1.1 	A bill for an act
1.2 	relating to education finance; requiring school
1.3 	districts to spend at least 65 percent of their total
1.4 	operating expenditures on direct classroom
1.5 	expenditures; proposing coding for new law in
1.6 	Minnesota Statutes, chapter 123B.
1.7 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.8 	Section 1. [123B.748] REGULAR CLASSROOM EXPENDITURES.
1.9 		Subdivision 1.Definitions. "Direct classroom
1.10 	expenditures" means the amount defined by the National Center of
1.11 	Educational Statistics of the United States Department of
1.12 	Education.  "Total operating expenditures" has the meaning given
1.13 	it under the uniform financial accounting and reporting
1.14 	standards.  Total operating expenditures include all operating
1.15 	expenditures incurred for the benefit of elementary and
1.16 	secondary education during that school year, except capital
1.17 	expenditures.  Community education, construction, debt service,
1.18 	and trust and agency expenditures are nonoperating expenditures.
1.19 		Subd. 2.Expected expenditure level. A school district
1.20 	must spend at least 65 percent of its total operating
1.21 	expenditures on direct classroom expenditures.  If a school
1.22 	district's direct classroom expenditures in fiscal year 2005 are
1.23 	less than 65 percent of its total operating expenditures, the
1.24 	district must increase its direct classroom expenditures by at
1.25 	least two percentage points per year beginning in fiscal year
1.26 	2006.
2.1 		Subd. 3.Superintendent verification. A superintendent
2.2 	must include in the audited financial statements submitted to
2.3 	the commissioner under section 123B.77 a letter signed by the
2.4 	superintendent certifying the percentage of the district's total
2.5 	operating expenditures that were actually spent on direct
2.6 	classroom expenditures for that school year.
2.7 		Subd. 4.Waiver. A school district that is unable to
2.8 	meet the expenditure standards established under subdivision 2
2.9 	may apply to the commissioner for a waiver.  The waiver request
2.10 	must list the reasons why the district's direct classroom
2.11 	expenditures cannot meet the requirements of subdivision 2 and
2.12 	describe the changes the district intends to meet in the
2.13 	subsequent year in order to meet the direct classroom
2.14 	instruction requirements.  The commissioner must grant or deny a
2.15 	waiver request within 60 days of receiving the request.
2.16 	
EFFECTIVE DATE. This section is effective July 1, 2005,
2.17 	for the 2005-2006 school year.