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PUBLIC LAWS OF MAINE
Second Special Session of the 121st

CHAPTER 712
S.P. 761 - L.D. 1924

An Act To Reduce the Cost of Local Government through Increased State Education Funding and Provide Property Tax Relief

Be it enacted by the People of the State of Maine as follows:

     Sec. 1. 5 MRSA §1677 is enacted to read:

§1677.   Municipal Budget Analysis Committee; established; membership

     There is established the Municipal Budget Analysis Committee, referred to in this section as "the committee," for the purpose of providing the Governor and the Legislature with an analysis of the effectiveness of increased state support for education services in reducing the local property tax commitment required to fund the cost of the essential programs and services described in Title 20-A, section 15671.

     1. Membership; chair. The committee is composed of the following members:

The Governor shall appoint one of the members to serve as chair.

     2. Determination of effectiveness of increased state support for public education in reducing property tax. Beginning in fiscal year 2006-07 and ending in fiscal year 2009-10, the committee shall meet annually on or about June 15th and, in coordination with the development of budget estimates pursuant to section 1665, determine whether the state share percentage of the total costs of essential programs and services described in Title 20-A, section 15671, subsection 7 was met in the prior fiscal year and to determine whether this level of state funding resulted in a reduction of the related local property tax commitment required to fund the costs of essential programs and services described in Title 20-A, section 15671 in the prior fiscal year. The committee's determination must be based on consideration of the following information developed by the Department of Education regarding each municipality and the statewide aggregate for the prior fiscal year:

     3. Benchmarks and projected performance indicators. In addition to the considerations set forth in subsection 2, paragraphs A to D, the committee's determination under subsection 2 must be based on consideration of the following benchmarks and projected performance indicators for the specified state fiscal years.

     4. Annual report. The committee shall provide an annual report to the Governor and to the joint standing committee of the Legislature having jurisdiction over appropriations and financial affairs, the joint standing committee of the Legislature having jurisdiction over education and cultural affairs and the joint standing committee of the Legislature having jurisdiction over taxation matters no later than September 1st in each of the fiscal years in which it meets pursuant to subsection 2. The committee's annual report must include the following:

     Sec. 2. 20-A MRSA §6202-A, sub-§§3 and 4, as enacted by PL 2001, c. 454, §30, are amended to read:

     3. Public high school graduation decisions. By the 2006-2007 2007-2008 school year, public high school graduation must be determined by student achievement of the standards of the system of learning results in English language arts, health and physical education, mathematics, science and technology and social studies, based on the school administrative unit's local assessment system established pursuant to this section in addition to other requirements as established by school board policy. By the 2009-2010 school year, public high school graduation must be determined by student achievement of the standards of the system of learning results in all content areas of the system of learning results, based on the school administrative unit's assessment system established pursuant to subsection 1 in addition to other requirements as established by policy of the school board.

     4. Graduation decisions at certain private high schools. By the 2006-2007 2007-2008 school year, high school graduation for publicly funded students in private schools approved for tuition that enroll at least 60% publicly funded students, as determined by the previous school year's October and April average enrollment, must be determined by student achievement of the standards of the system of learning results in English language arts, health and physical education, mathematics, science and technology, and social studies, in addition to other requirements that may be established by the trustees. By the 2009-2010 school year, high school graduation for publicly funded students in private schools must be determined by student achievement of the standards of the system of learning results in all content areas of the system of learning results, in addition to other requirements as established by the trustees.

     Sec. 3. 20-A MRSA §6209, sub-§3, as enacted by PL 2001, c. 454, §32, is amended to read:

     3. Career preparation; foreign languages; visual and performing arts. By the end of the 2002-2003 school year, each school administrative unit shall address in the comprehensive education plan, as required in section 4502, subsection 1, how the school administrative unit will implement for all students the content areas of career preparation, foreign languages and visual and performing arts, including interim targets for partial implementation. By the end of the 2006-2007 2007-2008 school year, each local school administrative unit shall implement standards in these additional content areas of the system of learning results, contingent upon funding based on essential programs and services or its equivalent. Notwithstanding any other provision of this chapter, the commissioner is authorized to establish rules for inclusion of some portion of the standards in visual and performing arts for the graduating class of 2006-07 2007-2008.

     Sec. 4. 20-A MRSA §15603, sub-§11-A, as enacted by PL 1993, c. 410, Pt. F, §13, is amended to read:

     11-A. Fiscal capacity. "Fiscal capacity" means the ability of a municipality to raise property tax revenues. For each year of funding, fiscal capacity is measured as the average of the state valuation amounts for the 2 most recent years prior to the year of funding. For fiscal year 1993-94 and fiscal year 1994-95 only, if the most recent state valuation amount is less than the average of the 2 most recent state valuation amounts, the fiscal capacity of the municipality is considered to be the state valuation for the most recent year. Beginning in fiscal year 2005-06, "fiscal capacity" means the certified state valuation for the year prior to the most recently certified state valuation. The fiscal capacity of a school administrative district or a community school district is the sum of the fiscal capacity amounts of its member municipalities.

     Sec. 5. 20-A MRSA §15609, sub-§2 is enacted to read:

     2. Repeal. This section is repealed July 1, 2005.

     Sec. 6. 20-A MRSA §15610, sub-§2 is enacted to read:

     2. Repeal. This section is repealed July 1, 2005.

     Sec. 7. 20-A MRSA §15611, sub-§3 is enacted to read:

     3. Repeal. This section is repealed July 1, 2005.

     Sec. 8. 20-A MRSA §15613, sub-§13, as enacted by PL 1987, c. 848, §10, is amended to read:

     13. Minimum state allocation. Effective 1988-89, each school administrative unit shall be is guaranteed a minimum state share of its total allocation that is determined by multiplying 5% of the foundation per pupil operating rate by the average number of resident kindergarten to grade 12 pupils, including special education tuition pupils, in the unit on April 1st and October 1st of the calendar year immediately prior to the year of allocation. These funds shall must be included as part of the school unit's total allocation as computed under this chapter and not as an adjustment to the unit's total allocation. This subsection is repealed July 1, 2005.

     Sec. 9. 20-A MRSA §15671, sub-§1, as enacted by PL 2001, c. 660, §1, is amended to read:

     1. State and local partnership. The State and each local school administrative unit are jointly responsible for contributing to the cost of the components of essential programs and services described in this chapter. The state contribution to the cost of the components of essential programs and services, exclusive of federal funds that are provided and accounted for in the cost of the components of essential programs and services, must be made in accordance with this subsection:

Beginning in fiscal year 2003-04 2005-06 and in each fiscal year thereafter, the commissioner shall use the funding level determined in accordance with this section as the basis for a recommended funding level for the state share of the cost of the components of essential programs and services.

     Sec. 10. 20-A MRSA §15671, sub-§7, ¶B, as enacted by PL 2003, c. 504, Pt. A, §5, is amended to read:

     Sec. 11. 20-A MRSA §15671-A is enacted to read:

§15671-A.      Property tax contribution to public education

     1. Definitions. As used in this section, unless the context otherwise indicates, the following terms have the following meanings.

     2. Local cost share expectation. The local cost share expectation is established as follows.

     3. Exceeding maximum local cost share expectations; separate article. Beginning with the 2005-2006 school budget, the legislative body of a school administrative unit may adopt property tax rates that exceed the local cost share expectation established by section 15688, subsection 3, paragraph A if that action is approved in a separate article by a vote of the school administrative unit's legislative body through the same process that the school budget is approved in that school administrative unit.

     Sec. 12. 20-A MRSA §15672, sub-§23, as enacted by PL 2003, c. 504, Pt. A, §6, is amended to read:

     23. Property fiscal capacity. "Property fiscal capacity" means the lesser of the average of the certified state valuation amounts amount for the 3 most recent years year prior to the year of funding and the state valuation amount for the most recent year recently certified state valuation.

     Sec. 13. 20-A MRSA §15673, as enacted by PL 2003, c. 504, Pt. A, §6, is repealed and the following enacted in its place:

§15673. Relationship to School Finance Act of 1985

     The provisions of chapter 606 apply for the purposes of calculating the total allocations for program costs and debt service and for the purposes of calculating adjustments under section 15612 and miscellaneous reimbursements and subsidy under section 15613.

     Sec. 14. 20-A MRSA §15683, first ¶, as enacted by PL 2003, c. 504, Pt. A, §6, is amended to read:

     For each school administrative unit, that unit's total operating allocation is the base total set forth in subsection 1 as adjusted in accordance with subsection 2 and including the total amount for subsection 3.

     Sec. 15. 20-A MRSA §15684, sub-§3 is enacted to read:

     3. Repeal. This section is repealed July 1, 2005.

     Sec. 16. 20-A MRSA §15686, as enacted by PL 2003, c. 504, Pt. A, §6, is amended to read:

§15686. Transition adjustment

     For each of the fiscal years described in section 15671, subsection 7, the commissioner shall establish a transition adjustment calculated to minimize the adverse fiscal impact directly related to that may be experienced by some municipalities as a result of the phase-in of this Act. The transition adjustment for a municipality must be directly related to the phase-in of essential programs and services and the local cost share expectation method under section 15671-A of determining the local contribution to the cost of funding essential programs and services. The amount of this adjustment must decline with each successive fiscal year, and the adjustments must end no later than fiscal year 2009-10.

     Sec. 17. 20-A MRSA §§15688 and 15689 are enacted to read:

§15688.       School administrative unit contribution to total cost of funding public education from kindergarten to grade 12

     1. School administrative unit; total cost. For each school administrative unit, the commissioner shall annually determine the school administrative unit's total cost of education. A school administrative unit's total cost of education must include:

     2. Member municipalities in school administrative districts or community school districts; total costs. For each municipality that is a member of a school administrative district or community school district, the commissioner shall annually determine each municipality's total cost of education. A municipality's total cost of education is the school administrative district's or community school district's total cost of funding multiplied by the percentage that the municipality's most recent calendar year average pupil count is to the school administrative district's or community school district's most recent calendar year average pupil count.

     3. School administrative unit; contribution. For each school administrative unit, the commissioner shall annually determine the school administrative unit's contribution in accordance with the following.

     4. Method of cost sharing; exception. For the purpose of local cost sharing, the provisions of subsection 3 do not apply to municipalities that are members of a school administrative district or a community school district whose cost sharing formula was established pursuant to private and special law prior to January 1, 2004. For each municipality that is a member of a school administrative district or a community school district whose cost sharing formula was established pursuant to private and special law prior to January 1, 2004, the cost sharing formula established pursuant to private and special law determines each municipality's local cost of education.

     5. Effective date. This section takes effect July 1, 2005.

§15689.       Adjustments to state share of total allocation

     Beginning July 1, 2005, adjustments to the state share of the total allocation must be made as set out in this section.

     1. Minimum state allocation. Each school administrative unit must be guaranteed a minimum state share of its total allocation that is determined by the sum of the following:

These funds must be included as part of the school administrative unit's total allocation as computed under this chapter and not as an adjustment to the school administrative unit's total allocation.

     2. Adjustment for debt service. Each school administrative unit may receive an adjustment for a debt service determined as follows.

     3. Adjustment limitations. The amounts of the adjustments paid to school administrative units or municipalities in subsections 1 and 2 are limited to the amounts appropriated by the Legislature for these adjustments.

     Sec. 18. Basis for funding costs of education from kindergarten to grade 12. Notwithstanding any other provision of law, beginning in fiscal year 2005-06, funding of the costs of education from kindergarten to grade 12 must be based on the cost of providing essential programs and services as described in the Maine Revised Statutes, Title 20-A, chapter 606-B.

     Sec. 19. Special education. To ensure greater consistency in providing special education services, beginning on January 1, 2005, state-approved guidelines must be used in the identification of children requiring special education services. Beginning in fiscal year 2004-05, the Department of Education shall provide to school administrative units training in the application of the state-approved identification guidelines and shall conduct periodic reviews to ascertain compliance in the application of the state-approved guidelines. To ensure greater equity and efficiency in the use of special education resources, beginning in fiscal year 2005-06, special education costs must be included in the essential programs and services operating cost calculations and be based on a special education funding formula that adheres to the 4 principles of being cost-based, equitable, flexible and identification-neutral. The funding formula must include provisions for providing supplemental funds for school districts with extraordinary expenses associated with high-cost in-district and out-of-district special education services and programs.

     Sec. 20. Transportation. To ensure greater equity and adequacy in providing transportation services, beginning in fiscal year 2005-06, transportation costs must be included in the essential programs and services operating costs calculations and be based on school administrative unit pupil transportation densities and adjustments for in-district and out-of-district required special education and vocational education transportation costs and may include other factors that respond to unique costs in some school administrative units. Beginning in fiscal year 2005-06, an appeals process to determine exceptions to the transportation operating cost for a school administrative unit must be implemented. All appeals must include, but may not be limited to, an analysis of cost efficiency and a cost comparison with school administrative units having comparable pupil transportation density indices.

     Sec. 21. Early childhood and vocational education. To ensure greater equity of education opportunities and efficiency in the use of early childhood and vocational education resources, beginning no later than fiscal year 2007-08, early childhood program costs and vocational education program costs must be included in the essential programs and services operating cost calculations.

     Sec. 22. Sharing of total costs in school administrative districts and community school districts whose cost sharing formulas were created by private and special law; Department of Education facilitation. To ensure that member municipalities of school administrative districts and community school districts whose cost sharing formulas were established by private and special law do not experience significant adverse impacts as a result of the cost sharing mechanism established pursuant to the Maine Revised Statutes, Title 20-A, section 15688, subsection 2, the Department of Education shall facilitate a review and analysis, school administrative unit by school administrative unit, of the implications of this proposed cost sharing mechanism on the member municipalities of these school administrative districts and community school districts. The Department of Education shall report the findings of this review, including any recommended legislation, to the First Regular Session of the 122nd Legislature by January 31, 2005.

Effective July 30, 2004, unless otherwise indicated.

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