HB2301 - 501R

Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 15-903, Arizona Revised Statutes, is amended to read:

START_STATUTE15-903. Budget format; prohibited expenditures

A. The superintendent of public instruction in conjunction with the auditor general shall prepare and prescribe a budget format to be utilized by all school districts.

B. The budget format shall be designed to allow all school districts to plan and provide in detail for the use of available funds. The budget format shall contain distinct sections for, but need not be limited to, maintenance and operation, debt service, special projects, capital outlay, adjacent ways and classroom site fund. The maintenance and operation section shall include, but need not be limited to, separate subsections for regular education programs, special education programs and operational expenditures for pupil transportation. Each subsection shall clearly distinguish classroom instruction expenditures. The special education program subsection shall include, but is not limited to, programs for each disability classification as defined in section 15‑761 and programs for gifted, vocational and technological technical education, remedial education and bilingual students. The total expenditures for each of these programs shall be included on the budget form. The pupil transportation subsection shall include all operational expenditures relating to the transportation of pupils, including all operational expenditures within a contract if the school district contracts for pupil transportation.

C. The capital outlay section of the budget shall include separate subsections for unrestricted capital outlay and soft capital allocation. The soft capital allocation subsection shall include budgeted expenditures as prescribed in section 15‑962. The unrestricted capital outlay subsection shall include budgeted expenditures for acquisitions by purchase, lease‑purchase or lease of capital items as defined in the uniform system of financial records. These sections and subsections shall include:

1. Land, buildings and improvements to land and buildings, including labor and related employee benefits costs and material costs if work is performed by school district employees.

2. Furniture, furnishings, athletic equipment and other equipment, including computer software.

3. Pupil and nonpupil transportation vehicles and equipment, including all capital expenditures within a contract if the school district contracts for pupil transportation.

4. Textbooks and related printed subject matter materials adopted by the governing board.

5. Instructional aids.

6. Library books.

7. Payment of principal and interest on bonds.

8. School district administration emergency needs that are directly related to pupils.

D. The budget format shall contain distinct subsections for the following:

1. Special programs to improve academic achievement of pupils in kindergarten programs and grades one through three as provided in section 15‑482.

2. School plant funds.

3. Capital outlay budget increases as provided in section 15‑481.

4. Property taxation, including the following:

(a) The primary tax rates for the school district for the current year and the budget year.

(b) The secondary tax rates for maintenance and operation, K‑3 and capital overrides for the school district for the current year and the budget year.

(d) The secondary tax rates for class B bonds for the school district for the current year and the budget year.

5. A description of any corrections or adjustments made to the budget pursuant to section 15‑915.

E. The budget format shall also contain:

1. A statement identifying proposed pupil‑teacher ratios and pupil‑staff ratios relating to the provision of special education services for the budget year.

2. A statement identifying the number of full‑time equivalent certified employees.

F. The special projects section shall include budgeted expenditures for state special projects, including special adult projects, career education, deficiencies correction fund projects, building renewal fund projects and new school facilities fund projects, such federal special projects as ESEA title programs, vocational education and title IV Indian education, and other special projects.

G. Each school district, other than a school district that qualifies as a transportation school district under section 15-461 or a joint technological education district as defined in section 15-391, shall establish an instructional salaries fund, which shall be a cash controlled fund as defined by the uniform system of financial records. Beginning in fiscal year 2012-2013, a school district shall deposit at least fifty per cent of base support level pursuant to section 15-943 into the school district's instructional salaries fund. Monies in the instructional salaries fund shall be spent only to pay for salaries and benefits of persons who provide direct classroom instruction to pupils, including the salaries and benefits of teachers, teacher aides and paraprofessionals. This subsection does not prohibit the expenditure of other funds on salaries and benefits of persons who provide direct classroom instruction.

G. H. A school district shall not make expenditures for campaign literature associated with school district or charter school officials. If the superintendent of public instruction determines that a school district has violated this subsection, the superintendent of public instruction may withhold any portion of the school district's apportionment of state aid.

H. I. The budget format shall include an electronic format that shall be submitted for each proposed, adopted and revised budget. END_STATUTE

Sec. 2. Section 15-962, Arizona Revised Statutes, is amended to read:

START_STATUTE15-962. Soft capital allocation

A. A soft capital allocation per student count is established for fiscal year 1999‑2000, as follows:

1. For kindergarten programs and grades one through eight, multiply one hundred ninety‑four dollars thirty cents by the weight which that corresponds to the student count for kindergarten programs and grades one through eight for the school district as provided in section 15‑943, paragraph 1, subdivision (a), column 3.

2. For grades nine through twelve, multiply one hundred ninety‑four dollars thirty cents by the weight which that corresponds to the student count as provided in section 15‑943, paragraph 1, subdivision (a), column 3.

3. For a school district with a student count of six hundred or more in kindergarten programs and grades one through eight or grades nine through twelve, multiply one hundred ninety‑four dollars thirty cents by 1.158.

4. For programs for preschool children with disabilities, multiply one hundred ninety‑four dollars thirty cents by 1.158.

B. Beginning with fiscal year 1999‑2000, the soft capital allocation prescribed in subsection A of this section shall be adjusted by the growth rate prescribed by law, subject to appropriation.

C. Beginning in fiscal year 1999‑2000, the soft capital allocation for a school district is computed as follows:

1. Select the applicable soft capital allocation per student count for the school district as provided in subsection A of this section.

2. Multiply the amount selected in paragraph 1 of this subsection by the appropriate student count of the school district. The student count of the school district shall not include any pupils in a charter school sponsored by the school district pursuant to section 15‑185, subsection A, paragraph 3.

D. A school district shall receive its soft capital allocation in the amount determined in this section from monies appropriated for this purpose to the department of education. School districts may use soft capital allocation monies for any lawful purpose. Soft capital allocation monies shall only may be used for short‑term capital items that are required to meet academic adequacy standards such as technology, textbooks, library resources, instructional aids, pupil transportation vehicles, furniture and equipment. School districts shall not use any portion of soft capital allocation monies for maintenance and operation expenses. School districts may use soft capital allocation monies to meet administrative soft capital purposes after complying with the adequacy standards prescribed in section 15‑2011.

E. School districts shall establish a district soft capital allocation fund and shall use the monies only for the purposes prescribed in subsection D of this section. The ending unexpended budget balance in the school district's soft capital allocation fund may be used in following fiscal years for short‑term capital items. School districts shall provide to the superintendent of public instruction an itemized accounting on forms provided by the department of education that details the expenditures of soft capital allocation monies at each school in the district. The superintendent of public instruction shall forward a copy of the report to the school facilities board established by section 15‑2001.

F. A school district governing board may petition the state board of education for authority to budget and accumulate for school construction, building renovation or soft capital purposes a portion of the prior year's ending cash balance, not to exceed the amount of title VIII of the elementary and secondary education act of 1965 monies which the school district was entitled to receive in the prior year, as computed by the superintendent of public instruction, if:

1. The governing board filed with the United States department of education division of impact aid an approved application for federal assistance for construction under P.L. public law 81‑815 for the current or budget year and has been advised by the division of impact aid that no federal monies are available to fund its application.

2. The school district has a computed assessed valuation per pupil which that is below the median amount computed by the superintendent of public instruction for all school districts.

3. The governing board has used any available revenues to reduce its primary tax rate to zero for any year in which it petitions to budget and accumulate monies received under title VIII of the elementary and secondary education act of 1965 for school construction purposes.

The state board of education may grant approval to a school district governing board to annually budget in the unrestricted capital outlay section of the budget a portion of the cash balance, not to exceed the amount of title VIII of the elementary and secondary education act of 1965 monies which the school district was entitled to receive in the prior year as computed by the superintendent of public instruction.

G. The state board of education shall not include in the aggregate expenditures of local revenues as determined in section 15‑911 the amount of revenues collected pursuant to the soft capital allocation limit. The amount of revenues collected for the soft capital allocation limit is the capital levy as authorized by law.

END_STATUTE

Sec. 3. Conforming legislation

The legislative council staff shall prepare proposed legislation conforming the Arizona Revised Statutes to the provisions of this act for consideration in the fiftieth legislature, second regular session.