SB 463 - STATE SCHOOL AID FORMULA - The act establishes a new formula for the distribution of state school aid. The formula establishes a flat, per pupil entitlement known as the "formula base amount per eligible pupil" which shall be initially established at $5300 per pupil for FY 2002 and shall be annually adjusted by the percentage change in the state average equalized assessed value from the 3rd to 2nd preceding year. Deductions are made for local sources of operating revenues, including merchant's and manufacturer's replacement taxes, and some federal revenues.

The act requires that each district, other than certain very wealthy school districts, levy no less than the $1.25 minimum operating levy as an eligibility requirement for state aid. Actual local property tax receipts from the $1.25 minimum levy are deducted at 100% from state aid entitlement while additional local property tax receipts above an additional $530 or ten percent are deducted at fifty percent. Payments pursuant to the new formula are phased in over 2 years.

"Average daily attendance" is weighted at 105% for the first 100 kids per grade level per school, but only for schools serving at least 4 grades including either kindergarten or twelfth grade. Double counting of summer school attendance is deleted.

"Operating levy for school purposes" is revised to allow up to 12.5 cents of the $1.25 minimum levy to be placed in either debt service or capital projects.

CATEGORICAL AID - The current Line 14 At-Risk categorical aid is revised so that districts receive an additional formula entitlement payment of 15% of the base formula amount on the basis of Free and Reduced Price Lunch Eligible pupils in the district enrollment. A new categorical, the "experienced teacher entitlement", is created.

MINIMUM TEACHER SALARIES - The bill creates a new, mandatory 5-level minimum salary program, beginning in the 2003-04 school year, funded by a separate categorical appropriation with salary steps as follows:

$25,000 for 5 or less years experience, $30,000 for Master's (or higher) + 6-10 years or Bachelor's + 6-19 years), $35,000 for Bachelors + 20 or Master's (or higher) + 11-19 years, $40,000 for Master's (or higher) + 20-29 years, $45,000 for Master's (or higher) + 30 or more years.

The act creates an "experienced teacher entitlement" which shall be $670 for every year of experience for every employee employed the previous year in a position for which a certificate from the State Board was required.

To be eligible for the "experienced teacher entitlement" a district shall: meet all requirements for state aid pursuant to section 163.021; make no illegal transfers for capital purposes; make no reductions in salary schedule unless financially stressed; place new teachers (with experience in other districts) on salary schedule using all of the new teacher's public school teaching experience and pay returning teachers no less than they were paid the previous year (on an FTE basis). State payments will be reduced if the district's extra duty pay is more than 8.5% or if end of year operating balances are over 15%.

TRANSFER OF SCHOOL FUNDS - The bill revises existing limitations on the amount of transfers of operating funds to the capital projects fund. All capital expenditures shall be made from the capital projects fund, including classroom instructional capital expenses. The act retains existing transfer authority for "grandfathered" lease purchases, allowed transportation expenses and area vocational-technical school capital expenses. The "6 cents plus 18 cents times the GTB" transfer is replaced by authority to include up to 12.5 cents of debt service and capital projects levies in the operating levy and place local and state aid based upon that portion of the minimum levy in the corresponding fund. Allowed transfers are permitted each year, regardless of whether the funds are spent in the current year. The existing eligibility criteria for transfers are retained.

TAXATION - The act increases the statutory sales tax from four percent to five percent. The one-cent Proposition C sales tax revenues and the one-cent increase in sales tax revenues will be distributed as part of the state sources used to fund the basic school aid payment. Personal income taxes are increased by one percent for all brackets. Corporate income taxes are increased one percent to seven and one-quarter percent.

The act has a referendum clause.
OTTO FAJEN