SS#3/SB 360 - This act makes many revisions to school laws.

TAX ABATEMENTS IN ST. LOUIS CITY - The act provides that tax abatements may not be issued or become effective in St. Louis City unless the city determines the total revenue to be generated by the project and pays 50% of that amount to the school district. Any such revenues received by the district for operating purposes shall be deducted from state aid entitlement on line 3 of the formula as "payment in lieu of tax".

OUTSTANDING SCHOOLS ACT - Sections 143.105, 143.106 and 143.107, RSMo, are repealed. Section 143.107 is the "contingent referendum clause" from Section D of SB 380 of 1993, and sections 143.105 and 143.106, if submitted and approved pursuant to section 143.107, would revise the corporate income tax rate and deductibility of federal income tax liability to their pre-SB 380 provisions. On November 19, 1996, the Missouri Supreme Court ruled, in W. Todd Akin, et al. v. Director of Revenue, that these sections, as contained in sections B, C and D of SB 380, are void and unconstitutional.

RAILROAD PROPERTY REPORTS - In annual reports to the State Tax Commission beginning April 15, 1999, railroad companies shall report the length of railroads and sidetracks and all other distributable property in each school district. Prior to April 15, 1999, railroads shall provide such information within 15 business days of a written request from a school district.

UTILITY PROPERTY REPORTS - In annual reports to the State Tax Commission beginning April 15, 1999, other utility companies shall report the real and tangible personal property in each school district. Prior to April 15, 1999, railroads shall provide such information within 15 business days of a written request from a school district.

STATE ASSESSMENT SYSTEM - The act provides that state assessment materials shall be provided at no cost to school districts.

USE OF RIVERBOAT GAMING PROCEEDS - Excess riverboat receipts beyond those needed for School District Bond Fund shall be used as follows: (1) the first $50 M go to fully fund formula entitlements, (2) the next $10 M shall be transferred to the School Building Revolving Fund and (3) any remainder shall go to fully fund the formula.

ACADEMICALLY DEFICIENT SCHOOLS - Districts with graduation rates below 65% shall determine which schools meet the criteria of "academically deficient" schools, and the district may suspend or terminate contracts of certificated staff, principals and other administrators of such school and may reconstitute the school or sponsor a charter school. Termination of a tenured teacher's contract shall be pursuant to applicable due process as provided by law. School districts which make self-determinations of "academically-deficient" schools shall establish a program of incentives and rewards for teachers to help improve such schools.

A+ SCHOOLS - The act provides that A+ Schools scholarships shall also be provided for reimbursement of costs of tuition, books and fees of eligible students attending public four-year colleges and pursuing an associate or other two-year degree. Such scholarships are currently available to eligible students attending public community colleges and vocational and technical schools.

FAILING SCHOOL DISTRICTS - The State Board may attach territory of a lapsed district to another district. The State Board of Education may appoint a three- member special administrative board for any lapsed school district. Special administrative boards shall serve for two years and may be extended for two more years by the State Board. The special administrative board shall not sponsor charter schools on behalf of the State Board, but existing charter schools shall continue.

VOLUNTARY INTERDISTRICT ENROLLMENT - School districts in Jackson, Clay, Platte and St. Louis Counties and St. Louis City may accept and enroll non-resident students. Such enrollment shall be terminated after five years after the end of the court order, except that non-resident students may finish attending the last grade level of the school attended. A school district may choose whether or not to accept such students and from which other districts students will be accepted. A district shall not be required to enroll students beyond the available enrollment capacity of the district. The receiving district shall receive state aid in the amount of the greater of: the basic formula state aid which would paid to such district (including 14(a) and 14(b)) or the sum of the basic formula state aid which would paid to the sending district on the basis of such attendance plus the per eligible pupil amounts deducted on lines 7, 8 and 9 of the formula (1/2 Prop C, Fair Share and Free Textbook) for the sending district, and DESE shall deduct from state aid to the sending district the same amount of state aid as is paid to the receiving district.

SCHOOL FINANCE DEFINITIONS - Some existing definitions are moved back into alphabetical order. For the 1997-98 school year deductions shall be based upon the average of the first and second preceding years and for the 1998-99 school year and thereafter, formula deductions shall be based upon the average of the second and third preceding years. Beginning in 1998-99, the guaranteed tax base (GTB) shall be based upon the state average assessed valuation averaged in the third and fourth preceding years with a factor decreased from 2.167 to 2.110. Summer school attendance shall be counted with the following, rather than preceding school term beginning in the summer of 1998. New terms include "fiscal instructional ratio of efficiency", "graduation rate" and "poverty concentration ratio". "Operating levy" is redefined to establish a "benchmark tax rate" which will be used in the formula even if subsequent reassessment rollbacks require a lower rate to be levied. This language is similar in effect to current provisions from SB 795 from 1996. Certification of assessments for equalization of levies shall be based upon the second preceding year's assessment or the average of the highest three of the last four years.

TAX RATE ROLLBACKS - Clarifies that a district may reduce the operating levy to preserve the adjustment required under reassessment rollbacks below the minimum levy without requirement to raise levy up to the minimum levy. This act contains the provisions of HB 105 which allow high wealth districts exempted from the minimum levy requirement to raise their levies to the minimum levy less any reassessment adjustments.

STATE AID DISTRIBUTION AND CATEGORICAL AID FOR HIGH POVERTY DISTRICTS - Districts shall not receive a state aid deduction for current year taxes which are protested and held in escrow and not received by the district. Protested taxes from previous years, but not prior to 1997, shall be deducted in the year received at 90%. Line 14, the free and reduced price lunch eligible pupil categorical add-on is revised. Line 14(a) functions similar to the existing 20% add-on.

Line 14(b) adds an additional percentage for districts with poverty concentration ratios over 20%. For districts with poverty concentration ratios over 70%, the payment is reduced to the extent that the district's fiscal instructional ratio of efficiency is lower than the fiscal year 1997 statewide average if the ratio is three or more percent below the fiscal year 1997 statewide average. For districts with poverty concentration ratios between 20% and 70%, the payment is prorated by the poverty concentration ratio.

The line 14(b) add-on will be prorated as needed to ensure that total line 14(b) payments are no greater than the lesser of $155 million or the amount of desegregation savings compared to the 1997 fiscal year and the remainder of such funds shall be used to fund the transportation, special education and gifted education categoricals but to no higher extent than the basic formula entitlements are funded, provided that no more than $7 million of desegregation savings shall be used to fund the special education categorical. The line 14(b) payment shall be distributed in addition to current "hold harmless" payments.

ELIGIBLE PUPIL COUNT AND ASSESSED VALUATION - Allows districts a third option for determining "eligible pupil" count beginning in fiscal year 1999: the average number of eligible pupils (EP) for the second and third preceding years. Districts may use preceding year's EP count or estimate for the current year. When estimating, districts are encouraged to use the prior EP count times the relative increase in membership for the current year. A district may use the current year's estimated assessed valuation for determining state aid, if the current year's estimated assessed valuation is more than ten percent less than the average assessed valuation for second and third preceding years.

TRANSPORTATION - The State Board of Education shall provide for additional transportation aid to ensure students stay at the same school all school year if the student moves within the district.

SETTING TAX RATE FOR CAPITAL PROJECTS - The act allows certain districts, such as Pleasant Hill, to set new levy increases in the operating funds, while making the full 24 cents of transfers for capital projects, beginning next year, rather than based upon the phase-in from SB 795 (full phase in occurs for 1999-2000 for all affected districts). To qualify, a district must have at least 16% growth in membership over the last six years, must have passed a full Prop C waiver or increased its tax rate ceiling on or after June 1, 1993 and must be in compliance with teacher's salary provisions of section 165.016 or have paid penalties for fiscal years 1995, 1996 and 1997 without waiver or base year adjustment.

PROP C ROLLBACKS - The act removes the provision that Prop C rollback shall not reduce levies below the minimum levy and replaces it with authority for a school board to raise the levy back up, after making all required reductions, to no more than the lesser of the district s tax rate ceiling or the minimum levy.

SCHOOL FUNDS - Money received as payment in lieu of tax shall be placed in the fund designated in the payment agreement. A school district may borrow between funds so long as the transfer is repaid during the same school year. The Jan. 1, 1997 moratorium on entering new lease purchases and making transfers of operating funds to the capital projects fund shall not apply to lease purchases of school buses.

Certain districts, such as Pleasant Hill, may transfer the local revenue raised the last three years from a full Prop C waiver or tax rate increase. The transfer to the capital projects fund shall be made no later than June 30, 1997 and shall not decrease the incidental fund balance below 12%. Such transfers shall not be considered as an operating expenditure for the purposes of determining compliance with requirements for expenditure on salaries for certificated staff. A district making this transfer shall comply with the teacher's salary compliance provisions of section 165.016 for the next three years without option for a waiver or base year adjustment. To qualify, a district must have at least 16% growth in membership over the last six years, must have passed a full Prop C waiver or increased its tax rate ceiling on or after June 1, 1993 and must be in compliance with teacher's salary provisions of section 165.016 or have paid penalties for fiscal years 1995, 1996 and 1997 without waiver or base year adjustment.

SCHOOL BUDGET REPORTING - A school budget and any amendments shall be discussed and approved in a public meeting and made available pursuant to chapter 610, RSMo. The budget shall include all components of the DESE model budget. School audits shall include documentation of a comparison of district payroll records with PSRS records for district employees.

USE OF CATEGORICAL AID FOR CHILREN AT-RISK - The "Children At-Risk in Education Program" shall be partly funded by moneys under line 14(b) of the formula. Districts with poverty concentration ratios greater than 50% shall first use line 14(b) to: (1) reduce class sizes in grades K-6 to 75% of the desirable class size established by the State Board and to 100% of the desirable class size for grades 7-12, (2) file a personnel assignment plan with DESE, (3) establish a reading tutoring program if less than 80% of students are reading at or above grade level, and (4) establish individual education plans (IEPs) for each 2nd through 5th grader not performing at or above grade level in math or reading.

Unless otherwise limited to the uses listed in (1) to (4) above, line 14(b) funds may be used for A+ schools, alternative schools, gifted education, special education, dropout reporting requirements and transportation purposes.

Districts with 20,000 or more students eligible for free and reduced price lunch shall not receive line 14(b) funds for more than five years unless the percentage of district students assessed as "proficient" is no lower than 5% less than the state average of "proficient" students in the fifth year, and such districts shall not receive line 14(b) funds for more than ten years unless the percentage of district students assessed as "proficient" is no lower than the state average of "proficient" students in the tenth year.

DISTRIBUTION OF DESEGREGATION SAVINGS - Clarifies that desegregation savings as of FY 1997 shall continue to go to the formula. Future desegregation savings beyond FY 1997 shall be transferred to the School Building Revolving Fund, until unitary status is declared. Once unitary status is declared, desegregation savings from that case shall be distributed through line 14(b), except that such funds shall not be distributed to any district which is not yet unitary. For the first two years of distribution of line 14(b) moneys, the first $25 million of desegregation savings shall be placed in the Voluntary Transfer School District Transition Fund. The funds shall be redistributed over no more than a ten year period to districts which have experienced a loss in enrollment of voluntary transfer students. The distribution shall be proportional to the district's voluntary transfer program enrollment loss times the district's cost of education, and DESE shall determine the total amount to be distributed each year so as to match the financial needs of districts with such enrollment loss while not creating a disincentive for districts to continue to accept voluntary transfer students.

SCHOOL BUILDING REVOLVING FUND - The Fund shall be used to provide funding for lease purchases. If the fund balance is insufficient to fund all projects, projects will be ranked in the following three classes and each class will be funded as fully as possible on a first- come, first-served basis. Rankings shall be based on: 1) uninsured costs due to fire or natural disaster, 2) districts with below average wealth and bonded debt of at least 9% of district assessed valuation and 3) districts with below average wealth and bonded debt of less than 9% of district assessed valuation. Lease purchase repayment terms, including interest, and penalties are included.

CALCULATION OF TUITION COSTS - Tuition cost shall not be based upon tuition revenues or categorical aid, and such tuition costs shall be based only on the education costs and actual attendance of resident pupils of the district.

DROPOUT REPORTING - Similar to SS/SB 168, the act adds provisions establishing a pupil attendance and dropout reporting system, and requires reporting of district and statewide graduation rates.

ST. LOUIS CITY PRINCIPALS - The act removes tenure, as a principal, for principals in St. Louis city.

CHARTER SCHOOLS - All applications to establish charter schools shall be submitted to the school district or districts requested to sponsor the charter school, except in districts exempted under the act from operating requirements, in which case applications may be made to a public college or university to sponsor a charter school. An application denied by any school district may be appealed to the State Board of Education for mediation, and the State Board shall grant a charter and act as sponsor if the State Board determines that the school district did not participate in the negotiations in good faith and that granting the charter would provide substantial educational benefit to the children of the district.

A charter school and school district may agree for the charter school to contract with the school district for special education services, and, in such cases, the proportionate share of state and federal funds for disabled students shall go to charter schools educating such students. The charter school shall not be charged for special education services for which the school district receives aid. Schools within special school districts may elect to enroll disabled students in charter schools by contract and with agreement of the parent, school district and charter school. A school district may contract with a charter school to provide special education services.

Charter school regional enrollment policies shall be made subject to State Board guidelines which ensure the charter school will assist the district in meeting the needs of minority children and children eligible for free or reduced price lunch.

For students from a sponsoring district, the per pupil payment shall be made as agreed to in the charter, and for students attending a charter school in another district or sponsored by the State Board or a public college or university, the charter school shall receive the total state and local funding (local levy of district in which child resides times GTB) for each attending pupil from the district of residence in monthly payments. No state transportation aid shall be required to be provided.

Certificated teachers at a charter school, may, at the school's option, participate in the public school teacher retirement system applicable to the district in which the school is located. A charter school may employ non-certificated teachers to comprise up to 20% of the instructional staff, but such teachers shall not be members of PSRS. All instructional staff shall have education, experience and skills appropriate to their instructional duties. School district employees may be employed by the district and the charter school contract may provide for employees to choose to remain employed by the district. A criminal and child abuse background check shall be conducted before hiring any employee of the charter school.

The act creates the Fund for Charter Schools and Alternative Educational Opportunities. The State Board may use the fund to make grants or loans for charter schools or alternative education programs.

LOCAL TAXES FOR EDUCATION - Kansas City may, with voter approval, enact an education earnings tax of up to one percent. Kansas City may, with voter approval, enact an education sales tax of up to one percent. Revenues shall be distributed to each district based upon the district's share of total school membership in the city or county. If a resident pupil is educated at a charter school or in another district, the net per pupil revenues, after considering tax rate rollbacks, shall follow the pupil to the charter school or district attended.

The State Board shall calculate an equivalent tax rate for any sales or earnings tax revenue under this section and add the equivalent tax rate to the operating levy for calculating state aid (but not to exceed $4.60). A district shall use 25% to 50% of the revenue from the sales or earnings tax for tax rate rollback.

TAX RATES IN KANSAS CITY MISSOURI SCHOOL DISTRICT - Similar to SJR 12, this act authorizes Kansas City Missouri School District to maintain an operating levy which is lower than the $4.96 levy established by court order. Any increase over the court-ordered rate shall require voter approval.

SPECIAL EDUCATION AND MAGNET SCHOOLS IN ST. LOUIS CITY - The act establishes a new Special Education and Magnet School District in St. Louis City. The new district will be governed by the board of St. Louis Public Schools. The new district may levy up to an $0.85 levy. The new district shall receive state transportation aid without a penalty for inefficiency for special education and magnet school pupils until fiscal year 2003. The new district shall not be subject to a minimum levy requirement. St. Louis Public Schools may include the new district s levy for determining state aid, but the new district levy shall not count toward the minimum levy requirement. SLPS is already at $3.75, $1.00 over the $2.75 minimum. The State Board shall continue to operate the State Schools for the Severely Handicapped until the schools are fully in compliance with all state standards or until the State Board and the new district sign an agreement for a transition whereby the new district takes over such schools with necessary resources to ensure the schools comply with state requirements. The Special District shall dissolve on July 1, 2007 unless district voters approve an issue to continue the district until July 1, 2017.

LENGTH OF ADMINISTRATOR'S CONTRACTS IN CERTAIN DISTRICTS - For Kansas City and St. Louis City, the act limits superintendent contracts to two years and limits contracts for all other administrative staff to one year, and such districts may suspend or terminate administrative staff contracts.

EXEMPTION OF SCHOOL DISTRICTS - Eligible school districts shall be exempt from all statutes, rules and regulations pertaining to the operation of the school district for a period of five years following the date the district is determined, by the Commissioner of Education, to eligible. The Commissioner of Education may remove any school district's designation under this section as exempt on the grounds that the is district no longer eligible.

Eligible school districts shall satisfy at least one of the criteria specified in the act, based upon enrollment, expenditures, graduation rate and postsecondary enrollment of graduates.

Exempted districts shall still be subject to:

(1) Federal requirements;

(2) Requirements relating to health and safety;

(3) Requirements relating to the maintaining of financial, attendance, personnel records and reports, as determined by the commissioner; and

(4) Requirements relating to the employment of certified personnel, except that exempted school districts shall have no requirements for certification in area assigned.

In exempted districts, public colleges and universities may sponsor charter schools and applications denied by the school district may be appealed to the State Board for mediation.

HIGH SCHOOL SCIENCE, MATH AND TECHNOLOGY INSTITUTE - The act authorizes the High School Science, Math & Technology Institute (HSSMTI) to be established by UMKC. Pupils shall be admitted, based upon guidelines of the Institute. Districts receiving line 14(b) monies shall give first priority of such funds to payment of tuition costs for HSSMTI, up to $2,000 per pupil, for district pupils who participate in the program and are also eligible for free or reduced price lunch. The Institute shall receive payment of tuition from line 14(b) monies for no more than 10 pupils in FY 1998, 20 pupils in FY 1999, 30 pupils in FY 2000 and 40 pupils thereafter.

OTTO FAJEN