SB1293 - 511R

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

Section 1. School accountability; pilot program for outcome‑based funding of schools; reports

A. The state board of education, in consultation with the department of education and the state board for charter schools, shall establish a competitive application process for a four‑year pilot program for outcome‑based funding of schools.

B. Pursuant to title 41, chapter 23, article 13, Arizona Revised Statutes, the state board of education shall solicit a request for information on or before October 31, 2013 regarding the appropriate assessment instruments that may be used to implement the pilot program, which shall include cost estimates and proposed timetables for implementation. The state board of education shall provide the results of the request for information to the president of the senate and the speaker of the house of representatives on or before January 1, 2014.

C. School districts and charter schools shall submit applications to participate in the pilot program to the state board of education on or before January 1 of each year of the pilot program. Applicants shall indicate which schools and grade levels will participate in the pilot program. The state board of education shall give selection preference to school districts and charter schools that participated in the pilot program during the previous school year.

D. On or before March 1 of each year of the pilot program, the state board of education shall select the school districts and charter schools that will participate in the pilot program during that school year. Pilot program participants shall consist of up to:

1. Five school districts each year, at least one of which provides online instruction.

2. Five charter schools each year, at least one of which offers full‑time Arizona online instruction.

E. Funding for school districts and charter schools that are selected to participate in the pilot program shall be determined as follows:

1. Each participating school district and charter school shall receive up to six thousand five hundred dollars for each participating pupil in kindergarten programs and grades one through eight and up to seven thousand five hundred dollars for each participating pupil in grades nine through twelve. The school districts and charter schools shall receive fifty per cent of the per pupil funding according to monthly apportionment schedules prescribed by the state board of education and shall receive the remaining fifty per cent on the successful demonstration of outcomes.

2. The state board of education shall distribute an additional two hundred fifty dollars to school districts and charter schools that participate in the pilot program for each participating pupil who obtains a grade of 3.0 on a four‑point grading scale in a dual enrollment or concurrent enrollment mathematics or science course.

3. Enrollment for pilot program participants shall be based on actual attendance of pupils for the current month.

4. Funding shall be apportioned to pilot program participants no later than one month after attendance figures for the previous month have been reported to the department of education.

5. The initial month of funding for pilot program participants shall be based on the school's prior year average daily membership.

6. The source of funding for school districts that participate in the pilot program is state monies appropriated for this purpose after subtracting monies available to the school district through the application of the qualifying tax rate pursuant to section 41-1276, Arizona Revised Statutes. The source of funding for charter schools that participate in the pilot program is state monies appropriated for this purpose.

F. The school districts and charter schools that participate in the pilot program shall:

1. Comply with state laws relating to the health and safety of pupils, teachers and other school district personnel and all state laws that are aligned to federal requirements.

2. Adhere to academic and twenty‑first century skills and workplace performance outcomes established by the joint legislative committee on outcome‑based funding. Academic outcomes determined by the joint legislative committee shall be used for participating pupils in kindergarten programs and grades one through twelve. College and career readiness outcomes shall also be used for participating pupils in grades seven through twelve.

3. Agree to exclude the student count of a school that is participating in the pilot program from all calculations relating to school district bond elections and school district override elections. This paragraph does not prohibit a participating school or school district from applying for federal monies that are otherwise allowed by law.

G. Each pupil who participates in the pilot program shall be administered an examination to determine the pupil's baseline academic level for outcome‑based funding.

H. If a pupil who was participating in the pilot program withdraws from a participating school before a formal assessment is administered to that pupil to determine whether the pupil has met a targeted outcome, the pupil shall be administered an assessment after withdrawal to ensure that the appropriate level of outcome‑based funding is provided to that school.

I. The universities under the jurisdiction of the Arizona board of regents shall:

1. Provide to the school districts and charter schools that participate in the pilot program a list of the courses at each university that meet the requirements for a degree in science, technology, engineering or mathematics.

2. Assign at least one but no more than three employees of each university to review the request for information received by the state board of education pursuant to subsection B of this section. These persons shall recommend to the state board of education a ranking of the available assessments to be used by participating school districts and charter schools to measure academic outcomes that are aligned to placement tests. To the extent possible, the assessments approved for high school English and mathematics shall be used for each content area by those universities.

3. Assist the school districts and charter schools that participate in the pilot program to review the results from the performance outcome assessments used by school districts and charter schools that participate in the pilot program.

4. Provide instruction on outcome‑based instructional strategies and competency‑based instructional strategies for prospective teachers enrolled in colleges of education.

J. The career and technical education division within the department of education, in collaboration with businesses in this state, shall develop methods to evaluate workplace skills, including portfolios, checklists and internships.

K. At the end of each school year, school districts and charter schools that participate in the pilot program shall submit to the state board of education a report with aggregated data by grade level that demonstrates the results of outcomes achieved.

L. The department of education shall develop an estimate of the annual costs of the pilot program. For each fiscal year of the pilot program, the department of education shall request a separate line item appropriation for the pilot program in the budget estimate submitted pursuant to section 35‑113, Arizona Revised Statutes.

M. Beginning November 15, 2015, the state board of education shall submit to the governor, the president of the senate and the speaker of the house of representatives an annual report that summarizes the results of the pilot program. The state board of education shall provide a copy of the annual report to the secretary of state.

N. The state board of education and the state board for charter schools may adopt rules to carry out the purposes of this section.

O. The four‑year pilot program is intended to begin in school year 2014‑2015, but the state board of education may delay the implementation of the pilot program until required assessments are developed to sufficiently measure outcomes.

Sec. 2. Delayed repeal

Section 1 of this act, relating to the pilot program for outcome-based funding of schools, is repealed from and after September 15, 2020.