State SealARIZONA HOUSE OF REPRESENTATIVES

 

HB 2663: K-12 education; budget reconciliation; 2018-2019.

PRIME SPONSOR: Representative Mesnard (with permission of committee on Rules), LD 17

BILL STATUS: Caucus & COW

                APPROP: DP 7-5-0-2

Legend: ADE – Arizona Department of Education ADM – Average Daily Membership AG- Attorney General ADOA – Arizona Department of Administration ASDB – Arizona Schools for the Deaf and Blind BRG – Building Renewal Grant BSA – Basic State Aid CAA – Charter Additional Assistance DAA – District Additional Assistance EDC – Emergency Deficiencies Correction JCCR – Joint Committee on Capital Review JLBC – Joint Legislative Budget Committee NSF – New School Facilities OAH – Office of Administrative Hearings SBE – State Board of Education SFB – School Facilities Board Amendments – BOLD and Stricken (Committee)

Abstract

Relating to K-12 and the FY 2019 Budget.

Provisions

☐ Prop 105 (45 votes) ☐ Prop 108 (40 votes) ☐ Emergency (40 votes) ☐ Fiscal Note School Finance

1.       Increases the Base Level for FY 2019 from $3,683.27 to $3,960.07. (Sec. 8)

2.       Increases the Transportation Support Level per route mile formula by 1.8%. (Sec. 10)

3.       Directs ADE to reduce the amount of BSA by $257,469,900 that otherwise would be apportioned to school districts for FY 2019 as DAA and requires school district budget limits to be reduced accordingly.

  1. Continues to direct ADE to reduce DAA for school districts that are not eligible to receive BSA funding by the amount that would be reduced if the district was eligible for BSA funding and reduce the school district’s budget limits accordingly.  
  2. Establishes a schedule to reduce the suspension of DAA to $0.00 in FY 2023. (Sec. 27)

o   In FY 2018, DAA was suspended by $352,442,700.

4.       Continues to declare that it is the intent of the Governor and Legislature that school districts increase the total percentage of classroom spending over the previous year’s percentages in instruction, student support and instructional support.  (Sec. 27)

5.       Exempts DAA reductions in FY 2019 for school districts with a student count of less than 1,100. (Sec. 27)

6.       Increases CAA by 1.8% to the following amounts:

a.       For students in preschool programs for children with disabilities and grades K-8, from

$1,775.05 to $1,807.00.

b.      For students in grades 9-12, from $2,068.79 to $2,106.03. (Sec. 2)

7.       Directs ADE to reduce the amount of CAA by $13,628,800 that otherwise would be apportioned to charter schools for FY 2019 and requires budget limits to be reduced accordingly.

  1. Continues to direct the reduction to be made on a proportional basis based on the CAA funding that each charter school would have received without the prescribed reduction. 
  2. Establishes a schedule to reduce the suspension of CAA to $3,407,200 in FY 2022. (Sec. 27)

o   In FY 2018, CAA was suspended by $18,656,000.

8.       Requires school districts to prominently post on their websites a copy of the profile page displaying classroom spending percentages from the Auditor General's Classroom Spending Report. (Sec. 17)

9.       Requires school district budget formats to prominently display the following and separately post each item on its website home page separately from the budget:

a.       The average salary of all teachers employed in the previous year and the average for the current year.

b.       The dollar and percentage increase in average salary for teachers employed in the current year. (Sec. 9)

10.   Instructs ADE to annually submit an electronic report compiling average teacher pay information for district schools by November 30 to JLBC and OSPB. (Sec. 3)

Charter Schools

11.   Includes financial expectations in charter school performance frameworks and instructs charter sponsor annual reports to include financial performance of the charter portfolio.  (Sec. 1)

12.   Allows a charter sponsor to deny a request for renewal or revoke the charter if the charter holder has failed to meet the financial performance expectations in the performance framework or in  an improvement plan. (Sec. 1)

13.   Requires charter schools to prominently display the following portion of the budget and post it on their website and additionally prominently post the information on the website separately from the budget:

c.        The average salary of all teachers employed in the previous year and the average for the current year.

d.       The dollar and percentage increase in average salary for teachers employed in the current year. (Sec. 3)

14.   Instructs ADE to annually submit an electronic report compiling average teacher pay information for charter schools by November 30 to JLBC and OSPB. (Sec. 3)

School District and Charter School Procurement (Sec. 4)

15.   Instructs SBE to adopt rules for school district and charter school procurement of materials, services and construction that ensure maximum competition, require contracts to be awarded based on the lowest qualified bidder and:

a.       Direct persons who contract or purchase in violation of adopted rules to be personally liable for the recovery of public monies paid plus 20%, legal interest from the date of payment and all costs and damages from the violation.

b.       Classify intentional or knowing violations to avoid the rules as a Class 4 felony (2.5 years/up to $150,000 + surcharges).

c.        Prohibit persons who prepare procurement specifications from receiving any direct or indirect benefit from using the specifications.

d.       Prohibit persons serving on a procurement selection committee from being a contractor or subcontractor or providing any specified services under the contract.

i.         Classifies violations for failing to disclose contact with a competing vendor or providing required accurate information as a civil penalty.

16.   Directs SBE to adopt rules to require school districts and nonexempt charter schools to maintain a record of proof that a construction or construction services provider that has been awarded a contract has a valid state license to practice.

17.   Instructs school district governing boards, when making information public after awarding a bid, to include the rationale for awarding a contract for specified services or materials.

18.   Allows the AG to do the following if there is reasonable cause to believe an employee of a school district, nonexempt charter school, school purchasing cooperative or an entity that has been awarded a contract has, is or is about to engage in a violation of SBE's rules:

a.       Require the person to file, on forms prescribed by the AG, a statement or report in writing and under oath to the facts and circumstances of the violation and other information deemed necessary.

b.       Examine any person under oath in connection with the violation.

19.   Prohibits school districts and charter schools from taking reprisal against an employee for the disclosure of information that is a matter of public concern, including procurement violations.

20.   Establishes the following penalties for gifting:

a.       For a person who supervises or participates in specified financial transactions or is involved in selecting specified services or goods for a school district, nonexempt charter school or school purchasing cooperative:

i.         A Class 6 felony (1 year/up to $150,000 + surcharges) if the person solicits, accepts or agrees to accept a personal gift or benefit with a value of at least $300, excluding items of nominal value, from a vendor that has secured or taken steps to secure a financial transaction.

ii.       A Class 1 misdemeanor (6 months/$2,500 + surcharges) for gifts or benefits less than $300, excluding items of nominal value.

b.       For a person or vendor that has secured or taken steps to secure a financial transaction with a school district, nonexempt charter school or school purchasing cooperative:

i.         A Class 6 felony (1 year/up to $150,000 + surcharges) if the person offers or confers a personal gift or benefit with a value of at least $300, excluding items of nominal value, to a person who supervises or participates in specified financial transactions or selecting specified services and goods.

ii.       A Class 1 misdemeanor (6 months/$2,500 + surcharges) for gifts or benefits less than $300, excluding items of nominal value.

21.   Allows persons or vendors convicted of offering or conferring gifts to be suspended for up to six months or be barred from doing business with public schools for up to three years by the Director of ADOA and instructs the Director of ADOA to adopt rules and administrative procedures to suspend or bar those persons.

22.   Prohibits school districts from hiring the same auditor or auditing firm for more than three consecutive years and prohibits auditors and auditing firms hired by a school district from receiving consulting fees from that school district.

Computer Science Program Fund (Sec. 5)

23.   Establishes the Computer Science Program Fund consisting of appropriations, grants, gifts, devises and donations.

a.       Directs ADE to administer the Fund and subjects the Fund to state auditing.

b.       Instructs monies in the Fund to be continuously appropriated and exempt from lapsing.

c.        Directs the State Treasurer, on notice from ADE, to invest and divest monies in the Fund and credit interest to the Fund.

24.   Instructs ADE to distribute grants from the Fund to public schools to fund quality training for prospective computer science teachers.

25.   Directs ADE to establish application procedures for the Fund, subject to SBE approval.

26.   Requires school districts and charter schools that apply for grants to demonstrate how funds will be used and, if the school receives grant monies, provide evidence that training addresses the academic standards for Computer Science.

27.   Prohibits ADE from distributing monies unless at least the same amount of matching monies are received from private sources.

28.   Allows ADE to use up to 5% of the monies in the Fund for administrative purposes.

29.   Requires school districts and charter schools that receive monies in the Fund to annually report by June 30 outcomes and how monies were spent and requires ADE to annually report by November 15 on the amount of monies awarded from the Fund, outcomes achieved and how monies were spent.

School Emergency Pilot Program (Sec. 20)

30.   Continues to designate $100,000 for the School Emergency Readiness Pilot Program from the FY 2019 GF appropriation to ADE for the School Safety Program and establishes the same programmatic requirements for FY 2019 as previously enacted with updated reporting dates.

College Credit by Examination Incentive Program (Sec. 5)

31.   Includes Social Studies in the list of exam subjects that qualify for the College Credit by Examination Incentive Program.

SFB

32.   Modifies the qualifications of two SFB members in the following manner:

a.       Requires a person with knowledge and experience in public procurement rather than school construction.

b.       Requires a person who is the owner or officer of a private construction company that does not construct schools rather than the owner of officer of a private business. (Sec. 11)

33.   Retains the existing terms of current SFB members. (Sec. 25)

34.   Allows school district governing boards to delegate authority in writing to the district's superintendent to submit NSF plans for minimum adequacy certification. (Sec. 7)

35.   Includes SFB employees in conflict of interest requirements and prohibits SFB employees from having a direct or indirect financial interest in purchases, construction or contracts financed with SFB or public monies.

a.       Classifies knowing violations as a Class 1 misdemeanor (6 months/$2,500 + surcharges). (Sec. 11)

36.   Requires SFB to establish policies and procedures for BRG change orders that:

a.       Require SFB to approve or reject a change order within two business days; and

b.       Instruct school districts to be responsible for the cost and construction of projects that the school district approves prior to SFB approving the change order. (Sec. 11)

37.   Requires SFB to establish policies and procedures to:

a.       Notify school districts in a uniform manner of the services and funding available from SFB at least annually and update and post the information to its website by July 1.

b.       Establish a project eligibility assessment for BRG or EDC projects.

i.         Allows SFB to review the costs and scope of the project with bidders prior to approval.

c.        Ensure the maintenance of standardized documentation for proposed and approved projects, including outlined eligibility criteria.

d.       Require school districts to submit specified contact information for each proposed project.

e.       Require school districts to provide justification for each project that includes specified items.

f.         Require school districts to report preventative maintenance activities on the facility in the previous year when applying for BRG monies.

g.       Require initial applications to be considered incomplete until all necessary information is submitted.

h.       Allow school districts to submit incomplete applications and request technical assistance if the district is unable to provide sufficient information.

i.         Require complete applications to be received at least 15 business days before the next regular Board meeting to be considered.

i.         Allows incomplete applications to be considered if both SFB staff and the school district's superintendent deem the project critical.

j.         Allow SFB staff to notify school districts in writing that the project does not meet eligibility criteria before review.

i.         Requires notification to include documentation supporting the determination.

ii.       Allows school districts to appeal the determination of ineligibility to the Executive Director and appeal the Executive Director's determination of ineligibility to the Board.

k.       Prohibit SFB staff from requesting that a school district withdraw a project application from review if the initial staff review determines that the project may be ineligible. (Sec. 11, 12 )

38.   Instructs SFB to maintain a list of persons responsible for facilities management at each school district and requires school districts to promptly notify SFB of any changes in personnel.

a.       Directs SFB to annually update and post the information to its website by July 1. (Sec. 11,12)

39.   Prohibits members of SFB from soliciting, accepting or providing gifts that are prohibited by state law. (Sec. 11)

40.    Allows school districts to appeal the denial of a request for monies or any other appealable agency action to OAH.

a.       Defines appealable agency action. (Sec. 12)

41.   Requires SFB to provide a fiscal impact statement to JCCR for review when making changes to minimum adequacy requirements. (Sec. 13)

42.   Repeals the requirement that square footage per pupil requirements for minimum adequacy use the 100th day ADM and requires the 40th day ADM to be used. (Sec. 13, 14)

o   Laws 2017, Chapter 304 required minimum adequacy guidelines to use the 40th day ADM for calculating square footage per pupil requirements and Laws 2017, Chapter 320 required the 100th day ADM. Both were enacted in the 2017 Legislative Session.

43.   Removes BRG application prioritization for school districts that can provide matching monies. (Sec. 15)

44.   Requires BRG monies for major renovations and repairs to be used for buildings that are used for student instruction or other academic purposes. (Sec. 15)

45.   Requires SFB to categorize each BRG project that is eligible for monies as critical or noncritical.

a.       Requires projects to be designated as critical if the project immediately impacts student safety, results in a building closure or results in operational disruptions.

b.       Directs SFB to prioritize critical projects. (Sec. 15)

46.   Instructs SFB to notify school districts if sufficient monies are unavailable for an approved noncritical BRG project that monies will be distributed from the BRG Fund only if sufficient monies are appropriated, directs projects to be cancelled if monies are not available in the FY and allows school districts to resubmit canceled projects in the next FY. (Sec. 15)

47.   Requires BRGs to be used for projects that serve an academic purpose. (Sec. 15)

48.   Allows SFB to distribute $825,000 from the NSF Fund in FY 2019 for new school construction to school districts that meet specified criteria. (Sec. 23)

49.   Continues SFB for four years, until July 1, 2022.

a.       Repeals associated statutes on January 1, 2023 if there are no outstanding bonds or lease-to-own transactions.  If there are outstanding bonds or transactions, statutes repeal 30 days after the retirement of the obligations. (Sec. 18, 19, 21, 31)

Results-Based Funding (Sec. 26)

50.   Directs ADE to distribute monies in the Results-Based Funding Fund in FY 2019 in the same manner prescribed in FY 2018, except that distributions in FY 2019 are based on assessment results from 2017 rather than 2016.

Special Audit on BRG Fund Expenditures (Sec. 30)

51.   Directs the Auditor General to complete a special audit of SFB BRG Fund expenditures from July 1, 2016 through June 30, 2018, including a review of specified applicable records to:

a.       Assess the BRG process, requests for and distributions of monies, grant closeout forms and the proposed scopes of work.

b.       Assess the vendor selection, procurement, contracting and oversight process of BRG projects.

c.        Provide BRG Program details, including specified items.

d.       Audit work in any areas deemed necessary.

e.       Recommend improvements for outlined processes.

52.   Requires SFB, school districts and county school superintendents to cooperate with the Auditor General and provide information and records.

53.   Directs the Auditor General to submit copies of the audit to the President of the Senate, Speaker or the House of Representatives, Secretary of State, JLBC and OSPB by June 30, 2019.

54.   Repeals the special audit on January 1, 2020.

Miscellaneous

63.   Defines rural for the purpose of federal funding eligibility determinations made by ADE that involve geographic location. (Sec. 5)

64.   Directs the Corporation Commission to make available any remaining monies collected for the E-Rate Broadband Special Construction Project Matching Fund Program after the 2018 E-Rate procurement cycle. (Sec. 22)

65.   Allows ASDB to use monies from the Telecommunication Fund for the Deaf in FY 2019 to support the expansion of the Birth-to-Three Program. (Sec. 24)

66.   Continues to increase the general budget limit by $1.5 million in FY 2019 for a school district that in FY 2018 was subject to the additional tax for districts ineligible for equalization assistance and in FY 2017 had an ADM of at least 5,000. (Sec. 29)

67.   Makes technical and conforming changes. (Sec. 1, 4, 7, 11-13, 15-17)

 

 

 

---------- DOCUMENT FOOTER ---------

Fifty-third Legislature                  HB 2663

Second Regular Session                               Version 2: Caucus & COW

 

---------- DOCUMENT FOOTER ---------