New Public School Finance Formula

    The act creates a new total program formula (new formula), which is used to determine each school district's (district) and institute charter school's annual total program amount to fund public education. With limited exception, the district or the institute charter school has the discretion to determine the budgeting and expending of its total program money.
    The new formula:
    ●    Starts with a district's foundation funding, which is determined by multiplying the statewide base per pupil funding by the district's funded pupil count, excluding the district's extended high school pupil enrollment and the district's online pupil enrollment; then
    ●    Adds the district's at-risk funding, which is determined by multiplying the statewide base per pupil funding by 25%, or 32% for certain districts with a high percentage of at-risk pupils, and then multiplying that result by the district's at-risk pupil enrollment; then
    ●    Adds the district's English language learning funding, which is determined by multiplying the statewide base per pupil funding by 25% and then multiplying that result by the district's English language learner pupil enrollment; then
    ●    Adds the district's special education funding, which is determined by multiplying the statewide base per pupil funding by 25% and then multiplying that result by the district's special education pupil enrollment; then
    ●    Adds the district's cost of living factor, which is determined by multiplying the statewide base per pupil funding by the district's funded pupil count, excluding the district's extended high school pupil enrollment and the district's online pupil enrollment, and then multiplying that result by the district's cost of living factor; then
    ●    Adds the district's locale factor, which is determined by multiplying the statewide base per pupil funding by the district's funded pupil count, excluding the district's extended high school pupil enrollment and the district's online pupil enrollment, and then multiplying that result by the district's locale factor, plus $100,000 if the district is classified as rural remote or town remote; then
    ●    Adds the district's size factor, which is determined by multiplying the statewide base per pupil funding by the district's funded pupil count, excluding the district's extended high school pupil enrollment and the district's online pupil enrollment, and then multiplying that result by the district's size factor; then
    ●    Adds the district's extended high school funding, which is determined by multiplying the district's extended high school pupil enrollment by an amount that increases by the same percentage that the statewide base per student funding increases; then
    ●    Adds the district's online funding, which is determined by multiplying the district's online pupil enrollment by an amount that increases by the same percentage that the statewide base per student funding increases.
    Beginning in the 2030-31 state fiscal year, the new formula will determine each district's and institute charter school's annual total program amount.
    For the 2025-26 state fiscal year through the 2029-30 state fiscal year, each district's and institute charter school's annual total program amount will be determined by calculating each district's and institute charter school's annual total program amount under the new formula and the expiring formula. During these state fiscal years, a district's or institute charter school's annual total program amount is the greater of the district's or institute charter school's calculation under the expiring formula plus 0.5% of that calculation, or:
    ●    For the 2025-26 state fiscal year, the amount calculated under the expiring formula plus an amount equal to 18% of the difference between the amount calculated under the new formula and the expiring formula;
    ●    For the 2026-27 state fiscal year, the amount calculated under the expiring formula plus an amount equal to 34% of the difference between the amount calculated under the new formula and the expiring formula;
    ●    For the 2027-28 state fiscal year, the amount calculated under the expiring formula plus an amount equal to 50% of the difference between the amount calculated under the new formula and the expiring formula;
    ●    For the 2028-29 state fiscal year, the amount calculated under the expiring formula plus an amount equal to 66% of the difference between the amount calculated under the new formula and the expiring formula; and
    ●    For the 2029-30 state fiscal year, the amount calculated under the expiring formula plus an amount equal to 82% of the difference between the amount calculated under the new formula and the expiring formula.
    For the 2024-25 budget year through the 2029-30 budget year, the joint budget committee is required to monitor the fiscal impact of the district total program determinations. Starting January 2025, the joint budget committee is required to develop a sustainability plan that makes findings and recommendations regarding how the general assembly can fully fund total program determinations during the transition to the new formula and under a new formula. The joint budget committee is required to review the sustainability plan annually and update it as necessary.
    Notwithstanding the transition to the new formula, during the 2024-25 budget year through the 2029-30 budget year, if the joint budget committee determines that a specified condition occurs in any of those budget years, for the next budget year and for each budget year thereafter, the department of education (department) is required to suspend further transition by calculating and determining each district's total program pursuant to the calculation and determination required for the budget year when the condition occurred.
    The act repeals the expiring formula on July 1, 2031.
    The act makes amendments to conform with these changes and to repeal obsolete provisions within the "Public School Finance Act".
    Beginning in January 2026, and each January thereafter, the department is required to report certain information concerning district total program determinations and pupil enrollment during its annual "SMART Act" presentation to the education committees of the house of representatives and the senate.
    By July 1, 2025, a district or institute charter school that is served by a multi-district administrative unit for special education services must update its existing agreement to contain provisions regarding special education pupil funding.
    Under current law, there is the public school fund of the state (permanent school fund). The act requires that:
    ●    For the 2024-25 state fiscal year, after paying for investment consultant services for the permanent school fund investment board, the next $11 million of interest and income is credited to the state public school fund, then the next $30 million of interest and income is credited to the restricted account of the public school capital construction assistance fund (restricted account), and the remaining interest and income is credited as specified by the general assembly or remains in the permanent school fund;
    ●    For the 25-26 state fiscal year, after paying for investment consultant services for the permanent school fund investment board, the next $5 million of interest and income is credited to the state public school fund, then the next $36 million of interest and income is credited to the restricted account, and the remaining interest and income is credited as specified by the general assembly or remains in the permanent school fund; and
    ●    For the 2026-27 state fiscal year, and state fiscal years thereafter, after paying for investment consultant services for the permanent school fund investment board, the next $41 million of interest and income is credited to the restricted account, and the remaining interest and income is credited as specified by the general assembly or remains in the permanent school fund.
    For the 2024-25 state fiscal year through the 2028-29 state fiscal year, the act credits an amount to the charter school facilities assistance account from the public school capital construction assistance fund.
    The act increases the total maximum amount of annual payments payable by the state during a state fiscal year under the terms of all outstanding financed purchase of an asset or certificate of participation agreements entered into by the state treasurer from $125 million to $150 million.
    Under current law, the public school capital construction assistance board presents a report regarding the provision of financial assistance to applicants of the school district capital construction assistance program, commonly known as the "Building Excellent Schools Today Act" or "BEST Act". Beginning in the report due in February 2026, the report must specify how existing reporting requirements relate to charter schools.
    The act creates an override mill levy match working group to meet during the 2024 interim and make recommendations concerning modifying the override mill levy match, make recommendations concerning which eligible districts and eligible institute charter schools will receive a distribution from the mill levy match override match fund for the 2024-25 budget year, and identify and analyze inequities between neighboring districts that have differing mill levy overrides, property tax bases, or demonstrated levels of local effort.
    For the 2023-24 budget year, the act creates a one-time formula under the override mill levy match through which each district receives a distribution that is the greater of the amount calculated pursuant to the one-time formula or the determination under current law.
    On or after July 1, 2024, through June 30, 2030, the act amends the total additional local property tax revenues that a district may receive pursuant to an election.
    The act appropriates:
    ●    For the 2024-25 state fiscal year, $184,433 to the department for administration related to school finance;
    ●    For the 2024-25 state fiscal year, $11.5 million from the charter school facilities assistance account to the department for state aid for charter school facilities;
    ●    For the 2024-25 state fiscal year, $32,875 to the legislative department to implement the act; and
    ●    For the 2023-24 state fiscal year, $11,374,594 to the department for the mill levy override match fund.
    The act adjusts appropriations made in the 2024 long bill by:
    ●    Decreasing the cash funds appropriation to the state public school fund from the permanent school fund for the state share of districts' total program by $5 million;
    ●    Decreasing the cash funds appropriation to the state public school fund from the permanent school fund for at-risk per pupil additional funding by $5 million;
    ●    Appropriating $5 million from the state education fund to the department for the state share of districts' total program; and
    ●    Appropriating $5 million from the state education fund to the department for at-risk per pupil additional funding.
APPROVED by Governor May 23, 2024
EFFECTIVE May 23, 2024

(Note: This summary applies to this bill as enacted.)