SB1603 - 501R

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

Section 1. Section 15-920.01, Arizona Revised Statutes, is amended to read:

START_STATUTE15-920.01. Arizona performance based compensation system task force; members; recommendations; reporting

A. The Arizona performance based compensation system task force is established within the state board of education. The task force shall consist of the following members appointed by the state board of education:

1. Three certificated teachers who are currently teaching in this state, one of whom provides academic instruction in grades one through eight, one of whom provides academic instruction in grades nine through twelve and one of whom teaches in a specialized area of instruction.

2. Three members who are certificated administrators or school district governing board members.

3. Two members of the general public who do not hold an active certificate issued by the state board of education and who are not employed by any school district in this state.

4. Four members of the general public who are employed in the private sector in capacities that involve or promote economic development.

B. By February 2006, and each year thereafter, the superintendent of public instruction shall submit the data provided by school districts pursuant to section 15‑977, subsection F to the Arizona performance based compensation system task force, which shall conduct an evaluation of performance based compensation systems in accordance with subsection C of this section.

C. The Arizona performance based compensation system task force shall conduct annual evaluations of one quarter of the school districts' performance based compensation systems based on the data submitted to the task force by the superintendent of public instruction pursuant to subsection B of this section. The annual evaluation shall:

1. Assess the relationship between components of individual school district performance based compensation systems and the improvement in:

(a) Individual student progress and achievement.

(b) Achievement of school district and school site goals.

(d) Teacher job satisfaction.

(e) Parent rating of the quality of education at the school and district levels.

2. Provide a report to the school districts evaluated each year assessing the effectiveness of each school district's performance based compensation system, including any recommendations for improvement. The report shall be delivered to the members of the school district governing board for consideration in a public meeting.

D. The Arizona performance based compensation system task force shall annually submit a summary of its findings and conclusions to the speaker of the house of representatives and the president of the senate. A copy of the summary of findings and conclusions shall be provided to the chairperson of the house of representatives K‑12 education committee, or its successor committee, and the chairperson of the senate K-12 education committee, or its successor committee.

E. On or before June 30, 2010, the Arizona performance based compensation system task force shall:

1. Provide recommendations to the state board of education on the implementation, operation and monitoring of performance based compensation systems and career ladder programs in the school districts of this state.

2. B. On or before December 31, 2011, the arizona performance based COMPENSATION system task force shall develop written recommendations based on the elements prescribed in section 15‑977, subsection C. These written recommendations shall determine the pay increase scale specified in section 15‑977, subsection C and shall be submitted to the governor, the speaker of the house of representatives, the president of the senate and the state board of education. The Arizona performance based compensation system task force shall provide copies of the written recommendations to the secretary of state and the director of the Arizona state library, archives and public records all school district governing boards. END_STATUTE

Sec. 2. Section 15-977, Arizona Revised Statutes, is amended to read:

START_STATUTE15-977. Classroom site fund; performance based compensation system; definitions

A. The classroom site fund is established consisting of monies transferred to the fund pursuant to section 37‑521, subsection B and section 42‑5029, subsection E, paragraph 10. The department of education shall administer the fund. School districts and charter schools may not supplant existing school site funding with revenues from the fund. All monies distributed from the fund are intended for use at the school site. Each school district or charter school shall allocate forty per cent of the monies for teacher compensation increases based on performance and employment related expenses, twenty per cent of the monies for teacher base salary increases and employment related expenses and forty per cent of the monies for maintenance and operation purposes as prescribed in subsection H of this section. Teacher compensation increases based on performance or teacher base salary increases distributed pursuant to this subsection shall supplement, and not supplant, teacher compensation monies from any other sources. The school district or charter school shall notify each school principal of the amount available to the school by April 15 of each year. The district or charter school shall request from the school's principal each school's priority for the allocation of the funds available to the school for each program listed under subsection H of this section. The amount budgeted by the school district or charter school pursuant to this section shall not be included in the allowable budget balance carryforward calculated pursuant to section 15‑943.01.

B. A school district governing board must adopt a performance based compensation system at a public hearing to allocate funding from the classroom site fund pursuant to subsection A of this section.

C. Beginning July 1, 2012, a school district governing board shall vote on a performance based compensation system that includes the following elements:

1. School district performance and School performance on statewide testing.

2. Measures of academic progress toward the academic standards adopted by the state board of education. The plan shall consider yearly performance gains by class.

3. Other measures of academic progress.

4. 3. If a teacher provides instruction in grades nine through twelve, dropout or graduation rates.

5. Attendance rates.

6. 4. Ratings of school teacher quality by parents.

7. 5. Ratings of school teacher quality by students.

8. The input of teachers and administrators.

9. Approval of the performance based compensation system based on an affirmative vote of at least seventy per cent of the teachers eligible to participate in the performance based compensation system.

10. 6. An appeals process for teachers who have been denied performance based compensation.

11. 7. Regular evaluation for effectiveness of the performance based compensation system.

D. A performance based compensation system shall include teacher professional development programs that are aligned with the elements of the performance based compensation system.

E. A school district governing board may modify the elements contained in subsection C of this section and consider additional elements when adopting a performance based compensation system. A school district governing board shall adopt any modifications or additional elements and specify the criteria used at a public hearing.

E. The system shall award teachers' compensation based only on the performance of the teacher's class or of the pupils assigned to that teacher. Teachers shall earn a score based on the criteria prescribed in paragraph 1 or 2 of this subsection, and that score shall determine the performance based compensation for each teacher. The pay increase scale shall be determined by the Arizona performance based compensation system task force established by section 15-920.01. Performance based compensation shall be determined as follows:

1. For teachers who provide instruction to pupils in kindergarten programs and grades one through eight, fifty per cent of compensation shall be based on statewide testing performance, twenty‑five per cent shall be based on academic progress and twenty‑five per cent shall be based on teacher and pupil evaluations.

2. For teachers who provide instruction to pupils in grades nine through twelve, forty per cent of compensation shall be based on statewide testing performance, twenty‑five per cent shall be based on academic progress, twenty‑five per cent shall be based on teacher and pupil evaluations and ten per cent shall be based on dropout rates.

F. Until December 31, 2009, Each school district shall develop an assessment plan for its performance based compensation system and submit the plan to the department of education by December 31 of each year. A copy of the performance based compensation system and assessment plan adopted by the school district governing board shall be included in the report submitted to the department of education.

G. Monies in the fund are continuously appropriated, are exempt from the provisions of section 35‑190 relating to lapsing of appropriations and shall be distributed as follows:

1. By March 30 of each year, the staff of the joint legislative budget committee shall determine a per pupil amount from the fund for the budget year using the estimated statewide weighted count for the current year pursuant to section 15‑943, paragraph 2, subdivision (a) and based on estimated available resources in the classroom site fund for the budget year adjusted for any prior year carryforward or shortfall.

2. The allocation to each charter school and school district for a fiscal year shall equal the per pupil amount established in paragraph 1 of this subsection for the fiscal year multiplied by the weighted student count for the school district or charter school for the fiscal year pursuant to section 15‑943, paragraph 2, subdivision (a). For the purposes of this paragraph, the weighted student count for a school district that serves as the district of attendance for nonresident pupils shall be increased to include nonresident pupils who attend school in the school district.

3. For each fiscal year in which the legislature appropriates sufficient monies for teacher performance pay pursuant to this section, the amount appropriated shall equal the product of the base level prescribed in section 15‑901 multiplied by the prior year statewide weighted student count multiplied by the following percentages:

(a) For stage one, one per cent.

(b) For stage two, two per cent.

(d) For stage four, four per cent.

(e) For stage five, five per cent.

(f) For stage six, five and one‑half per cent by June 30, 2018.

H. Monies distributed from the classroom site fund shall be spent for the following maintenance and operation purposes:

1. Class size reduction.

2. Teacher compensation increases.

3. AIMS intervention programs.

4. Teacher development.

5. Dropout prevention programs.

6. Teacher liability insurance premiums.

I. The district governing board or charter school shall allocate the classroom site fund monies to include, wherever possible, the priorities identified by the principals of the schools while assuring that the funds maximize classroom opportunities and conform to the authorized expenditures identified in subsection A of this section.

J. School districts and charter schools that receive monies from the classroom site fund shall submit a report by November 15 of each year to the superintendent of public instruction on a per school basis that provides an accounting of the expenditures of monies distributed from the fund during the previous fiscal year and a summary of the results of district and school programs funded with monies distributed from the fund. The department of education in conjunction with the auditor general shall prescribe the format of the report under this subsection.

K. School districts and charter schools that receive monies from the classroom site fund shall receive these monies monthly in an amount not to exceed one‑twelfth of the monies estimated pursuant to subsection G of this section, except that if there are insufficient monies in the fund that month to make payments, the distribution for that month shall be prorated for each school district or charter school. The department of education may make an additional payment in the current month for any prior month or months in which school districts or charter schools received a prorated payment if there are sufficient monies in the fund that month for the additional payments. The state is not required to make payments to a school district or charter school classroom site fund if the state classroom site fund revenue collections are insufficient to meet the estimated allocations to school districts and charter schools pursuant to subsection G of this section.

L. The state education system for committed youth shall receive monies from the classroom site fund in the same manner as school districts and charter schools. The Arizona state schools for the deaf and the blind shall receive monies from the classroom site fund in an amount that corresponds to the weighted student count for the current year pursuant to section 15‑943, paragraph 2, subdivision (b) for each pupil enrolled in the Arizona state schools for the deaf and the blind. Except as otherwise provided in this subsection, the Arizona state schools for the deaf and the blind and the state education system for committed youth are subject to this section in the same manner as school districts and charter schools.

M. Each school district and charter school, including school districts that unify pursuant to section 15‑448 or consolidate pursuant to section 15‑459, shall establish a local level classroom site fund to receive allocations from the state level classroom site fund. The local level classroom site fund shall be a budgetary controlled account. Interest charges for any registered warrants for the local level classroom site fund shall be a charge against the local level classroom site fund. Interest earned on monies in the local level classroom site fund shall be added to the local level classroom site fund as provided in section 15‑978. In no event shall This state shall not be required to make payments to a school district or charter school local level classroom site fund that are in addition to monies transferred to the state level classroom site fund pursuant to section 37‑521, subsection B and section 42‑5029, subsection E, paragraph 10.

N. Monies distributed from the classroom site fund for class size reduction, AIMS intervention and dropout prevention programs shall only be used for instructional purposes in the instruction function as defined in the uniform system of financial records, except that monies shall not be used for school sponsored athletics.

O. If a school district is approved for a career ladder program pursuant to section 15‑918.04 or an optional performance incentive program pursuant to section 15‑919, the school district may continue to participate in those programs or may choose to receive additional teacher performance pay monies pursuant to subsection G, paragraph 3 of this section. If a school district chooses to receive monies pursuant to subsection G, paragraph 3 of this section, the school district shall reduce the amount of funding for its career ladder program or optional performance incentive program, as applicable, in an amount that is equal to the amount appropriated by the legislature for the applicable stage specified in subsection G, paragraph 3 of this section. If a school district is approved for a career ladder program pursuant to section 15‑918.04 or an optional performance incentive program pursuant to section 15‑919 and that school district chooses to receive monies for stage one pursuant to subsection G, paragraph 3 of this section, the school district shall continue to receive funding through the remaining stages specified in subsection G, paragraph 3 of this section, subject to legislative appropriation. A school district that is subject to this subsection shall notify the department of education of the school district's intention to receive monies pursuant to subsection G, paragraph 3 of this section no later than July 1 of the fiscal year that stage one monies are appropriated.

P. For the purposes of this section:

1. "AIMS intervention" means summer programs, after school programs, before school programs or tutoring programs that are specifically designed to ensure that pupils meet the Arizona academic standards as measured by the Arizona instrument to measure standards test prescribed by section 15‑741.

2. "Class size reduction" means any maintenance and operations expenditure that is designed to reduce the ratio of pupils to classroom teachers, including the use of persons who serve as aides to classroom teachers. END_STATUTE