teachers improve their skills;
6.16 	(5) reform the "steps and lanes" salary schedule, prevent any teacher's compensation 
6.17 	paid before implementing the pay system from being reduced as a result of participating 
6.18 	in this system, and base all compensation increases while the performance pay system 
6.19 	is in place on teacher performance; and
6.20 	(6) be negotiated and adopted according to the Public Employment Labor Relations 
6.21 	Act under chapter 179A, except that notwithstanding section 179A.20, subdivision 3, a 
6.22 	district may enter into a contract for a term of two or four years.
6.23 	(e) Notwithstanding section 179A.20 or other law to the contrary, a school board and 
6.24 	the exclusive representative of the teachers may agree to reopen a collective bargaining 
6.25 	agreement for the purpose of entering into a performance pay system agreement under 
6.26 	paragraph (d). Negotiations for a contract reopened under this section must be limited to 
6.27 	issues related to the performance pay system.

6.28 	EFFECTIVE DATE. This section is effective the day following final enactment 
6.29 	and applies to the 2015-2016 school year and later.

6.30 	Sec. 3. Minnesota Statutes 2012, section 124D.10, is amended by adding a subdivision 
6.31 	to read:
6.32 		Subd. 11a.Performance pay for charter schools. To provide incentives to 
6.33 	encourage teachers to improve their knowledge and instructional skills to improve 
6.34 	student learning and for charter schools to recruit and retain highly qualified teachers and 
7.1 	encourage highly qualified teachers to undertake challenging assignments, a charter school 
7.2 	may develop a performance pay system. If developed, the performance pay system must:
7.3 	(1) include the elements in section 122A.40, subdivision 8, paragraph (d), clauses 
7.4 	(1) to (5);
7.5 	(2) if governed by a collective bargaining agreement, comply with section 122A.40, 
7.6 	subdivision 8, paragraph (d), clause (6);
7.7 	(3) be adopted by the charter school board of directors adopting the agreement; and
7.8 	(4) be approved by a formal vote of the teachers employed at the charter school 
7.9 	indicating that at least 70 percent of all teachers agree to implement the performance pay 
7.10 	system, unless the charter school submits a performance pay system agreement under this 
7.11 	subdivision before the first year of operation.

7.12 	EFFECTIVE DATE. This section is effective the day following final enactment 
7.13 	and applies to the 2015-2016 school year and later.

7.14 	Sec. 4. Minnesota Statutes 2013 Supplement, section 124D.11, subdivision 1, is 
7.15 	amended to read:
7.16 		Subdivision 1.General education revenue.  General education revenue must be 
7.17 	paid to a charter school as though it were a district. The general education revenue for 
7.18 	each adjusted pupil unit is the state average general education revenue per pupil unit, plus 
7.19 	the referendum equalization aid allowance in the pupil's district of residence, minus an 
7.20 	amount equal to the product of the formula allowance according to section 126C.10, 
7.21 	subdivision 2, times .0466, calculated without basic skills revenue, extended time revenue, 
7.22 	pension adjustment revenue, evaluation and performance revenue, transition revenue, and 
7.23 	transportation sparsity revenue, plus basic skills revenue, extended time revenue, pension 
7.24 	adjustment revenue, evaluation and performance aid according to section 126C.10, 
7.25 	subdivision 39, and transition revenue as though the school were a school district. The 
7.26 	general education revenue for each extended time pupil unit equals $4,794.

7.27 	Sec. 5. Minnesota Statutes 2013 Supplement, section 126C.10, subdivision 1, is 
7.28 	amended to read:
7.29 		Subdivision 1.General education revenue. (a) For fiscal years 2013 and 2014, the 
7.30 	general education revenue for each district equals the sum of the district's basic revenue, 
7.31 	extended time revenue, gifted and talented revenue, small schools revenue, basic skills 
7.32 	revenue, secondary sparsity revenue, elementary sparsity revenue, transportation sparsity 
7.33 	revenue, total operating capital revenue, equity revenue, alternative teacher compensation 
7.34 	revenue, and transition revenue.
8.1 	(b) For fiscal year 2015 and later, the general education revenue for each district 
8.2 	equals the sum of the district's basic revenue, extended time revenue, gifted and 
8.3 	talented revenue, declining enrollment revenue, location equity revenue, small schools 
8.4 	revenue, basic skills revenue, secondary sparsity revenue, elementary sparsity revenue, 
8.5 	transportation sparsity revenue, total operating capital revenue, equity revenue, pension 
8.6 	adjustment revenue, evaluation and performance revenue, and transition revenue.

8.7 	Sec. 6. Minnesota Statutes 2012, section 126C.10, is amended by adding a subdivision 
8.8 	to read:
8.9 		Subd. 38.Evaluation and performance revenue. (a) For fiscal year 2016 and later, 
8.10 	evaluation and performance revenue for a school district or charter school in which the 
8.11 	school board, intermediate school board, or charter school board of directors (1) notified 
8.12 	the commissioner by October 1 of the previous fiscal year of the district's or charter 
8.13 	school's intention to implement a performance plan under section 122A.40, subdivision 8, 
8.14 	paragraph (d); 122A.41, subdivision 5, paragraph (d); 136D.02; or 124D.10, subdivision 
8.15 	11a, and (2) certifies to the commissioner by October 1 of that fiscal year that the district, 
8.16 	intermediate district, or charter school has implemented the performance plan, equals $260 
8.17 	times the number of pupils enrolled at the district or site on October 1 of the previous 
8.18 	fiscal year. Of this amount, ... percent must be reserved for compensation increases 
8.19 	consistent with the adopted performance plan.
8.20 	(b) For fiscal year 2015 and later, evaluation and performance revenue for a school 
8.21 	district or charter school not receiving revenue under paragraph (a) is equal to $... times 
8.22 	the number of pupils enrolled at the district or site on October 1 of the previous fiscal year.
8.23 	(c) Evaluation and performance revenue for an intermediate school district equals 
8.24 	the basic evaluation and performance aid for an intermediate school district calculated 
8.25 	under subdivision 39.
8.26 	(d) Notwithstanding paragraphs (a), (b), and (c), the evaluation and performance 
8.27 	revenue for a school district, intermediate school district, or charter school receiving 
8.28 	revenue under section 122A.415 for the current school year equals $0.
8.29 	(e) For a newly combined or consolidated district, the revenue shall be computed 
8.30 	using the sum of pupils enrolled on October 1 of the previous year in the districts entering 
8.31 	into the combination or consolidation. The commissioner may adjust the revenue computed 
8.32 	for a site using prior year data to reflect changes attributable to school closings, school 
8.33 	openings, or grade level reconfigurations between the prior year and the current year.
8.34 	(f) For a charter school in the first year of operation, the revenue shall be computed 
8.35 	using the number of pupils enrolled on October 1 of the current year.

9.1 	Sec. 7. Minnesota Statutes 2012, section 126C.10, is amended by adding a subdivision 
9.2 	to read:
9.3 		Subd. 39.Basic evaluation and performance aid. For fiscal year 2015 and 
9.4 	later, the basic evaluation and performance aid equals 65 percent of the evaluation and 
9.5 	performance revenue under subdivision 38. The basic evaluation and performance aid 
9.6 	for an intermediate school district equals $260 times the number of pupils enrolled in the 
9.7 	school on October 1 of the previous year times the ratio of the sum of the evaluation and 
9.8 	performance aid and evaluation and performance levy for all participating school districts 
9.9 	to the maximum evaluation and performance revenue for those districts under subdivision 
9.10 	38. The basic evaluation and performance aid for a charter school equals the evaluation 
9.11 	and performance revenue under subdivision 38.

9.12 	Sec. 8. Minnesota Statutes 2012, section 126C.10, is amended by adding a subdivision 
9.13 	to read:
9.14 		Subd. 40.Evaluation and performance levy. For fiscal year 2015 and later, 
9.15 	the evaluation and performance levy for a school district equals the product of (1) the 
9.16 	difference between the district's evaluation and performance revenue and the district's 
9.17 	basic evaluation and performance aid, times (2) the lesser of one or the ratio of the 
9.18 	district's adjusted net tax capacity per adjusted pupil unit to $6,100.

9.19 	Sec. 9. Minnesota Statutes 2012, section 126C.10, is amended by adding a subdivision 
9.20 	to read:
9.21 		Subd. 41.Evaluation and performance equalization aid. (a) For fiscal year 2015 
9.22 	and later, a district's evaluation and performance equalization aid equals the district's 
9.23 	evaluation and performance revenue minus the district's basic evaluation and performance 
9.24 	aid minus the district's evaluation and performance levy. If a district does not levy the 
9.25 	entire amount permitted, the evaluation and performance equalization aid must be reduced 
9.26 	in proportion to the actual amount levied.
9.27 	(b) A district's evaluation and performance aid equals the sum of the district's basic 
9.28 	evaluation and performance aid and the district's evaluation and performance equalization 
9.29 	aid.

9.30 	Sec. 10. Minnesota Statutes 2013 Supplement, section 126C.13, subdivision 4, is 
9.31 	amended to read:
9.32 		Subd. 4.General education aid. (a) For fiscal years 2013 and 2014 only, a district's 
9.33 	general education aid is the sum of the following amounts:
10.1 	(1) general education revenue, excluding equity revenue, total operating capital 
10.2 	revenue, alternative teacher compensation revenue, and transition revenue;
10.3 	(2) operating capital aid under section 126C.10, subdivision 13b;
10.4 	(3) equity aid under section 126C.10, subdivision 30;
10.5 	(4) alternative teacher compensation aid under section 126C.10, subdivision 36;
10.6 	(5) transition aid under section 126C.10, subdivision 33;
10.7 	(6) shared time aid under section 126C.01, subdivision 7;
10.8 	(7) referendum aid under section 126C.17, subdivisions 7 and 7a; and
10.9 	(8) online learning aid according to section 124D.096.
10.10 	(b) For fiscal year 2015 and later, a district's general education aid equals:
10.11 	(1) general education revenue, excluding operating capital revenue, equity revenue, 
10.12 	location equity revenue, evaluation and performance revenue, and transition revenue, 
10.13 	minus the student achievement levy, multiplied times the ratio of the actual amount of 
10.14 	student achievement levy levied to the permitted student achievement levy; plus
10.15 	(2) equity aid under section 126C.10, subdivision 30; plus
10.16 	(3) transition aid under section 126C.10, subdivision 33; plus
10.17 	(4) shared time aid under section 126C.10, subdivision 7; plus
10.18 	(5) referendum aid under section 126C.17, subdivisions 7 and 7a; plus
10.19 	(6) online learning aid under section 124D.096; plus
10.20 	(7) location equity aid according to section 126C.10, subdivision 2d, paragraph 
10.21 	(d).; plus
10.22 	(8) evaluation and performance aid according to section 126C.10, subdivision 41, 
10.23 	paragraph (b).

10.24 	Sec. 11. [136D.02] PERFORMANCE PAY SYSTEM.
10.25 	To provide incentives to encourage teachers to improve their knowledge and 
10.26 	instructional skills to improve student learning and for intermediate school districts 
10.27 	to recruit and retain highly qualified teachers and encourage highly qualified teachers 
10.28 	to undertake challenging assignments, an intermediate school district may develop a 
10.29 	performance pay system. If developed, the performance pay system must include the 
10.30 	elements in section 122A.40, subdivision 8, paragraph (d), clauses (1) to (6).

10.31 	EFFECTIVE DATE. This section is effective the day following final enactment 
10.32 	and applies to the 2015-2016 school year and later.

10.33 	Sec. 12.  REPEALER.
 11.1 	Minnesota Statutes 2012, sections 122A.413; 122A.414; 122A.4144; 122A.415, 
11.2 	subdivisions 1 and 3; 122A.4155; and 122A.416, and Minnesota Statutes 2013 
11.3 	Supplement, section 122A.415, subdivisions 4, 5, and 6, are repealed effective for the 
11.4 	2017-2018 school year and later.