HB2173 - 562R

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

Section 1. Section 15-971, Arizona Revised Statutes, as amended by Laws 2022, chapter 317, section 13, is amended to read:

START_STATUTE15-971. Determination of equalization assistance payments from county and state funds for school districts

A. Equalization assistance for education is computed by determining the total of the following:

1. The lesser of a school district's revenue control limit or district support level as determined in section 15-947 or 15-951.

2. District additional assistance of a school district as determined in section 15-951 or 15-961.

B. From the total of the amounts determined in subsection A of this section subtract:

1. The amount that would be produced by levying the applicable qualifying tax rate determined pursuant to section 41-1276 for a high school district or a common school district within a high school district that does not offer instruction in high school subjects as provided in section 15-447.

2. The amount that would be produced by levying the applicable qualifying tax rate determined pursuant to section 41-1276 for a unified school district, a common school district not within a high school district or a common school district within a high school district that offers instruction in high school subjects as provided in section 15-447. The qualifying tax rate shall be applied in the following manner:

(a) For the purposes of the amount determined in subsection A, paragraph 1 of this section:

(i) Determine separately the percentage that the weighted student count in preschool programs for children with disabilities, kindergarten programs and grades one through eight and the weighted student count in grades nine through twelve is to the weighted student count determined in subtotal A as provided in section 15-943, paragraph 2, subdivision (a).

(ii) Apply the percentages determined in item (i) of this subdivision to the amount determined in subsection A, paragraph 1 of this section.

(b) For the purposes of the amounts determined in subsection A, paragraph 2 of this section, determine separately the amount of the district additional assistance attributable to the student count in preschool programs for children with disabilities, kindergarten programs and grades one through eight and grades nine through twelve.

(c) From the amounts determined in subdivisions (a) and (b) of this paragraph, subtract the levy that would be produced by the current qualifying tax rate for a high school district or a common school district within a high school district that does not offer instruction in high school subjects as provided in section 15-447. If the qualifying tax rate generates a levy that is in excess of the total determined in subsection A of this section, the school district is not eligible for equalization assistance. For the purposes of this subsection, "assessed valuation" includes the values used to determine voluntary contributions collected pursuant to title 9, chapter 4, article 3 and title 48, chapter 1, article 8 and the assessed value of all property subject to the government property lease excise tax pursuant to title 42, chapter 6, article 5.

3. The amount that would be produced by levying a qualifying tax rate in a career technical education district, which shall be $.05 per $100 assessed valuation unless the legislature sets a lower rate by law.

C. County aid from common school districts not within a high school district shall be computed as follows:

1. Determine the total equalization assistance for all school districts in the county as provided in subsections A and B of this section.

2. Determine the total amount of monies collected pursuant to section 15-992, subsection F.

3. Divide the amount determined in paragraph 2 of this subsection by the amount determined in paragraph 1 of this subsection.

4. Multiply the amount determined in subsections A and B of this section by the quotient determined in paragraph 3 of this subsection for each school district.

5. The amount determined in paragraph 4 of this subsection shall be the county aid from common school districts not within a high school district for a school district.

C. D. State aid for equalization assistance for education for a school district shall be the equalization assistance for education for a school district as provided in subsections A and B of this section, reduced by the amount calculated pursuant to subsection C, paragraph 5 of this section.

D. E. Equalization assistance for education shall be paid from appropriations for that purpose to the school districts as provided in section 15-973.

E. F. A school district shall report expenditures on approved career and technical education and vocational education programs in the annual financial report according to uniform guidelines prescribed by the uniform system of financial records and in order to facilitate compliance with sections 15-255 and 15-904.

F. G. The additional weight for state aid purposes given to special education as provided in section 15-943 shall be given to school districts only if special education programs comply with chapter 7, article 4 of this title and the conditions and standards prescribed by the superintendent of public instruction pursuant to rules of the state board of education for pupil identification and placement pursuant to sections 15-766 and 15-767.

G. H. In addition to state general fund appropriations, all amounts received pursuant to section 37-521, subsection B, paragraph 3, section 42-5029, subsection E, paragraph 5 and section 42-5029.02, subsection A, paragraph 5 and from any other source for the purposes of this section are appropriated for state aid to schools as provided in this section.

H. I. The total amount of state monies that may be spent in any fiscal year for state equalization assistance shall not exceed the amount appropriated or authorized by section 35-173 for that purpose. This section does not impose a duty on an officer, agent or employee of this state to discharge a responsibility or create any right in a person or group if the discharge or right would require an expenditure of state monies in excess of the expenditure authorized by legislative appropriation for that specific purpose. END_STATUTE

Sec. 2. Repeal

Section 15-971, Arizona Revised Statutes, as amended by Laws 2022, chapter 285, section 9, is repealed.

Sec. 3. Section 15-992, Arizona Revised Statutes, is amended to read:

START_STATUTE15-992. School district tax levy; additional tax in districts ineligible for equalization assistance; definition

A. The board of supervisors of each county, at the time of levying other taxes, shall annually levy school district taxes on the property in any school district in which additional amounts are required, which shall be at rates prescribed in this section. A delinquency factor for estimated uncollected taxes may not be included in the computation of the primary tax rate for school district taxes. Local property taxes may not be levied for any deficit in the classroom site fund. The taxes shall be added to and collected in the same manner as other county taxes on the property within the school district. The amount of the school district taxes levied on the property in a particular school district shall be paid into the school fund of that school district.

B. At the same time of levying taxes as provided in subsection A of this section, the county board of supervisors shall annually levy an additional tax in each school district that is not eligible for equalization assistance as provided in section 15-971 in an amount determined as follows:

1. Determine the levy that would be produced by fifty percent of the applicable qualifying tax rate, prescribed in section 15-971, subsection B, per $100 assessed valuation.

2. Subtract the amount amounts determined in section 15-971, subsection A and subsection F of this section from the levy determined in paragraph 1 of this subsection. This difference is the additional amount levied or collected as voluntary contributions pursuant to title 48, chapter 1, article 8, except that if the difference is zero or is a negative number, there shall be no levy.

C. Monies collected pursuant to subsection B of this section shall be transmitted to the state treasurer for deposit in the state general fund to aid in school financial assistance.

D. The additional tax prescribed in subsection B of this section is considered to be primary property tax for purposes of section 15-972, subsection B, except that this state is not required to make the payments prescribed in section 15-972, subsection H for these reductions in taxes.

E. The tax levy prescribed in subsection A of this section shall be a rate equal to the applicable qualifying tax rate or rates as prescribed in section 15-971, subsection B or a rate that would result in a levy that equals the school district equalization assistance base prescribed in section 15-971 subtracted by any amount received pursuant to section 15-905, subsections K, O and P per $100 of assessed valuation used for primary property taxes, whichever is less.

F. At the same time of levying taxes as provided in subsection A of this section, the county board of supervisors shall annually levy an additional tax in each common school district not within a high school district that is equal to the lesser of:

1. A rate that is equal to the applicable qualifying tax rate or rates as prescribed in section 15-971, subsection B.

2. A rate that would result in a levy that equals the countywide average per pupil equalization base for high school pupils multiplied by the number of resident high school pupils in the common school district not within a high school district during the prior school year. The monies collected pursuant to this subsection shall be added to county aid for equalization assistance for education pursuant to section 15-971, subsection C. On or before July 1 of each year, the department of education shall provide each county board of supervisors with the countywide average per pupil equalization base for high school pupils, the number of resident high school pupils in the common school district not within a high school district during the prior school year and any other information requested by the county board of supervisors for the purposes of levying the tax prescribed in this subsection.

g. Monies collected pursuant to subsection F of this section are county aid from common school districts not within a high school district as described in section 15-971, subsection C and shall be distributed to school districts within the county.

G. H. At the time of levying taxes as provided in subsection E of this section, the county school superintendent shall annually validate any additional primary school district tax levy amount requests from each school district and levy the sum of the following amounts:

1. A rate that would result in a levy that equals the difference between the transportation revenue control limit as determined in section 15-946 and the transportation support level as determined in section 15-945 or a lesser amount.

2. A rate that would result in a levy that equals any amount pursuant to section 15-910.

3. A rate that would result in a levy that equals any amount for tuition loss as determined in section 15-954.

4. A rate that would result in a levy that equals any amount for the small school adjustment as determined in section 15-949.

5. A rate that would result in a levy that equals any amount for liabilities in excess of the school district budget pursuant to section 15-907.

6. A rate that would result in a levy that equals any amount for adjacent ways pursuant to section 15-995.

7. A rate that would result in a levy that equals the amount not captured by the qualifying tax rate as a result of property subject to the government property lease excise tax pursuant to title 42, chapter 6, article 5 as calculated in section 15-971, subsection B, paragraph 2.

8. Following the recommendation of the county school superintendent and on approval by the county board of supervisors, for a school district that is not eligible for state aid, a rate that would result in a levy that equals any legal amount not levied in the current year as a result of underestimated average daily membership in the current year or as a result of a judgment in accordance with section 42-16213.

9. A rate that would result in a levy that equals any amount pursuant to a qualifying dropout prevention program that was originally established by law in 1987.

10. On the recommendation of the county school superintendent and on approval by the county board of supervisors before adoption of tax rates pursuant to section 42-17151, a rate that would result in a levy that equals any separately stated cash deficit from the prior fiscal year resulting from an anticipated or actual deviation in the property tax roll, including resolutions or judgments pursuant to title 42, chapter 16, articles 5 and 6.

H. I. For the purposes of this section, "assessed valuation" includes the values used to determine voluntary contributions collected pursuant to title 9, chapter 4, article 3 and title 48, chapter 1, article 8. END_STATUTE

Sec. 4. Section 37-521, Arizona Revised Statutes, is amended to read:

START_STATUTE37-521. Permanent state school fund; composition; use

A. After any appropriation pursuant to section 37-527, the permanent state school fund shall consist of:

1. The proceeds of all lands granted to this state by the United States for the support of common schools.

2. All property which that accrues to this state by escheat or forfeiture.

3. All property donated for the benefit of the common schools, unless the terms of the donation otherwise provide.

4. All unclaimed shares and dividends of any corporation incorporated under the laws of this state.

5. The proceeds of sale of timber, mineral, gravel or other natural products or property from school lands and state lands other than those granted for specific purposes.

6. The residue of the lands granted for payment of the bonds and accrued interest issued by Maricopa, Pima, Yavapai and Coconino counties, after the purpose of the grant has been satisfied, and the five percent of the proceeds of sales of public lands lying within this state sold by the United States subsequent to admission of this state into the union, as granted by the enabling act.

B. The fund shall be and remain a perpetual fund, and distributions from the fund pursuant to article X, section 7, Constitution of Arizona, plus monies derived from the rental of the lands and property, interest and accrued rent for that year credited pursuant to section 37-295 and interest paid on installment sales, shall be used as follows:

1. If there are outstanding state school facilities revenue bonds pursuant to title 41, chapter 56, article 6, outstanding qualified zone academy bonds pursuant to title 41, chapter 56, article 7 or outstanding state school trust revenue bonds issued to correct existing deficiencies, the state treasurer and the state land department shall annually transfer to the state school facilities revenue bond debt service fund established in pursuant to section 41-5754, the state school improvement revenue bond debt service fund established in pursuant to section 41-5784 and the state school trust revenue bond debt service fund the amount that is necessary to pay that fiscal year's debt service on outstanding state school facilities revenue bonds, qualified zone academy bonds and state school trust revenue bonds, before transferring amounts for any other uses.

2. If there are no outstanding state school facilities revenue bonds pursuant to title 41, chapter 56, article 6 or if the amount of monies available under this subsection exceeds the amount required under paragraph 1 of this subsection, the monies are subject to legislative appropriation to the new school facilities fund established by section 41-5741.

3. If the amount of monies available under this subsection exceeds the amount required under paragraphs 1 and 2 of this subsection, the legislature may annually appropriate an amount to be used as provided in section 15-971, subsection G H, except that the amount appropriated may not exceed the amount appropriated from the permanent state school fund and from the rent and interest paid on installment sales for this purpose in fiscal year 2000-2001.

4. Notwithstanding paragraphs 1, 2 and 3 of this subsection, from and after June 30, 2001, any expendable earnings under this subsection that exceed the fiscal year 2000-2001 expendable earnings shall be deposited in the classroom site fund established by section 15-977. END_STATUTE

Sec. 5. Property tax reduction; 2024 tax year; delayed repeal; definition

A. If a county board of supervisors levies an additional tax pursuant to section 15-992, subsection B, Arizona Revised Statutes, as amended by this act, in one or more eligible school districts in the 2023 tax year, the board of supervisors shall reduce the tax levy in each eligible school district for the 2024 tax year by the lesser of:

1. The amount levied pursuant to section 15-992, subsection B, Arizona Revised Statutes, as amended by this act, in the 2023 tax year.

2. The amount levied pursuant to section 15-992, subsection F, Arizona Revised Statutes, as amended by this act, in the 2023 tax year.

B. This section is repealed from and after December 31, 2027.

C. For the purposes of this section, "eligible school district" means a district that is both:

1. Not eligible for equalization assistance as provided in section 15-971, Arizona Revised Statutes, as amended by this act.

2. A common school district not within a high school district.

Sec. 6. Retroactivity

A. The following sections apply retroactively to from and after June 30, 2023:

1. Section 15-971, Arizona Revised Statutes, as amended by Laws 2022, chapter 317, section 13 and this act.

2. Section 15-971, Arizona Revised Statutes, as amended by Laws 2022, chapter 285, section 9 and repealed by this act.

3. Section 37-521, Arizona Revised Statutes, as amended by this act.

B. Section 15-992, Arizona Revised Statutes, as amended by this act, applies retroactively to tax years beginning from and after December 31, 2023.