State Public K-12 Education Funding

     The bill requires the secretary of state to refer a ballot issue at the November 2026 general election to seek voter approval for the state , beginning in the 2026-27 state fiscal year, to retain and spend an amount of state revenue equal to the amount of state public K-12 education funding in excess of the limitation on state fiscal year spending and to increase state public K-12 education funding by up to 2% for 10 years.

     The bill directs legislative council staff to determine the amount of state public K-12 education funding and describes how legislative council staff will make that determination.

     The bill creates a positive factor to provide additional funding for each district increase state public K-12 education funding. The amount of the positive factor compounds annually for 10 years . A positive factor is equal to the lesser of 2% of statewide total program funding for the 2026-27 budget year multiplied by a district's total program as a percentage of the statewide total program or the amount that the state is authorized to retain and spend that would otherwise have been in excess of the limitation on state fiscal year spending multiplied by a district's total program as a percentage of the statewide total program. The positive factor for the 2026-27 budget year is 2% of the program foundation calculated for the 2025-26 budget year. For the 2027-28 through 2034-35 budget years, it is the sum of 2% of the prior year's program foundation plus the prior year's positive factor. For the 2035-36 budget year and beyond, it is the sum of 2% of the 2034-35 program foundation plus the 2034-35 positive factor. If, in any year, there is not sufficient money in the children's account (account), which account is created in the bill, to pay the full amount of that year's positive factor, that amount must be paid in future years.

      The positive factor is divided into the positive factor acceleration amount and the positive factor education investment amount. The positive factor acceleration amount is determined and paid first. The positive factor acceleration amount is an amount used to accelerate the phase-in of the new school finance formula and the amount that any district receives is determined by the distribution of statewide total program. A district's positive factor education investment amount is an amount of the positive factor remaining after the positive factor acceleration amount has been accounted for and is proportional to the district's percentage of total program under the new school finance formula.

     A district may only use its positive factor funding for increasing teacher pay, improving teacher retention, lowering class sizes, and increasing access to career and technical courses.

      The bill creates the excess state revenues account (account) within the general fund. For the 2026-27 state fiscal year, the account consists of an amount of money equal to the amount of state revenues in excess of the excess state revenues cap that the state retains for a given fiscal year pursuant to voter approval of the bill. For state fiscal years commencing on or after July 1, 2027, the account consists of that same amount minus an amount equal to the total dollar amount of warrants issued by the state treasurer to reimburse local governments for property tax exemptions. Money in the account must first be spent for paying districts their positive factor and only after that may be spent for any other purpose.

     The bill directs the state auditor to conduct and publish, for each state fiscal year that the state retains and spends state revenues in excess of the limitation on state fiscal year spending, a legislative report. That report must include descriptions of:

• The amount of state revenues that the state retained and spent that would otherwise have been in excess of the limitation on state fiscal year spending; and
• How the state expended the state revenues that the state retained and spent that would otherwise have been in excess of the limitation on state fiscal year spending were expended.

      Beginning August 1, 2027, the bill requires each local education provider to post its actual expenditures of any positive factor acceleration amount and any positive factor education investment amount online for free public access in a format that can be downloaded and sorted.

     Lastly, the bill makes conforming amendments to ensure that voter approval of the bill does not impact the expanded earned income tax credit, the family affordability tax credit, or the affordable housing financing fund.

(Note: Italicized words indicate new material added to the original summary; dashes through words indicate deletions from the original summary.)


(Note: This summary applies to the reengrossed version of this bill as introduced in the second house.)