New Public School Finance Formula

The bill 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% 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; 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 district's or institute charter school's calculation under the expiring formula, unless:

• For the 2025-26 state fiscal year, if the total program calculation under the new formula is greater than the total program calculation under the expiring formula, the district's or institute charter school's annual total program amount is 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, if the total program calculation under the new formula is greater than the total program calculation under the expiring formula, the district's or institute charter school's annual total program amount is 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, if the total program calculation under the new formula is greater than the total program calculation under the expiring formula, the district's or institute charter school's annual total program amount is 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, if the total program calculation under the new formula is greater than the total program calculation under the expiring formula, the district's or institute charter school's annual total program amount is 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, if the total program calculation under the new formula is greater than the total program calculation under the expiring formula, the district's or institute charter school's annual total program amount is 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.

The bill repeals the expiring formula on July 1, 2030.

The bill makes amendments to conform with these changes and to repeal obsolete provisions within the "Public School Finance Act".

The bill requires the department of education to contract with third-party entities to conduct 2 studies and publish reports concerning weighted student budgeting and implementing a multiple count day method for determining pupil enrollment. The third-party entities are required to submit reports to the education committees of the house of representatives and the senate, and the governor, by June 30, 2025.

Under current law, there is the public school fund of the state (permanent school fund). The bill requires that:

• For the 2024-25 state fiscal year, the first $11 million of interest and income earned on the deposit and investment of money in the permanent school fund (interest and income) is credited to the state public school fund, the next $11 million of interest and income becomes part of the principal of the permanent school fund, and the remaining interest and income is credited to the restricted account of the public school capital construction assistance fund (assistance fund);
• For the 2025-26 state fiscal year, the first $6 million of interest and income is credited to the state public school fund, the next $6 million of interest and income becomes part of the principal of the permanent school fund, and the remaining interest and income is credited to the restricted account of the assistance fund; and
• For the 2026-27 state fiscal year, and state fiscal years thereafter, all interest and income is credited to the restricted account of the assistance fund.

The bill requires the state treasurer to allocate any money remaining in the state land board trust administration fund to pay for the services provided by the investment consultant hired by the public school investment board and for the reimbursement for travel and other necessary expenses incurred by the members of that board.

Under certain circumstances, the bill requires to be credited to the assistance fund:

• For the 2024-25 state fiscal year, the greater of $10 million from proceeds received from certain resources from public school lands plus 50% of the gross amount of public school lands income other than interest or income, or $40 million;
• For the 2025-26 state fiscal year, the greater of $15 million from proceeds received from certain resources from public school lands plus 50% of the gross amount of public school lands income other than interest or income, or $40 million; and
• For the 2026-27 state fiscal year, and each state fiscal year thereafter, the greater of $21 million from proceeds received from certain resources from public school lands plus 50% of the gross amount of public school lands income other than interest or income, or $40 million.

The bill credits an amount to the charter school facilities assistance account from the assistance fund.

The bill 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.

Current law dictates the distribution of proceeds received from certain resources from public school lands, of which, a certain amount is credited to the permanent school fund. The bill requires that:

• For the 2024-25 state fiscal year, the first $10 million is credited to the assistance fund;
• For the 2025-26 state fiscal year, the first $15 million is credited to the assistance fund; and
• For the 2026-27 state fiscal year, and each state fiscal year thereafter, the first $21 million is credited to the assistance fund.
  (Note: This summary applies to this bill as introduced.)