Journal of the House - 45th Day - Friday, April 22, 2005

A quorum was present.

Hansen was excused until 11:00 a.m. Beard was excused until 11:10 a.m. Westrom was excused until 12:55 p.m. Abrams was excused until 1:10 p.m.

The Chief Clerk proceeded to read the Journal of the preceding day. Cornish moved that further reading of the Journal be suspended and that the Journal be approved as corrected by the Chief Clerk. The motion prevailed.

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REPORTS OF CHIEF CLERK

S. F. No. 767 and H. F. No. 1043, which had been referred to the Chief Clerk for comparison, were examined and found to be identical.

Emmer moved that S. F. No. 767 be substituted for H. F. No. 1043 and that the House File be indefinitely postponed. The motion prevailed.

REPORTS OF STANDING COMMITTEES

Sykora from the Committee on Education Finance to which was referred:

H. F. No. 872, A bill for an act relating to education finance; simplifying the operating referendum ballot language; amending Minnesota Statutes 2004, section 126C.17, subdivision 9.

Reported the same back with the following amendments:

Delete everything after the enacting clause and insert:

"ARTICLE 1

GENERAL EDUCATION

Section 1. Minnesota Statutes 2004, section 120A.05, is amended by adding a subdivision to read:

Subd. 18. [KINDERGARTEN.] "Kindergarten" means a program designed for pupils five years of age on September 1 of the calendar year in which the school year commences that prepares pupils to enter first grade the following school year. A program designed for pupils younger than five years of age on September 1 of the calendar year in which the school year commences that prepares pupils to enter kindergarten the following school year is a prekindergarten program.

[EFFECTIVE DATE.] This section is effective the day following final enactment.

Sec. 2. Minnesota Statutes 2004, section 123A.05, subdivision 2, is amended to read:

Subd. 2. [RESERVE REVENUE.] Each district that is a member of an area learning center must reserve revenue in an amount equal to the sum of (1) at least 90 percent of the district average general education revenue per pupil unit minus an amount equal to the product of the formula allowance according to section 126C.10, subdivision 2, times .0485, calculated without basic skills revenue, and transportation sparsity revenue, ~~and the transportation portion of the transition revenue adjustment,~~ times the number of pupil units attending an area learning center program under this section, plus (2) the amount of basic skills revenue generated by pupils attending the area learning center. The amount of reserved revenue under this subdivision may only be spent on program costs associated with the area learning center. ~~Compensatory revenue must be allocated according to section 126C.15, subdivision 2.~~

Sec. 3. Minnesota Statutes 2004, section 123B.42, subdivision 3, is amended to read:

Subd. 3. [COST; LIMITATION.] (a) The cost per pupil of the textbooks, individualized instructional or cooperative learning materials, and standardized tests provided for in this section for each school year must not exceed the statewide average expenditure per pupil, adjusted ~~pursuant~~ according to ~~clause~~ paragraph (b), by the

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Minnesota public elementary and secondary schools for textbooks, individualized instructional materials and standardized tests as computed and established by the department by February 1 of the preceding school year from the most recent public school year data then available.

(b) The cost computed in ~~clause~~ paragraph (a) shall be increased by an inflation adjustment equal to ~~the percent of increase in the formula allowance, pursuant to section 126C.10, subdivision 2, from the second preceding school year to the current school year~~ 3.0 percent for fiscal year 2006, 6.19 percent for fiscal year 2007, and 3.1 percent for fiscal year 2008.

(c) The commissioner shall allot to the districts or intermediary service areas the total cost for each school year of providing or loaning the textbooks, individualized instructional or cooperative learning materials, and standardized tests for the pupils in each nonpublic school. The allotment shall not exceed the product of the statewide average expenditure per pupil, according to clause (a), adjusted pursuant to clause (b), multiplied by the number of nonpublic school pupils who make requests pursuant to this section and who are enrolled as of September 15 of the current school year.

Sec. 4. Minnesota Statutes 2004, section 123B.75, is amended by adding a subdivision to read:

Subd. 4a. [TACONITE REVENUE.] Taconite revenue received in a calendar year by a school district under section 298.28, subdivisions 4, paragraphs (b) and (c), and 11, paragraph (d), is fully recognized in the fiscal year in which the February payment falls.

[EFFECTIVE DATE.] This section is effective for revenue for fiscal year 2006.

Sec. 5. Minnesota Statutes 2004, section 123B.76, subdivision 3, is amended to read:

Subd. 3. [EXPENDITURES BY BUILDING.] (a) For the purposes of this section, "building" means education site as defined in section 123B.04, subdivision 1.

(b) Each district shall maintain separate accounts to identify general fund expenditures~~, excluding capital expenditures and pupil transportation,~~ for each building. All expenditures for regular instruction, secondary vocational instruction, and school administration must be reported to the department separately for each building. All expenditures for special education instruction, instructional support services, and pupil support services provided within a specific building must be reported to the department separately for each building. Salary expenditures reported by building must reflect actual salaries for staff at the building and must not be based on districtwide averages. All other general fund expenditures may be reported by building or on a districtwide basis.

(c) The department must annually report information showing school district general fund expenditures per pupil by program category for each building and estimated school district general fund revenue generated by pupils attending each building on its Web site. For purposes of this report:

(1) expenditures not ~~required to be~~ reported by building shall be allocated among buildings on a uniform per pupil basis;

(2) basic skills revenue shall be allocated according to section 126C.10, subdivision 4;

(3) secondary sparsity revenue and elementary sparsity revenue shall be allocated according to section 126C.10, subdivisions 7 and 8;

(4) other general education revenue shall be allocated on a uniform per pupil unit basis;

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(5) first grade preparedness aid shall be allocated according to section 124D.081;

(6) state and federal special education aid and Title I aid shall be allocated in proportion to district expenditures for these programs by building; and

(7) other general fund revenues shall be allocated on a uniform per pupil basis, except that the department may allocate other revenues attributable to specific buildings directly to those buildings.

Sec. 6. Minnesota Statutes 2004, section 123B.79, subdivision 6, is amended to read:

Subd. 6. [ACCOUNT TRANSFER FOR STATUTORY OPERATING DEBT.] On June 30 of each year, a district may make a permanent transfer from the general fund account entitled "~~undesignated~~ net unreserved general fund balance since statutory operating debt" to the account entitled "reserved fund balance reserve account for purposes of statutory operating debt reduction." The amount of the transfer is limited to the lesser of (a) the net ~~undesignated operating~~ unreserved general fund balance, or (b) the sum of the remaining statutory operating debt levies authorized for all future years according to section 126C.42, subdivision 1. If the net ~~undesignated operating~~ unreserved general fund balance is less than zero, the district may not make a transfer.

Sec. 7. Minnesota Statutes 2004, section 123B.81, subdivision 1, is amended to read:

Subdivision 1. [OPERATING DEBT.] The "operating debt" of a school district means the net negative ~~undesignated~~ unreserved general fund balance ~~in all school district funds, other than capital expenditure, building construction, debt service, and trust and agency,~~ calculated as of June 30 of each year in accordance with the uniform financial accounting and reporting standards for Minnesota school districts.

Sec. 8. Minnesota Statutes 2004, section 123B.82, is amended to read:

123B.82 [REORGANIZATION OPERATING DEBT.]

The "reorganization operating debt" of a school district means the net negative ~~undesignated~~ unreserved fund ~~balance~~ balances in all school district funds, other than building construction, debt redemption, and trust and agency, calculated in accordance with the uniform financial accounting and reporting standards for Minnesota school districts as of:

(1) June 30 of the fiscal year before the first year that a district receives revenue according to section 123A.39, subdivision 3; or

(2) June 30 of the fiscal year before the effective date of reorganization according to section 123A.46 or 123A.48.

Sec. 9. Minnesota Statutes 2004, section 123B.83, subdivision 2, is amended to read:

Subd. 2. [~~UNDESIGNATED~~ UNRESERVED FUND BALANCES.] ~~Beginning in fiscal year 1978 and each year thereafter, any~~ A school district ~~not subject to the provisions of subdivision 1~~ must limit its expenditures so that its ~~undesignated~~ net unreserved general fund ~~balances do~~ balance does not constitute statutory operating debt as defined in section 126C.42.

Sec. 10. Minnesota Statutes 2004, section 123B.92, subdivision 1, is amended to read:

Subdivision 1. [DEFINITIONS.] For purposes of this section and section 125A.76, the terms defined in this subdivision have the meanings given to them.

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(a) "Actual expenditure per pupil transported in the regular and excess transportation categories" means the quotient obtained by dividing:

(1) the sum of:

(i) all expenditures for transportation in the regular category, as defined in paragraph (b), clause (1), and the excess category, as defined in paragraph (b), clause (2), plus

(ii) an amount equal to one year's depreciation on the district's school bus fleet and mobile units computed on a straight line basis at the rate of 15 percent per year for districts operating a program under section 124D.128 for grades 1 to 12 for all students in the district and 12-1/2 percent per year for other districts of the cost of the fleet, plus

(iii) an amount equal to one year's depreciation on the district's type three school buses, as defined in section 169.01, subdivision 6, clause (5), which must be used a majority of the time for pupil transportation purposes, computed on a straight line basis at the rate of 20 percent per year of the cost of the type three school buses by:

(2) the number of pupils eligible for transportation in the regular category, as defined in paragraph (b), clause (1), and the excess category, as defined in paragraph (b), clause (2).

(b) "Transportation category" means a category of transportation service provided to pupils as follows:

(1) Regular transportation is:

(i) transportation to and from school during the regular school year for resident elementary pupils residing one mile or more from the public or nonpublic school they attend, and resident secondary pupils residing two miles or more from the public or nonpublic school they attend, excluding desegregation transportation and noon kindergarten transportation; but with respect to transportation of pupils to and from nonpublic schools, only to the extent permitted by sections 123B.84 to 123B.87;

(ii) transportation of resident pupils to and from language immersion programs;

(iii) transportation of a pupil who is a custodial parent and that pupil's child between the pupil's home and the child care provider and between the provider and the school, if the home and provider are within the attendance area of the school;

(iv) transportation to and from or board and lodging in another district, of resident pupils of a district without a secondary school; and

(v) transportation to and from school during the regular school year required under subdivision 3 for nonresident elementary pupils when the distance from the attendance area border to the public school is one mile or more, and for nonresident secondary pupils when the distance from the attendance area border to the public school is two miles or more, excluding desegregation transportation and noon kindergarten transportation.

For the purposes of this paragraph, a district may designate a licensed day care facility, respite care facility, the residence of a relative, or the residence of a person chosen by the pupil's parent or guardian as the home of a pupil for part or all of the day, if requested by the pupil's parent or guardian, and if that facility or residence is within the attendance area of the school the pupil attends.

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(2) Excess transportation is:

(i) transportation to and from school during the regular school year for resident secondary pupils residing at least one mile but less than two miles from the public or nonpublic school they attend, and transportation to and from school for resident pupils residing less than one mile from school who are transported because of extraordinary traffic, drug, or crime hazards; and

(ii) transportation to and from school during the regular school year required under subdivision 3 for nonresident secondary pupils when the distance from the attendance area border to the school is at least one mile but less than two miles from the public school they attend, and for nonresident pupils when the distance from the attendance area border to the school is less than one mile from the school and who are transported because of extraordinary traffic, drug, or crime hazards.

(3) Desegregation transportation is transportation within and outside of the district during the regular school year of pupils to and from schools located outside their normal attendance areas under a plan for desegregation mandated by the commissioner or under court order.

(4) "Transportation services for pupils with disabilities" is:

(i) transportation of pupils with disabilities who cannot be transported on a regular school bus between home or a respite care facility and school;

(ii) necessary transportation of pupils with disabilities from home or from school to other buildings, including centers such as developmental achievement centers, hospitals, and treatment centers where special instruction or services required by sections 125A.03 to 125A.24, 125A.26 to 125A.48, and 125A.65 are provided, within or outside the district where services are provided;

(iii) necessary transportation for resident pupils with disabilities required by sections 125A.12, and 125A.26 to 125A.48;

(iv) board and lodging for pupils with disabilities in a district maintaining special classes;

(v) transportation from one educational facility to another within the district for resident pupils enrolled on a shared-time basis in educational programs, and necessary transportation required by sections 125A.18, and 125A.26 to 125A.48, for resident pupils with disabilities who are provided special instruction and services on a shared-time basis or if resident pupils are not transported, the costs of necessary travel between public and private schools or neutral instructional sites by essential personnel employed by the district's program for children with a disability;

(vi) transportation for resident pupils with disabilities to and from board and lodging facilities when the pupil is boarded and lodged for educational purposes; and

(vii) services described in clauses (i) to (vi), when provided for pupils with disabilities in conjunction with a summer instructional program that relates to the pupil's individual education plan or in conjunction with a learning year program established under section 124D.128.

For purposes of computing special education base revenue under section 125A.76, subdivision 2, the cost of providing transportation for children with disabilities includes (A) the additional cost of transporting a homeless student from a temporary nonshelter home in another district to the school of origin, or a formerly homeless student from a permanent home in another district to the school of origin but only through the end of the academic year; and (B) depreciation on district-owned school buses purchased after July 1, 2005, and used primarily for transportation

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of pupils with disabilities, calculated according to paragraph (a), clauses (ii) and (iii). Depreciation costs included in the disabled transportation category must be excluded in calculating the actual expenditure per pupil transported in the regular and excess transportation categories according to paragraph (a).

(5) "Nonpublic nonregular transportation" is:

(i) transportation from one educational facility to another within the district for resident pupils enrolled on a shared-time basis in educational programs, excluding transportation for nonpublic pupils with disabilities under clause (4);

(ii) transportation within district boundaries between a nonpublic school and a public school or a neutral site for nonpublic school pupils who are provided pupil support services pursuant to section 123B.44; and

(iii) late transportation home from school or between schools within a district for nonpublic school pupils involved in after-school activities.

(c) "Mobile unit" means a vehicle or trailer designed to provide facilities for educational programs and services, including diagnostic testing, guidance and counseling services, and health services. A mobile unit located off nonpublic school premises is a neutral site as defined in section 123B.41, subdivision 13.

Sec. 11. Minnesota Statutes 2004, section 123B.92, subdivision 5, is amended to read:

Subd. 5. [DISTRICT REPORTS.] (a) Each district must report data to the department as required by the department to account for transportation expenditures.

(b) Salaries and fringe benefits of district employees whose primary duties are other than transportation, including central office administrators and staff, building administrators and staff, teachers, social workers, school nurses, and instructional aides, must not be included in a district's transportation expenditures, except that a district may include salaries and benefits according to paragraph (c) for (1) an employee designated as the district transportation director, (2) an employee providing direct support to the transportation director, or (3) an employee providing direct transportation services such as a bus driver or bus aide.

(c) Salaries and fringe benefits of other district employees who work part time in transportation and part time in other areas must not be included in a district's transportation expenditures unless the district maintains documentation of the employee's time spent on pupil transportation matters in the form and manner prescribed by the department.

(d) Pupil transportation expenditures, excluding expenditures for capital outlay, leased buses, student board and lodging, crossing guards, and aides on buses, must be allocated among transportation categories based on cost-per-mile, cost-per-student, cost-per-hour, or cost-per-route, regardless of whether the transportation services are provided on district-owned or contractor-owned school buses. Expenditures for school bus driver salaries and fringe benefits may either be directly charged to the appropriate transportation category or may be allocated among transportation categories based on cost-per-mile, cost-per-student, cost-per-hour, or cost-per-route. Expenditures by private contractors or individuals who provide transportation exclusively in one transportation category must be charged directly to the appropriate transportation category. Transportation services provided by contractor-owned school bus companies incorporated under different names but owned by the same individual or group of individuals must be treated as the same company for cost allocation purposes.

[EFFECTIVE DATE.] This section is effective for expenditure reporting for fiscal year 2006.

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Sec. 12. Minnesota Statutes 2004, section 123B.92, subdivision 9, is amended to read:

Subd. 9. [NONPUBLIC PUPIL TRANSPORTATION AID.] (a) A district's nonpublic pupil transportation aid for ~~the 1996-1997 and later school years for~~ transportation services for nonpublic school pupils according to sections 123B.88, 123B.84 to 123B.86, and this section, equals the sum of the amounts computed in paragraphs (b) and (c). This aid does not limit the obligation to transport pupils under sections 123B.84 to 123B.87.

(b) For regular and excess transportation according to subdivision 1, paragraph (b), clauses (1) and (2), an amount equal to the product of:

(1) the district's actual expenditure per pupil transported in the regular and excess transportation categories during the second preceding school year; times

(2) the number of nonpublic school pupils residing in the district who receive regular or excess transportation service or reimbursement for the current school year; times

(3) the ratio of the formula allowance pursuant to section 126C.10, subdivision 2, for the current school year to the formula allowance pursuant to section 126C.10, subdivision 2, for the second preceding school year 1.03 for fiscal year 2006, 1.0619 for fiscal year 2007, 1.031 for fiscal year 2008, and 1.0 for fiscal year 2009 and later.

(c) For nonpublic nonregular transportation according to subdivision 1, paragraph (b), clause (5), an amount equal to the product of:

(1) the district's actual expenditure for nonpublic nonregular transportation during the second preceding school year; times

(2) the ratio of the formula allowance pursuant to section 126C.10, subdivision 2, for the current school year to the formula allowance pursuant to section 126C.10, subdivision 2, for the second preceding school year 1.03 for fiscal year 2006, 1.0619 for fiscal year 2007, 1.031 for fiscal year 2008, and 1.0 for fiscal year 2009 and later.

(d) Notwithstanding the amount of the formula allowance for fiscal year 2004 in section 126C.10, subdivision 2, the commissioner shall use the amount of the formula allowance for the current year minus $415 in determining the nonpublic pupil transportation revenue in paragraphs (b) and (c) for fiscal year 2004.

Sec. 13. Minnesota Statutes 2004, section 124D.68, subdivision 9, is amended to read:

Subd. 9. [ENROLLMENT VERIFICATION.] (a) For a pupil attending an eligible program full time under subdivision 3, paragraph (d), the department must pay 90 percent of the district's average general education revenue less basic skills revenue to the eligible program and ten percent of the district's average general education revenue less basic skills revenue to the contracting district within 30 days after the eligible program verifies enrollment using the form provided by the department. For a pupil attending an eligible program part time, revenue, excluding compensatory revenue, shall be reduced proportionately, according to the amount of time the pupil attends the program, and the payments to the eligible program and the contracting district shall be reduced accordingly. A pupil for whom payment is made according to this section may not be counted by any district for any purpose other than computation of general education revenue. If payment is made for a pupil under this subdivision, a district shall not reimburse a program under section 124D.69 for the same pupil. The basic skills revenue ~~shall be paid~~ generated by pupils attending the eligible program according to section 126C.10, subdivision 4, shall be paid to the eligible program.

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(b) The department must pay up to 100 percent of the revenue to the eligible program if there is an agreement to that effect between the school district and the eligible program.

(c) Notwithstanding paragraphs (a) and (b), for an eligible program that provides chemical treatment services to students, the department must pay 100 percent of the revenue to the eligible program.

Sec. 14. Minnesota Statutes 2004, section 124D.69, subdivision 1, is amended to read:

Subdivision 1. [AID.] If a pupil enrolls in an alternative program, eligible under section 124D.68, subdivision 3, paragraph (d), or subdivision 4, operated by a private organization that has contracted with a school district to provide educational services for eligible pupils under section 124D.68, subdivision 2, the district contracting with the private organization must reimburse the provider an amount equal to the sum of (1) at least 95 percent of the district's average general education less basic skills revenue per pupil unit times the number of pupil units for pupils attending the program., and (2) the amount of basic skills revenue ~~shall be paid~~ generated by pupils attending the program according to section 126C.10, subdivision 4. ~~Compensatory revenue must be allocated according to section 126C.15, subdivision 2.~~ For a pupil attending the program part time, the revenue paid to the program, excluding compensatory revenue, must be reduced proportionately, according to the amount of time the pupil attends the program, and revenue paid to the district shall be reduced accordingly. Pupils for whom a district provides reimbursement may not be counted by the district for any purpose other than computation of general education revenue. If payment is made to a district or program for a pupil under this section, the department must not make a payment for the same pupil under section 124D.68, subdivision 9. Notwithstanding sections 125A.15, 125A.51, and 125A.515, general education revenue for a student who receives educational services under this section shall be paid according to this section.

Sec. 15. Minnesota Statutes 2004, section 125A.51, is amended to read:

125A.51 [PLACEMENT OF CHILDREN WITHOUT DISABILITIES; EDUCATION AND TRANSPORTATION.]

The responsibility for providing instruction and transportation for a pupil without a disability who has a short-term or temporary physical or emotional illness or disability, as determined by the standards of the commissioner, and who is temporarily placed for care and treatment for that illness or disability, must be determined as provided in this section.

(a) The school district of residence of the pupil is the district in which the pupil's parent or guardian resides.

(b) When parental rights have been terminated by court order, the legal residence of a child placed in a residential or foster facility for care and treatment is the district in which the child resides.

(c) Before the placement of a pupil for care and treatment, the district of residence must be notified and provided an opportunity to participate in the placement decision. When an immediate emergency placement is necessary and time does not permit resident district participation in the placement decision, the district in which the pupil is temporarily placed, if different from the district of residence, must notify the district of residence of the emergency placement within 15 days of the placement.

(d) When a pupil without a disability is temporarily placed for care and treatment in a day program and the pupil continues to live within the district of residence during the care and treatment, the district of residence must provide instruction and necessary transportation to and from the treatment facility for the pupil. Transportation shall only be

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provided by the district during regular operating hours of the district. The district may provide the instruction at a school within the district of residence, at the pupil's residence, or in the case of a placement outside of the resident district, in the district in which the day treatment program is located by paying tuition to that district. The district of placement may contract with a facility to provide instruction by teachers licensed by the state Board of Teaching.

(e) When a pupil without a disability is temporarily placed in a residential program for care and treatment, the district in which the pupil is placed must provide instruction for the pupil and necessary transportation while the pupil is receiving instruction, and in the case of a placement outside of the district of residence, the nonresident district must bill the district of residence for the actual cost of providing the instruction for the regular school year and for summer school, excluding transportation costs.

(f) Notwithstanding paragraph (e), if the pupil is homeless and placed in a public or private homeless shelter, then the district that enrolls the pupil under section 127A.47, subdivision 2, shall provide the transportation, unless the district that enrolls the pupil and the district in which the pupil is temporarily placed agree that the district in which the pupil is temporarily placed shall provide transportation. When a pupil without a disability is temporarily placed in a residential program outside the district of residence, the administrator of the court placing the pupil must send timely written notice of the placement to the district of residence. The district of placement may contract with a residential facility to provide instruction by teachers licensed by the state Board of Teaching. For purposes of this section, the state correctional facilities operated on a fee-for-service basis are considered to be residential programs for care and treatment.

~~(f)~~ (g) The district of residence must include the pupil in its residence count of pupil units and pay tuition as provided in section 123A.488 to the district providing the instruction. Transportation costs must be paid by the district providing the transportation and the state must pay transportation aid to that district. For purposes of computing state transportation aid, pupils governed by this subdivision must be included in the disabled transportation category if the pupils cannot be transported on a regular school bus route without special accommodations.

Sec. 16. Minnesota Statutes 2004, section 126C.01, subdivision 11, is amended to read:

Subd. 11. [NET ~~UNAPPROPRIATED OPERATING~~ UNRESERVED GENERAL FUND BALANCE.] "Net ~~unappropriated operating~~ unreserved general fund balance" means the sum of the unreserved general fund balances in the general, food service, and community service funds minus the balances reserved for statutory operating debt reduction, bus purchase, severance pay, taconite, unemployment benefits, maintenance levy reduction, operating capital, disabled access, health and safety, balance and encumbrances, computed as of June 30 each year.

Sec. 17. Minnesota Statutes 2004, section 126C.05, is amended by adding a subdivision to read:

Subd. 20. [PROJECT-BASED AVERAGE DAILY MEMBERSHIP.] (a) To receive general education revenue for a pupil enrolled in a public school with a project-based program, a school must meet the requirements in this paragraph. The school must:

(1) register with the commissioner as a project-based program by May 30 of the preceding fiscal year;

(2) provide a minimum teacher contact of no less than one hour per week per project-based credit for each pupil;

(3) maintain a record system that shows when each credit or portion thereof was reported for membership for each pupil; and

(4) report pupil membership consistent with paragraph (b).

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(b) The commissioner must develop a formula for reporting pupil membership to compute average daily membership for each registered project-based school. Average daily membership for a pupil in a registered project-based program is the lesser of:

(1) 1.0; or

(2) the ratio of (i) the number of membership hours generated by project-based credits completed during the school year plus membership hours generated by credits completed in a seat-based setting to (ii) the annual required instructional hours at that grade level. Membership hours for a partially completed project-based credit must be prorated.

Sec. 18. Minnesota Statutes 2004, section 126C.10, subdivision 1, is amended to read:

Subdivision 1. [GENERAL EDUCATION REVENUE.] (a) For fiscal year 2003, the general education revenue for each district equals the sum of the district's basic revenue, basic skills revenue, training and experience revenue, secondary sparsity revenue, elementary sparsity revenue, transportation sparsity revenue, total operating capital revenue, and equity revenue.

~~(b)~~ For fiscal year ~~2004~~ 2006 and later, the general education revenue for each district equals the sum of the district's basic revenue, extended time revenue, gifted and talented revenue, basic skills revenue, training and experience revenue, secondary sparsity revenue, elementary sparsity revenue, transportation sparsity revenue, total operating capital revenue, equity revenue, alternative compensation revenue, and transition revenue.

[EFFECTIVE DATE.] This section is effective for revenue for fiscal year 2006.

Sec. 19. Minnesota Statutes 2004, section 126C.10, subdivision 2, is amended to read:

Subd. 2. [BASIC REVENUE.] The basic revenue for each district equals the formula allowance times the adjusted marginal cost pupil units for the school year. The formula allowance for fiscal year ~~2001~~ 2006 is ~~$3,964. The formula allowance for fiscal year 2002 is $4,068. The formula allowance for fiscal year 2003 and subsequent years is $4,601~~ $4,740. The formula allowance for fiscal year 2007 and later is $4,885.

Sec. 20. Minnesota Statutes 2004, section 126C.10, is amended by adding a subdivision to read:

Subd. 2b. [GIFTED AND TALENTED REVENUE.] Gifted and talented revenue for each district equals $15 times the district's adjusted marginal cost pupil units. For fiscal year 2006 only, a district is eligible for start-up revenue equal to $3 times the adjusted marginal cost pupil units for that year. A school district must reserve gifted and talented revenue and, consistent with section 120B.15, must spend the revenue only to:

(1) identify gifted and talented students;

(2) provide education programs for gifted and talented students; or

(3) provide staff development to prepare teachers to best meet the unique needs of gifted and talented students.

[EFFECTIVE DATE.] This section is effective for revenue for fiscal year 2006 and later.

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Sec. 21. Minnesota Statutes 2004, section 126C.10, subdivision 3, is amended to read:

Subd. 3. [COMPENSATORY EDUCATION REVENUE.] (a) For fiscal year 2006 and later, the compensatory education revenue for each building in the district equals ~~the formula allowance minus $415~~ $4,186 times the compensation revenue pupil units computed according to section 126C.05, subdivision 3. Revenue shall be paid to the district and must be allocated according to section 126C.15, subdivision 2.

(b) When the district contracting with an alternative program under section 124D.69 changes prior to the start of a school year, the compensatory revenue generated by pupils attending the program shall be paid to the district contracting with the alternative program for the current school year, and shall not be paid to the district contracting with the alternative program for the prior school year.

(c) When the fiscal agent district for an area learning center changes prior to the start of a school year, the compensatory revenue shall be paid to the fiscal agent district for the current school year, and shall not be paid to the fiscal agent district for the prior school year.

Sec. 22. Minnesota Statutes 2004, section 126C.10, subdivision 6, is amended to read:

Subd. 6. [DEFINITIONS.] The definitions in this subdivision apply only to subdivisions 7 and 8.

(a) "High school" means a secondary school that has pupils enrolled in at least the 10th, 11th, and 12th grades. If there is no secondary school in the district that has pupils enrolled in at least the 10th, 11th, and 12th grades, and the school is at least 19 miles from the next nearest school, the commissioner must designate one school in the district as a high school for the purposes of this section.

(b) "Secondary average daily membership" means, for a district that has only one high school, the average daily membership of pupils served in grades 7 through 12. For a district that has more than one high school, "secondary average daily membership" for each high school means the product of the average daily membership of pupils served in grades 7 through 12 in the high school, times the ratio of six to the number of grades in the high school.

(c) "Attendance area" means the total surface area of the district, in square miles, divided by the number of high schools in the district. For a district that does not operate a high school and is less than 19 miles from the nearest operating high school, the attendance area equals zero.

(d) "Isolation index" for a high school means the square root of 55 percent of the attendance area plus the distance in miles, according to the usually traveled routes, between the high school and the nearest high school. For a district in which there is located land defined in section 84A.01, 84A.20, or 84A.31, the distance in miles is the sum of:

(1) the square root of one-half of the attendance area; and

(2) the distance from the border of the district to the nearest high school.

(e) "Qualifying high school" means a high school that has an isolation index greater than 23 and that has secondary average daily membership of less than 400.

(f) "Qualifying elementary school" means an elementary school that is located 19 miles or more from the nearest elementary school or from the nearest elementary school within the district and, in either case, has an elementary average daily membership of an average of 20 or fewer per grade.

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(g) "Elementary average daily membership" means, for a district that has only one elementary school, the average daily membership of pupils served in kindergarten through grade 6. For a district that has more than one elementary school, "average daily membership" for each school means the average daily membership of pupils served in kindergarten through grade 6 multiplied by the ratio of seven to the number of grades in the elementary school.

(h) "Sparsity allowance" means $4,740 for fiscal year 2006 and $4,885 for fiscal year 2007 and later.

Sec. 23. Minnesota Statutes 2004, section 126C.10, subdivision 7, is amended to read:

Subd. 7. [SECONDARY SPARSITY REVENUE.] (a) A district's secondary sparsity revenue for a school year equals the sum of the results of the following calculation for each qualifying high school in the district:

(1) the ~~formula~~ sparsity allowance for the school year, multiplied by

(2) the secondary average daily membership of pupils served in the high school, multiplied by

(3) the quotient obtained by dividing 400 minus the secondary average daily membership by 400 plus the secondary daily membership, multiplied by

(4) the lesser of 1.5 or the quotient obtained by dividing the isolation index minus 23 by ten.

(b) A newly formed district that is the result of districts combining under the cooperation and combination program or consolidating under section 123A.48 must receive secondary sparsity revenue equal to the greater of: (1) the amount calculated under paragraph (a) for the combined district; or (2) the sum of the amounts of secondary sparsity revenue the former districts had in the year prior to consolidation, increased for any subsequent changes in the secondary sparsity formula.

Sec. 24. Minnesota Statutes 2004, section 126C.10, subdivision 8, is amended to read:

Subd. 8. [ELEMENTARY SPARSITY REVENUE.] A district's elementary sparsity revenue equals the sum of the following amounts for each qualifying elementary school in the district:

(1) the ~~formula~~ sparsity allowance for the year, multiplied by

(2) the elementary average daily membership of pupils served in the school, multiplied by

(3) the quotient obtained by dividing 140 minus the elementary average daily membership by 140 plus the average daily membership.

Sec. 25. Minnesota Statutes 2004, section 126C.10, subdivision 13, is amended to read:

Subd. 13. [TOTAL OPERATING CAPITAL REVENUE.] (a) For fiscal year ~~2000~~ 2006 and thereafter, total operating capital revenue for a district equals the amount determined under paragraph (b) or (c), plus ~~$73~~ $93 times the adjusted marginal cost pupil units for the school year. The revenue must be placed in a reserved account in the general fund and may only be used according to ~~paragraph (d) or~~ subdivision 14.

(b) For fiscal years ~~2000~~ 2006 and later, capital revenue for a district equals $100 times the district's maintenance cost index times its adjusted marginal cost pupil units for the school year.

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(c) ~~For fiscal years 2000 and later,~~ The revenue for a district that operates a program under section 124D.128, is increased by an amount equal to $30 times the number of marginal cost pupil units served at the site where the program is implemented.

(d) For fiscal years 2001, 2002, and 2003, the district must reserve an amount equal to $5 per adjusted marginal cost pupil unit for telecommunication access costs. Reserve revenue under this paragraph must first be used to pay for ongoing or recurring telecommunication access costs, including access to data and video connections, including Internet access. Any revenue remaining after covering all ongoing or recurring access costs may be used for computer hardware or equipment.

Sec. 26. Minnesota Statutes 2004, section 126C.10, subdivision 13a, is amended to read:

Subd. 13a. [OPERATING CAPITAL LEVY.] To obtain operating capital revenue for fiscal year ~~2005~~ 2007 and later, a district may levy an amount not more than the product of its operating capital revenue for the fiscal year times the lesser of one or the ratio of its adjusted net tax capacity per adjusted marginal cost pupil unit to ~~$22,222~~ $22,700.

[EFFECTIVE DATE.] This section is effective for revenue for fiscal year 2007.

Sec. 27. Minnesota Statutes 2004, section 126C.10, subdivision 17, is amended to read:

Subd. 17. [TRANSPORTATION SPARSITY DEFINITIONS.] The definitions in this subdivision apply to subdivisions 18 and 19.

(a) "Sparsity index" for a district means the greater of .2 or the ratio of the square mile area of the district to the resident pupil units of the district.

(b) "Density index" for a district means the ratio of the square mile area of the district to the resident pupil units of the district. However, the density index for a district cannot be greater than .2 or less than .005.

Sec. 28. Minnesota Statutes 2004, section 126C.10, subdivision 18, is amended to read:

Subd. 18. [TRANSPORTATION SPARSITY REVENUE ALLOWANCE.] (a) A district's transportation sparsity allowance equals the greater of zero or the result of the following computation:

~~(i)~~ (1) Multiply the ~~formula~~ transportation allowance ~~according to subdivision 2,~~ by .1469.

~~(ii)~~ (2) Multiply the result in clause ~~(i)~~ (1) by the district's sparsity index raised to the 26/100 power.

~~(iii)~~ (3) Multiply the result in clause ~~(ii)~~ (2) by the district's density index raised to the 13/100 power.

~~(iv)~~ (4) Multiply the ~~formula~~ transportation allowance ~~according to subdivision 2,~~ by .0485.

~~(v)~~ (5) Subtract the result in clause ~~(iv)~~ (4) from the result in clause ~~(iii)~~ (3).

(b) Transportation sparsity revenue is equal to the transportation sparsity allowance times the adjusted marginal cost pupil units times 1.08.

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Sec. 29. Minnesota Statutes 2004, section 126C.10, subdivision 24, is amended to read:

Subd. 24. [EQUITY REVENUE.] (a) A school district qualifies for equity revenue if:

(1) the school district's adjusted marginal cost pupil unit amount of basic revenue, supplemental revenue, transition revenue, and referendum revenue is less than the value of the school district at or immediately above the 95th percentile of school districts in its equity region for those revenue categories; and

(2) the school district's administrative offices are not located in a city of the first class on July 1, 1999.

(b) Equity revenue for a qualifying district that receives referendum revenue under section 126C.17, subdivision 4, equals the product of (1) the district's adjusted marginal cost pupil units for that year; times (2) the sum of (i) $13, plus (ii) $75, times the school district's equity index computed under subdivision 27.

(c) Equity revenue for a qualifying district that does not receive referendum revenue under section 126C.17, subdivision 4, equals the product of the district's adjusted marginal cost pupil units for that year times $13.

(d) A school district's equity revenue is increased by the greater of zero or an amount equal to the district's resident marginal pupil units times the difference between ten percent of the statewide average amount of referendum revenue per resident marginal cost pupil unit for that year and the district's referendum revenue per resident marginal cost pupil unit. A school district's revenue under this paragraph must not exceed $100,000 for that year.

[EFFECTIVE DATE.] This section is effective for revenue for fiscal year 2006.

Sec. 30. Minnesota Statutes 2004, section 126C.10, subdivision 31, is amended to read:

Subd. 31. [TRANSITION REVENUE.] (a) A district's transition allowance ~~for fiscal years 2004 through 2008~~ equals the greater of zero or the product of the ratio of the number of adjusted marginal cost pupil units the district would have counted for fiscal year 2004 under Minnesota Statutes 2002 to the district's adjusted marginal cost pupil units for fiscal year 2004, times the difference between: (1) the lesser of the district's general education revenue per adjusted marginal cost pupil unit for fiscal year 2003 or the amount of general education revenue the district would have received per adjusted marginal cost pupil unit for fiscal year 2004 according to Minnesota Statutes 2002, and (2) the district's general education revenue for fiscal year 2004 excluding transition revenue divided by the number of adjusted marginal cost pupil units the district would have counted for fiscal year 2004 under Minnesota Statutes 2002.

~~A district's transition allowance for fiscal year 2009 and later is zero.~~

(b) A district's transition revenue for fiscal year ~~2004 and later~~ 2006 and later equals the sum of (1) the product of the district's transition allowance times the district's adjusted marginal cost pupil units. plus (2) the amount of referendum revenue under section 126C.17 and general education revenue, excluding transition revenue, for fiscal year 2004 attributable to pupils four or five years of age on September 1, 2003, enrolled in a prekindergarten program implemented by the district before July 1, 2003, and reported as kindergarten pupils under section 126C.05, subdivision 1, for fiscal year 2004, plus (3) the amount of compensatory education revenue under subdivision 3 for fiscal year 2005 attributable to pupils four years of age on September 1, 2003, enrolled in a prekindergarten program implemented by the district before July 1, 2003, and reported as kindergarten pupils under section 126C.05, subdivision 1, for fiscal year 2004.

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Sec. 31. Minnesota Statutes 2004, section 126C.10, is amended by adding a subdivision to read:

Subd. 34. [BASIC ALTERNATIVE COMPENSATION AID.] (a) For fiscal year 2006, the basic alternative compensation aid for a district or charter school with an alternative compensation plan approved under section 122A.415 equals the alternative compensation revenue according to section 122A.415, subdivision 1. The basic alternative compensation aid for a charter school with an approved alternative compensation plan under section 122A.415, subdivision 1, paragraph (c), equals $260 times the number of pupils enrolled in the school on October 1 of the previous school year, or on October 1 of the current fiscal year for a charter school in the first year of operation.

(b) For fiscal year 2007 and later, the basic alternative compensation aid for a district with an alternative compensation plan approved under section 122A.415 equals 73.1 percent of the alternative compensation revenue according to section 122A.415, subdivision 1. The basic alternative compensation aid for a charter school with an alternative compensation plan approved under section 122A.415 equals $260 times the number of pupils enrolled in the school on October 1 of the previous fiscal year, or on October 1 of the current fiscal year for a charter school in the first year of operation, times the ratio of the sum of the alternative compensation aid and alternative compensation levy for all participating school districts to the maximum alternative compensation revenue for those districts according to section 122A.415, subdivision 1.

(c) Notwithstanding paragraphs (a) and (b) and section 122A.415, subdivision 1, the state total basic alternative compensation aid entitlement must not exceed $19,329,000 for fiscal year 2006 and $75,636,000 for fiscal year 2007 and later. The commissioner must limit the amount of alternative compensation aid approved under section 122A.415 so as not to exceed these limits.

Sec. 32. Minnesota Statutes 2004, section 126C.10, is amended by adding a subdivision to read:

Subd. 35. [ALTERNATIVE COMPENSATION LEVY.] For fiscal year 2007 and later, the alternative compensation levy for a district receiving basic alternative compensation aid equals the product of (1) the difference between the district's alternative compensation revenue and the district's basic alternative compensation aid times (2) the lesser of one or the ratio of the district's adjusted net tax capacity per adjusted pupil unit to $5,913.

Sec. 33. Minnesota Statutes 2004, section 126C.10, is amended by adding a subdivision to read:

Subd. 36. [ALTERNATIVE COMPENSATION AID.] (a) For fiscal year 2007 and later, a district's alternative compensation equalization aid equals the district's alternative compensation revenue minus the district's basic alternative compensation aid minus the district's alternative compensation levy. If a district does not levy the entire amount permitted, the alternative compensation equalization aid must be reduced in proportion to the actual amount levied.

(b) A district's alternative compensation aid equals the sum of the district's basic alternative compensation aid and the district's alternative compensation equalization aid.

Sec. 34. Minnesota Statutes 2004, section 126C.13, subdivision 4, is amended to read:

Subd. 4. [GENERAL EDUCATION AID.] (a) ~~For fiscal year 2004, a district's general education aid is the sum of the following amounts:~~

~~(1) general education revenue;~~

~~(2) shared time aid according to section 126C.01, subdivision 7;~~

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~~(3) referendum aid according to section 126C.17; and~~

~~(4) online learning aid according to section 126C.24.~~

~~(b)~~ For fiscal year ~~2005 and later~~ 2006, a district's general education aid is the sum of the following amounts:

(1) general education revenue, excluding equity revenue, total operating capital, and transition revenue;

(2) operating capital aid according to section 126C.10, subdivision 13b;

(3) equity aid according to section 126C.10, subdivision 30;

(4) transition aid according to section 126C.10, subdivision 33;

(5) shared time aid according to section 126C.01, subdivision 7;

(6) referendum aid according to section 126C.17; and

(7) online learning aid according to section 126C.24.

(b) For fiscal year 2007 and later, a district's general education aid is the sum of the following amounts:

(1) general education revenue, excluding equity revenue, total operating capital revenue, alternative compensation revenue, and transition revenue;

(2) operating capital aid according to section 126C.10, subdivision 13b;

(3) equity aid according to section 126C.10, subdivision 30;

(4) alternative compensation aid according to section 126C.10, subdivision 36;

(5) transition aid according to section 126C.10, subdivision 33;

(6) shared time aid according to section 126C.01, subdivision 7;

(7) referendum aid according to section 126C.17; and

(8) online learning aid according to section 126C.24.

Sec. 35. Minnesota Statutes 2004, section 126C.15, subdivision 1, is amended to read:

Subdivision 1. [USE OF THE REVENUE.] Except for revenue allocated for prekindergarten programs under subdivision 2, paragraph (c), the basic skills revenue under section 126C.10, subdivision 4, must be reserved and used to meet the educational needs of pupils who enroll under-prepared to learn and whose progress toward meeting state or local content or performance standards is below the level that is appropriate for learners of their age. Any of the following may be provided to meet these learners' needs:

(1) direct instructional services under the assurance of mastery program according to section 124D.66;

(2) remedial instruction in reading, language arts, mathematics, other content areas, or study skills to improve the achievement level of these learners;

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(3) additional teachers and teacher aides to provide more individualized instruction to these learners through individual tutoring, lower instructor-to-learner ratios, or team teaching;

(4) a longer school day or week during the regular school year or through a summer program that may be offered directly by the site or under a performance-based contract with a community-based organization;

(5) comprehensive and ongoing staff development consistent with district and site plans according to section 122A.60, for teachers, teacher aides, principals, and other personnel to improve their ability to identify the needs of these learners and provide appropriate remediation, intervention, accommodations, or modifications;

(6) instructional materials and technology appropriate for meeting the individual needs of these learners;

(7) programs to reduce truancy, encourage completion of high school, enhance self-concept, provide health services, provide nutrition services, provide a safe and secure learning environment, provide coordination for pupils receiving services from other governmental agencies, provide psychological services to determine the level of social, emotional, cognitive, and intellectual development, and provide counseling services, guidance services, and social work services;

(8) bilingual programs, bicultural programs, and programs for learners of limited English proficiency;

(9) all day kindergarten;

(10) extended school day and extended school year programs; and

(11) substantial parent involvement in developing and implementing remedial education or intervention plans for a learner, including learning contracts between the school, the learner, and the parent that establish achievement goals and responsibilities of the learner and the learner's parent or guardian.

Sec. 36. Minnesota Statutes 2004, section 126C.15, subdivision 2, is amended to read:

Subd. 2. [BUILDING ALLOCATION.] (a) A district must allocate its compensatory revenue to each school building in the district where the children who have generated the revenue are served unless the school district has received permission under section 63 to allocate compensatory revenue according to student performance measures developed by the school board.

(b) Notwithstanding paragraph (a), a district may allocate up to five percent of the amount of compensatory revenue that the district ~~received during the previous fiscal year~~ receives to school sites according to a plan adopted by the school board.

(c) Notwithstanding paragraph (a), a district may allocate up to ten percent of the amount of compensatory revenue the district receives to support prekindergarten programs under subdivision 2a.

(d) For the purposes of this section and section 126C.05, subdivision 3, "building" means education site as defined in section 123B.04, subdivision 1.

~~(d)~~ (e) If the pupil is served at a site other than one owned and operated by the district, the revenue shall be paid to the district and used for services for pupils who generate the revenue.

[EFFECTIVE DATE.] This section is effective July 1, 2005, for revenue for fiscal year 2006.

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Sec. 37. Minnesota Statutes 2004, section 126C.15, subdivision 3, is amended to read:

Subd. 3. [RECOMMENDATION.] A school site decision-making team, as defined in section 123B.04, subdivision 2, paragraph (a), or the instruction and curriculum advisory committee under section 120B.11, if the school has no school site decision team, shall recommend how the compensatory education revenue will be used to carry out the purpose of this section. A school district that has received permission under section 63 to allocate compensatory revenue according to school performance measures shall share its plan for the distribution of compensatory revenue with the school site decision team.

[EFFECTIVE DATE.] This section is effective July 1, 2005, for revenue for fiscal year 2006.

Sec. 38. Minnesota Statutes 2004, section 126C.17, subdivision 2, is amended to read:

Subd. 2. [REFERENDUM ALLOWANCE LIMIT.] (a) ~~Notwithstanding subdivision 1, for fiscal year 2003, a district's referendum allowance must not exceed the greater of:~~

~~(1) the sum of a district's referendum allowance for fiscal year 1994 times 1.162 plus its referendum conversion allowance for fiscal year 2003, minus $415;~~

~~(2) 18.2 percent of the formula allowance;~~

(3) for a newly reorganized district created on July 1, 2002, the referendum revenue authority for each reorganizing district in the year preceding reorganization divided by its resident marginal cost pupil units for the year preceding reorganization, minus $415; or

(4) for a newly reorganized district created after July 1, 2002, the referendum revenue authority for each reorganizing district in the year preceding reorganization divided by its resident marginal cost pupil units for the year preceding reorganization.

~~(b)~~ Notwithstanding subdivision 1, for fiscal year ~~2004~~ 2007 and later, a district's referendum allowance must not exceed the greater of:

(1) the sum of: (i) a district's referendum allowance for fiscal year 1994 times 1.177 times the annual inflationary increase as calculated under paragraph (c) plus (ii) its referendum conversion allowance for fiscal year 2003, minus (iii) ~~$415~~ $115;

(2) the greater of (i) ~~18.6~~ 28 percent of the formula allowance or (ii) ~~$855.79~~ $1,368 times the annual inflationary increase as calculated under paragraph (c); or

(3) for a newly reorganized district created after July 1, ~~2002~~ 2006, the referendum revenue authority for each reorganizing district in the year preceding reorganization divided by its resident marginal cost pupil units for the year preceding reorganization.

~~(c)~~ (b) For purposes of this subdivision, for fiscal year 2005 and later, "inflationary increase" means one plus the percentage change in the Consumer Price Index for urban consumers, as prepared by the United States Bureau of Labor Standards, for the current fiscal year to fiscal year 2004. For fiscal years 2009 and later, for purposes of paragraph (b), clause (1), the inflationary increase equals the inflationary increase for fiscal year 2008 plus one-fourth of the percentage increase in the formula allowance for that year compared with the formula allowance for fiscal year 2008.

[EFFECTIVE DATE.] This section is effective for revenue for fiscal year 2007.

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Sec. 39. Minnesota Statutes 2004, section 126C.17, subdivision 5, is amended to read:

Subd. 5. [REFERENDUM EQUALIZATION REVENUE.] (a) For fiscal year 2003 and later, a district's referendum equalization revenue equals the sum of the first tier referendum equalization revenue and the second tier referendum equalization revenue.

(b) A district's first tier referendum equalization revenue equals the district's first tier referendum equalization allowance times the district's resident marginal cost pupil units for that year.

(c) For fiscal years 2003 and 2004, a district's first tier referendum equalization allowance equals the lesser of the district's referendum allowance under subdivision 1 or $126. For fiscal year 2005, a district's first tier referendum equalization allowance equals the lesser of the district's referendum allowance under subdivision 1 or $405. For fiscal year 2006 ~~and later~~, a district's first tier referendum equalization allowance equals the lesser of the district's referendum allowance under subdivision 1 or $500. For fiscal year 2007 and later, a district's first tier referendum equalization allowance equals the lesser of the district's referendum allowance under subdivision 1 or $600.

(d) A district's second tier referendum equalization revenue equals the district's second tier referendum equalization allowance times the district's resident marginal cost pupil units for that year.

(e) For fiscal year 2006, a district's second tier referendum equalization allowance equals the lesser of the district's referendum allowance under subdivision 1 or 18.6 percent of the formula allowance, minus the district's first tier referendum equalization allowance. For fiscal year 2007 and later, a district's second tier referendum equalization allowance equals the lesser of the district's referendum allowance under subdivision 1 or 28 percent of the formula allowance, minus the district's first tier referendum equalization allowance.

(f) Notwithstanding paragraph (e), the second tier referendum allowance for a district qualifying for secondary sparsity revenue under section 126C.10, subdivision 7, or elementary sparsity revenue under section 126C.10, subdivision 8, equals the district's referendum allowance under subdivision 1 minus the district's first tier referendum equalization allowance.

Sec. 40. Minnesota Statutes 2004, section 126C.17, subdivision 7, is amended to read:

Subd. 7. [REFERENDUM EQUALIZATION AID.] (a) A district's referendum equalization aid equals the difference between its referendum equalization revenue and levy.

(b) If a district's actual levy for first or second tier referendum equalization revenue is less than its maximum levy limit for that tier, aid shall be proportionately reduced.

(c) Notwithstanding paragraph (a), the referendum equalization aid for a district, where the referendum equalization aid under paragraph (a) exceeds 90 percent of the referendum revenue, must not exceed ~~18.6~~ 28 percent of the formula allowance times the district's resident marginal cost pupil units. A district's referendum levy is increased by the amount of any reduction in referendum aid under this paragraph.

[EFFECTIVE DATE.] This section is effective for revenue for fiscal year 2007.

Sec. 41. Minnesota Statutes 2004, section 126C.17, subdivision 9, is amended to read:

Subd. 9. [REFERENDUM REVENUE.] (a) The revenue authorized by section 126C.10, subdivision 1, may be increased in the amount approved by the voters of the district at a referendum called for the purpose. The referendum may be called by the board or shall be called by the board upon written petition of qualified voters of the district. The referendum must be conducted one or two calendar years before the increased levy authority, if

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approved, first becomes payable. Only one election to approve an increase may be held in a calendar year. Unless the referendum is conducted by mail under paragraph (g), the referendum must be held on the first Tuesday after the first Monday in November. The ballot must state the maximum amount of the increased revenue per resident marginal cost pupil unit, the estimated referendum tax rate as a percentage of referendum market value in the first year it is to be levied, and that the revenue must be used to finance school operations. The ballot may state a schedule, determined by the board, of increased revenue per resident marginal cost pupil unit that differs from year to year over the number of years for which the increased revenue is authorized. If the ballot contains a schedule showing different amounts, it must also indicate the estimated referendum tax rate as a percent of referendum market value for the amount specified for the first year and for the maximum amount specified in the schedule. The ballot may state that existing referendum levy authority is expiring. In this case, the ballot may also compare the proposed levy authority to the existing expiring levy authority, and express the proposed increase as the amount, if any, over the expiring referendum levy authority. The ballot must designate the specific number of years, not to exceed ten, for which the referendum authorization applies. The ballot, including a ballot on the question to revoke or reduce the increased revenue amount under paragraph (c), must abbreviate the term "per resident marginal cost pupil unit" as "per pupil." The notice required under section 275.60 may be modified to read, in cases of renewing existing levies:

"BY VOTING "YES" ON THIS BALLOT QUESTION, YOU MAY BE VOTING FOR A PROPERTY TAX INCREASE."

The ballot may contain a textual portion with the information required in this subdivision and a question stating substantially the following:

"Shall the increase in the revenue proposed by (petition to) the board of ........., School District No. .., be approved?"

If approved, an amount equal to the approved revenue per resident marginal cost pupil unit times the resident marginal cost pupil units for the school year beginning in the year after the levy is certified shall be authorized for certification for the number of years approved, if applicable, or until revoked or reduced by the voters of the district at a subsequent referendum.

(b) The board must prepare and deliver by first class mail at least 15 days but no more than 30 days before the day of the referendum to each taxpayer a notice of the referendum and the proposed revenue increase. The board need not mail more than one notice to any taxpayer. For the purpose of giving mailed notice under this subdivision, owners must be those shown to be owners on the records of the county auditor or, in any county where tax statements are mailed by the county treasurer, on the records of the county treasurer. Every property owner whose name does not appear on the records of the county auditor or the county treasurer is deemed to have waived this mailed notice unless the owner has requested in writing that the county auditor or county treasurer, as the case may be, include the name on the records for this purpose. The notice must project the anticipated amount of tax increase in annual dollars and annual percentage for typical residential homesteads, agricultural homesteads, apartments, and commercial-industrial property within the school district.

The notice for a referendum may state that an existing referendum levy is expiring and project the anticipated amount of increase over the existing referendum levy in the first year, if any, in annual dollars and annual percentage for typical residential homesteads, agricultural homesteads, apartments, and commercial-industrial property within the district.

The notice must include the following statement: "Passage of this referendum will result in an increase in your property taxes." However, in cases of renewing existing levies, the notice may include the following statement: "Passage of this referendum may result in an increase in your property taxes."

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(c) A referendum on the question of revoking or reducing the increased revenue amount authorized pursuant to paragraph (a) may be called by the board and shall be called by the board upon the written petition of qualified voters of the district. A referendum to revoke or reduce the revenue amount must state the amount per resident marginal cost pupil unit by which the authority is to be reduced. Revenue authority approved by the voters of the district pursuant to paragraph (a) must be available to the school district at least once before it is subject to a referendum on its revocation or reduction for subsequent years. Only one revocation or reduction referendum may be held to revoke or reduce referendum revenue for any specific year and for years thereafter.

(d) A petition authorized by paragraph (a) or (c) is effective if signed by a number of qualified voters in excess of 15 percent of the registered voters of the district on the day the petition is filed with the board. A referendum invoked by petition must be held on the date specified in paragraph (a).

(e) The approval of 50 percent plus one of those voting on the question is required to pass a referendum authorized by this subdivision.

(f) At least 15 days before the day of the referendum, the district must submit a copy of the notice required under paragraph (b) to the commissioner and to the county auditor of each county in which the district is located. Within 15 days after the results of the referendum have been certified by the board, or in the case of a recount, the certification of the results of the recount by the canvassing board, the district must notify the commissioner of the results of the referendum.

Sec. 42. Minnesota Statutes 2004, section 126C.17, subdivision 13, is amended to read:

Subd. 13. [REFERENDUM CONVERSION ALLOWANCE.] ~~(a)~~ A school district that received supplemental or transition revenue in fiscal year 2002 may convert its supplemental revenue conversion allowance and transition revenue conversion allowance to additional referendum allowance under subdivision 1 for fiscal year 2003 and thereafter. A majority of the school board must approve the conversion at a public meeting before November 1, 2001. For a district with other referendum authority, the referendum conversion allowance approved by the board continues until the portion of the district's other referendum authority with the earliest expiration date after June 30, 2006, expires. For a district with no other referendum authority, the referendum conversion allowance approved by the board continues until June 30, 2012.

(b) A school district that received transition revenue in fiscal year 2004 may convert all or part of its transition revenue to referendum revenue with voter approval in a referendum called for the purpose. The referendum must be held in accordance with subdivision 9, except that the ballot may state that existing transition revenue authority is being canceled or is expiring. In this case, the ballot shall compare the proposed referendum allowance to the canceled or expiring transition revenue allowance. For purposes of this comparison, the canceled or expiring transition revenue allowance per adjusted marginal cost pupil unit shall be converted to an allowance per resident marginal cost pupil unit based on the district's ratio of adjusted marginal cost pupil units to resident marginal cost pupil units for the preceding fiscal year. The referendum must be held on the first Tuesday after the first Monday in November. The notice required under section 275.60 may be modified to read: "BY VOTING 'YES' ON THIS BALLOT QUESTION, YOU MAY BE VOTING FOR A PROPERTY TAX INCREASE." Elections under this paragraph must be held in 2007 or earlier.

Sec. 43. Minnesota Statutes 2004, section 126C.21, subdivision 4, is amended to read:

Subd. 4. [TACONITE DEDUCTIONS.] (1) Notwithstanding any provisions of any other law to the contrary, the adjusted net tax capacity used in calculating general education aid may include only that property that is currently taxable in the district.

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~~(2)~~ For districts that ~~received payments~~ have revenue under sections 298.018; 298.225; 229.24 to 298.28, excluding 298.26 and 298.28, subdivision 4, paragraph (d); 298.34 to 298.39; 298.391 to 298.396; ~~and~~ 298.405; and 477A.15, or any law imposing a tax upon severed mineral values; ~~or recognized revenue under section 477A.15;~~, the general education aid must be reduced in the final adjustment payment by (1) the ~~difference between the dollar~~ amount of the ~~payments received~~ revenue recognized pursuant to those sections~~, or revenue recognized under section 477A.15 in~~ for the fiscal year to which the final adjustment is attributable ~~and~~, less (2) the amount that was calculated, pursuant to section 126C.48, subdivision 8, as a reduction of the levy attributable to the fiscal year to which the final adjustment is attributable. If the final adjustment of a district's general education aid for a fiscal year is a negative amount because of this ~~clause~~ subdivision, the next fiscal year's general education aid to that district must be reduced by this negative amount in the following manner: there must be withheld from each scheduled general education aid payment due the district in such fiscal year, 15 percent of the total negative amount, until the total negative amount has been withheld. The amount reduced from general education aid pursuant to this ~~clause~~ subdivision must ~~be recognized as~~ reduce revenue in the fiscal year to which the final adjustment payment is attributable.

[EFFECTIVE DATE.] This section is effective for revenue for fiscal year 2006.

Sec. 44. Minnesota Statutes 2004, section 126C.40, subdivision 1, is amended to read:

Subdivision 1. [TO LEASE BUILDING OR LAND.] (a) When an independent or a special school district or a group of independent or special school districts finds it economically advantageous to rent or lease a building or land for any instructional purposes or, for school storage or furniture repair, or for administrative space according to paragraph (j), and it determines that the operating capital revenue authorized under section 126C.10, subdivision 13, is insufficient for this purpose, it may apply to the commissioner for permission to make an additional capital expenditure levy for this purpose. An application for permission to levy under this subdivision must contain financial justification for the proposed levy, the terms and conditions of the proposed lease, and a description of the space to be leased and its proposed use.

(b) The criteria for approval of applications to levy under this subdivision must include: the reasonableness of the price, the appropriateness of the space to the proposed activity, the feasibility of transporting pupils to the leased building or land, conformity of the lease to the laws and rules of the state of Minnesota, and the appropriateness of the proposed lease to the space needs and the financial condition of the district. The commissioner must not authorize a levy under this subdivision in an amount greater than ~~90 percent of~~ the cost to the district of renting or leasing a building or land for approved purposes. The proceeds of this levy must not be used for custodial or other maintenance services. A district may not levy under this subdivision for the purpose of leasing or renting a district-owned building or site to itself.

(c) For agreements finalized after July 1, 1997, a district may not levy under this subdivision for the purpose of leasing: (1) a newly constructed building used primarily for regular kindergarten, elementary, or secondary instruction; or (2) a newly constructed building addition or additions used primarily for regular kindergarten, elementary, or secondary instruction that contains more than 20 percent of the square footage of the previously existing building.

(d) Notwithstanding paragraph (b), a district may levy under this subdivision for the purpose of leasing or renting a district-owned building or site to itself only if the amount is needed by the district to make payments required by a lease purchase agreement, installment purchase agreement, or other deferred payments agreement authorized by law, and the levy meets the requirements of paragraph (c). A levy authorized for a district by the commissioner under this paragraph may be in the amount needed by the district to make payments required by a lease purchase agreement, installment purchase agreement, or other deferred payments agreement authorized by law, provided that any agreement include a provision giving the school districts the right to terminate the agreement annually without penalty.

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(e) The total levy under this subdivision for a district for any year must not exceed ~~$90~~ $100 times the resident pupil units for the fiscal year to which the levy is attributable.

(f) For agreements for which a review and comment have been submitted to the Department of Education after April 1, 1998, the term "instructional purpose" as used in this subdivision excludes expenditures on stadiums.

(g) The commissioner of education may authorize a school district to exceed the limit in paragraph (e) if the school district petitions the commissioner for approval. The commissioner shall grant approval to a school district to exceed the limit in paragraph (e) for not more than five years if the district meets the following criteria:

(1) the school district has been experiencing pupil enrollment growth in the preceding five years;

(2) the purpose of the increased levy is in the long-term public interest;

(3) the purpose of the increased levy promotes colocation of government services; and

(4) the purpose of the increased levy is in the long-term interest of the district by avoiding over construction of school facilities.

(h) A school district that is a member of an intermediate school district may include in its authority under this section ~~90 percent of~~ the costs associated with leases of administrative and classroom space for intermediate school district programs. This authority must not exceed ~~$22.50~~ $25 times the adjusted marginal cost pupil units of the member districts. This authority is in addition to any other authority authorized under this section.

(i) In addition to the allowable capital levies in paragraph (a), a district that is a member of the "Technology and Information Education Systems" data processing joint board, that finds it economically advantageous to enter into a lease purchase agreement for a building for a group of school districts or special school districts for staff development purposes, may levy for its portion of lease costs attributed to the district within the total levy limit in paragraph (e).

(j) A school district may lease administrative space under this section if the district can demonstrate to the commissioner's satisfaction that the administrative space is less expensive than instructional space that the district would otherwise lease.

Sec. 45. Minnesota Statutes 2004, section 126C.43, subdivision 2, is amended to read:

Subd. 2. [PAYMENT TO UNEMPLOYMENT INSURANCE PROGRAM TRUST FUND BY STATE AND POLITICAL SUBDIVISIONS.] A district may levy ~~90 percent of~~ the amount ~~exceeding $10 times the district's adjusted marginal cost pupil units for the fiscal year ending in the year before the year the levy is certified~~ necessary (i) to pay the district's obligations under section 268.052, subdivision 1, and (ii) to pay for job placement services offered to employees who may become eligible for benefits pursuant to section 268.085 for the fiscal year the levy is certified.

[EFFECTIVE DATE.] This section is effective for taxes payable in 2006.

Sec. 46. Minnesota Statutes 2004, section 126C.43, subdivision 3, is amended to read:

Subd. 3. [TAX LEVY FOR JUDGMENT.] A district may levy ~~90 percent of~~ the amount ~~exceeding $10 times the district's adjusted marginal cost pupil units for the fiscal year ending in the year before the year the levy is certified~~ necessary to pay judgments against the district under section 123B.25 that became final after the date the district certified its proposed levy in the previous year. With the approval of the commissioner, a district may spread

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this levy over a period not to exceed three years. Upon approval through the adoption of a resolution by each of an intermediate district's member school district boards, a member school district may include its proportionate share of the costs of a judgment against an intermediate school district that became final under section 123B.25 after the date that the earliest member school district certified its proposed levy in the previous year. With the approval of the commissioner, an intermediate school district member school district may spread this levy over a period not to exceed three years.

[EFFECTIVE DATE.] This section is effective for taxes payable in 2006.

Sec. 47. Minnesota Statutes 2004, section 126C.44, is amended to read:

126C.44 [SAFE SCHOOLS LEVY.]

Each district may make a levy on all taxable property located within the district for the purposes specified in this section. The maximum amount which may be levied for all costs under this section shall be equal to ~~$27~~ $30 multiplied by the district's adjusted marginal cost pupil units for the school year. The proceeds of the levy must be used for directly funding the following purposes or for reimbursing the cities and counties who contract with the district for the following purposes: (1) to pay the costs incurred for the salaries, benefits, and transportation costs of peace officers and sheriffs for liaison in services in the district's schools; (2) to pay the costs for a drug abuse prevention program as defined in section 609.101, subdivision 3, paragraph (e), in the elementary schools; (3) to pay the costs for a gang resistance education training curriculum in the district's schools; (4) to pay the costs for security in the district's schools and on school property; or (5) to pay the costs incurred for the salaries and benefits of school counselors; or (6) to pay the costs for other crime prevention, drug abuse, student and staff safety, and violence prevention measures taken by the school district. The district must initially attempt to contract for services to be provided by peace officers or sheriffs with the police department of each city or the sheriff's department of the county within the district containing the school receiving the services. If a local police department or a county sheriff's department does not wish to provide the necessary services, the district may contract for these services with any other police or sheriff's department located entirely or partially within the school district's boundaries. The levy authorized under this section is not included in determining the school district's levy limitations.

[EFFECTIVE DATE.] This section is effective for taxes payable in 2006.

Sec. 48. Minnesota Statutes 2004, section 126C.48, is amended by adding a subdivision to read:

Subd. 9. [REVERSE REFERENDUM.] (a) At the time a district certifies its proposed levy to the county auditor according to section 275.065, subdivision 1, the school board must certify the amount of deferred maintenance revenue per pupil unit that the board intends to raise. If the board certifies an amount for fiscal year 2007, the amount certified is subject to reverse referendum under paragraphs (b) and (c). If the amount certified for fiscal year 2008 and later exceeds the amount certified for the previous fiscal year, excluding any amount disallowed by reverse referendum, the increase over the amount certified for the previous fiscal year excluding any amount disallowed by reverse referendum, is subject to reverse referendum under paragraphs (b) and (c).

(b) If a district certifies revenue under paragraph (a) that is subject to reverse referendum, the district must publish notice of the intended increase subject to reverse referendum by October 10. The notice must include the amount of the revenue increase per adjusted pupil unit and the property tax increase in annual dollars for typical residential homesteads, agricultural homesteads, apartments, and commercial-industrial property within the district.

(c) Revenue tentatively authorized by the board under this subdivision becomes authorized unless a petition signed by more than 15 percent of the registered voters of the district is filed with the school board within 30 days of the publication of notice. The percentage is to be determined with reference to the number of registered voters in the

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district on the last day before the petition is filed with the board. The petition must call for a referendum on the question of whether to increase the revenue. The approval of 50 percent plus one of those voting on the question is required to pass a referendum authorized by this section. The referendum must be held on the last Tuesday in January.

(d) The ballot must state that the board proposes to increase its deferred maintenance revenue, the maximum amount of the increased revenue per pupil, and the estimated tax rate as a percentage of net tax capacity in the first year it is to be levied. The ballot shall contain a textual portion with the information required in this paragraph and a question stating substantially the following: "Shall the increase in revenue proposed by the Board of ......., Independent School District No. ......., be approved?"

(e) The district's final and deferred maintenance revenue per pupil unit for a fiscal year must not exceed the sum of the amounts certified by the district according to paragraph (a). A district may elect to reduce the amount certified according to paragraph (a) at the time of final levy certification. If the criteria for a reverse referendum have been met, but the amount certified is reduced to a level that would not require a reverse referendum, the reverse referendum is canceled.

Sec. 49. Minnesota Statutes 2004, section 126C.48, subdivision 2, is amended to read:

Subd. 2. [NOTICE TO COMMISSIONER; FORMS.] By October 7 of each year each district must notify the commissioner of the proposed levies in compliance with the levy limitations of this chapter and chapters 120B, 122A, 123A, 123B, 124D, 125A, 127A, and 136D. By January 15 7 of each year each district must notify the commissioner of the final levies certified. The commissioner shall prescribe the form of these notifications and may request any additional information necessary to compute certified levy amounts.

Sec. 50. Minnesota Statutes 2004, section 126C.48, subdivision 8, is amended to read:

Subd. 8. [TACONITE PAYMENT AND OTHER REDUCTIONS.] (1) Reductions in levies pursuant to subdivision 1 must be made prior to the reductions in clause (2).

(2) Notwithstanding any other law to the contrary, districts ~~which received payments~~ that have revenue pursuant to sections 298.018; 298.225; 298.24 to 298.28, except an amount distributed under ~~section~~ sections 298.26; 298.28, subdivision 4, ~~paragraph~~ paragraphs (c), clause (ii), and (d); 298.34 to 298.39; 298.391 to 298.396; 298.405; 477A.15; and any law imposing a tax upon severed mineral values~~; or recognized revenue under section 477A.15 must not include a portion of these aids in their permissible levies pursuant to those sections, but instead~~ must reduce the ~~permissible~~ levies authorized by this chapter and chapters 120B, 122A, 123A, 123B, 124A, 124D, 125A, and 127A by ~~the greater of the following:~~ 95 percent of the previous year's revenue specified under this clause.

~~(a) an amount equal to 50 percent of the total dollar amount of the payments received pursuant to those sections or revenue recognized under section 477A.15 in the previous fiscal year; or~~

(b) an amount equal to the total dollar amount of the payments received pursuant to those sections or revenue recognized under section 477A.15 in the previous fiscal year less the product of the same dollar amount of payments or revenue times five percent.

For levy year 2002 only, 77 percent of the amounts distributed under section 298.225 and 298.28, and 100 percent of the amounts distributed under sections 298.018; 298.34 to 298.39; 298.391 to 298.396; 298.405; and any law imposing a tax upon severed mineral values, or recognized revenue under section 477A.15, shall be used for purposes of the calculations under this paragraph. For levy year 2003 only, the levy reductions under this subdivision must be calculated as if section 298.28, subdivision 4, paragraph (f), did not apply for the 2003 distribution.

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(3) The amount of any voter approved referendum, facilities down payment, and debt levies shall not be reduced by more than 50 percent under this subdivision. In administering this paragraph, the commissioner shall first reduce the nonvoter approved levies of a district; then, if any payments, severed mineral value tax revenue or recognized revenue under paragraph (2) remains, the commissioner shall reduce any voter approved referendum levies authorized under section 126C.17; then, if any payments, severed mineral value tax revenue or recognized revenue under paragraph (2) remains, the commissioner shall reduce any voter approved facilities down payment levies authorized under section 123B.63 and then, if any payments, severed mineral value tax revenue or recognized revenue under paragraph (2) remains, the commissioner shall reduce any voter approved debt levies.

(4) Before computing the reduction pursuant to this subdivision of the health and safety levy authorized by sections 123B.57 and 126C.40, subdivision 5, the commissioner shall ascertain from each affected school district the amount it proposes to levy under each section or subdivision. The reduction shall be computed on the basis of the amount so ascertained.

(5) To the extent the levy reduction calculated under paragraph (2) exceeds the limitation in paragraph (3), an amount equal to the excess must be distributed from the school district's distribution under sections 298.225, 298.28, and 477A.15 in the following year to the cities and townships within the school district in the proportion that their taxable net tax capacity within the school district bears to the taxable net tax capacity of the school district for property taxes payable in the year prior to distribution. No city or township shall receive a distribution greater than its levy for taxes payable in the year prior to distribution. The commissioner of revenue shall certify the distributions of cities and towns under this paragraph to the county auditor by September 30 of the year preceding distribution. The county auditor shall reduce the proposed and final levies of cities and towns receiving distributions by the amount of their distribution. Distributions to the cities and towns shall be made at the times provided under section 298.27.

[EFFECTIVE DATE.] This section is effective for revenue for fiscal year 2006.

Sec. 51. Minnesota Statutes 2004, section 127A.45, subdivision 11, is amended to read:

Subd. 11. [PAYMENT PERCENTAGE FOR REIMBURSEMENT AIDS.] One hundred percent of the aid for the previous fiscal year must be paid in the current year for the following aids: telecommunications/Internet access equity and according to section 125B.26, special education special pupil aid according to section 125A.75, subdivision 3, aid for litigation costs according to section 125A.75, subdivision 8, aid for court-placed special education expenses according to section 125A.79, subdivision 4, and aid for special education out-of-state tuition according to section 125A.79, subdivision 8, and shared time aid according to section 126C.01, subdivision 7.

Sec. 52. Minnesota Statutes 2004, section 127A.49, subdivision 2, is amended to read:

Subd. 2. [ABATEMENTS.] Whenever by virtue of chapter 278, sections 270.07, 375.192, or otherwise, the net tax capacity of any district for any taxable year is changed after the taxes for that year have been spread by the county auditor and the local tax rate as determined by the county auditor based upon the original net tax capacity is applied upon the changed net tax capacities, the county auditor shall, prior to February 1 of each year, certify to the commissioner of education the amount of any resulting net revenue loss that accrued to the district during the preceding year. Each year, the commissioner shall pay an abatement adjustment to the district in an amount calculated according to the provisions of this subdivision. This amount shall be deducted from the amount of the levy authorized by section 126C.46. The amount of the abatement adjustment must be the product of:

(1) the net revenue loss as certified by the county auditor, times

(2) the ratio of:

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(i) the sum of the amounts of the district's certified levy in the third preceding year according to the following:

(A) section 123B.57, if the district received health and safety aid according to that section for the second preceding year;

(B) section 124D.20, if the district received aid for community education programs according to that section for the second preceding year;

(C) section 124D.135, subdivision 3, if the district received early childhood family education aid according to section 124D.135 for the second preceding year; and

(D) section 126C.17, subdivision 6, if the district received referendum equalization aid according to that section for the second preceding year; to

(ii) the total amount of the district's certified levy in the third preceding December, plus or minus auditor's adjustments.

Sec. 53. Minnesota Statutes 2004, section 127A.49, subdivision 3, is amended to read:

Subd. 3. [EXCESS TAX INCREMENT.] (a) If a return of excess tax increment is made to a district pursuant to ~~section~~ sections 469.176, subdivision 2, and 469.177, subdivision 9, or upon decertification of a tax increment district, the school district's aid and levy limitations must be adjusted for the fiscal year in which the excess tax increment is paid under the provisions of this subdivision.

(b) An amount must be subtracted from the district's aid for the current fiscal year equal to the product of:

(1) the amount of the payment of excess tax increment to the district, times

(2) the ratio of:

(i) the sum of the amounts of the district's certified levy for the fiscal year in which the excess tax increment is paid according to the following:

(A) section 123B.57, if the district received health and safety aid according to that section for the second preceding year;

(B) section 124D.20, if the district received aid for community education programs according to that section for the second preceding year;

(C) section 124D.135, subdivision 3, if the district received early childhood family education aid according to section 124D.135 for the second preceding year; and

(D) section 126C.17, subdivision 6, if the district received referendum equalization aid according to that section for the second preceding year; to

(ii) the total amount of the district's certified levy for the fiscal year, plus or minus auditor's adjustments.

(c) An amount must be subtracted from the school district's levy limitation for the next levy certified equal to the difference between:

(1) the amount of the distribution of excess increment; and

(2) the amount subtracted from aid pursuant to clause (a).

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If the aid and levy reductions required by this subdivision cannot be made to the aid for the fiscal year specified or to the levy specified, the reductions must be made from aid for subsequent fiscal years, and from subsequent levies. The school district must use the payment of excess tax increment to replace the aid and levy revenue reduced under this subdivision.

(d) This subdivision applies only to the total amount of excess increments received by a district for a calendar year that exceeds $25,000.

Sec. 54. Minnesota Statutes 2004, section 127A.50, subdivision 5, is amended to read:

Subd. 5. [ADJUSTMENT PHASE-OUT AND TERMINATION.] All adjustments under this section terminate on June 30, 2020. For fiscal year 2007 and later, the adjustment under this section equals 75 percent of the adjustment for fiscal year 2006.

[EFFECTIVE DATE.] This section is effective for revenue for fiscal year 2007.

Sec. 55. Minnesota Statutes 2004, section 275.14, is amended to read:

275.14 [CENSUS.]

For the purposes of sections 275.124 to 275.16, the population of a city shall be that established by the last federal census, by a special census taken by the United States Bureau of the Census, by an estimate made by the Metropolitan Council, or by the state demographer made according to section 4A.02, whichever has the latest stated date of count or estimate, before July 2 of the current levy year. The population of a school district must be as certified by the Department of Education from the most recent federal census. In any year in which no federal census is taken pursuant to law in any school district affected by sections ~~275.124 to 275.16~~ 124D.20 and 124D.531 a population estimate may be made and submitted to the state demographer for approval as hereinafter provided. The school board of a school district, in case it desires a population estimate, shall pass a resolution by July 1 containing a current estimate of the population of the school district and shall submit the resolution to the state demographer. The resolution shall describe the criteria on which the estimate is based and shall be in a form and accompanied by the data prescribed by the state demographer. The state demographer shall determine whether or not the criteria and process described in the resolution provide a reasonable basis for the population estimate and shall inform the school district of that determination within 30 days of receipt of the resolution. If the state demographer determines that the criteria and process described in the resolution do not provide a reasonable basis for the population estimate, the resolution shall be of no effect. If the state demographer determines that the criteria and process do provide a reasonable basis for the population estimate, the estimate shall be treated as the population of the school district for the purposes of sections ~~275.124 to 275.16~~ 124D.20 and 124D.531 until the population of the school district has been established by the next federal census or until a more current population estimate is prepared and approved as provided herein, whichever occurs first. The state demographer shall establish guidelines for acceptable population estimation criteria and processes. The state demographer shall issue advisory opinions upon request in writing to cities or school districts as to proposed criteria and processes prior to their implementation in an estimation. The advisory opinion shall be final and binding upon the demographer unless the demographer can show cause why it should not be final and binding.

In the event that a census tract employed in taking a federal or local census overlaps two or more school districts, the county auditor shall, on the basis of the best information available, allocate the population of said census tract to the school districts involved.

The term "council," as used in sections 275.124 to 275.16, means any board or body, whether composed of one or more branches, authorized to make ordinances for the government of a city within this state.

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Sec. 56. Minnesota Statutes 2004, section 275.16, is amended to read:

275.16 [COUNTY AUDITOR TO FIX AMOUNT OF LEVY.]

If any such municipality shall return to the county auditor a levy greater than permitted by chapters 123A, 123B, 124D, 126C, and 136C, ~~and 136D,~~ sections 275.124 to 275.16, and 275.70 to 275.74, such county auditor shall extend only such amount of taxes as the limitations herein prescribed will permit; provided, if such levy shall include any levy for the payment of bonded indebtedness or judgments, such levies for bonded indebtedness or judgments shall be extended in full, and the remainder of the levies shall be reduced so that the total thereof, including levies for bonds and judgments, shall not exceed such amount as the limitations herein prescribed will permit.

Sec. 57. Minnesota Statutes 2004, section 469.177, subdivision 9, is amended to read:

Subd. 9. [DISTRIBUTIONS OF EXCESS TAXES ON CAPTURED NET TAX CAPACITY.] (a) If the amount of tax paid on captured net tax capacity exceeds the amount of tax increment, the county auditor shall distribute the excess to the municipality, county, and school district as follows: each governmental unit's share of the excess equals

(1) the total amount of the excess for the tax increment financing district, multiplied by

(2) a fraction, the numerator of which is the current local tax rate of the governmental unit less the governmental unit's local tax rate for the year the original local tax rate for the district was certified (in no case may this amount be less than zero) and the denominator of which is the sum of the numerators for the municipality, county, and school district.

If the entire increase in the local tax rate is attributable to a taxing district, other than the municipality, county, or school district, then the excess must be distributed to the municipality, county, and school district in proportion to their respective local tax rates.

(b) The amounts distributed shall be deducted in computing the levy limits of the taxing district for the succeeding taxable year. ~~In the case of a school district, only the proportion of the excess taxes attributable to unequalized levies that are subject to a fixed dollar amount levy limit shall be deducted from the levy limit.~~

(c) In the case of distributions to a school district ~~that are attributable to state equalized levies~~, the county auditor shall report amounts distributed to the commissioner of education in the same manner as provided for excess increments under section 469.176, subdivision 2, and the distribution shall be deducted from the school district's state aid payments and levy limitation according to section 127A.49, subdivision 3.

Sec. 58. [KINDERGARTEN REPORTING.]

Notwithstanding Minnesota Statutes, sections 120A.05, subdivision 18; 120A.20, subdivision 1; and 124D.02, subdivision 1, pupils four or five years of age on September 1 of the calendar year in which the school year commences and enrolled in a prekindergarten program implemented by the district before July 1, 2003, may be reported as kindergarten pupils under Minnesota Statutes, section 126C.05, subdivision 1, for fiscal years 2004 and earlier.

[EFFECTIVE DATE.] This section is effective the day following final enactment and applies to fiscal years 2004 and earlier.

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Sec. 59. [TRANSITION REVENUE ADJUSTMENTS.]

For taxes payable in 2006, a district may levy an amount equal to the increase in the district's transition revenue for fiscal year 2006 under Minnesota Statutes, section 126C.10, subdivision 31, paragraphs (c) and (d).

Sec. 60. [FISCAL YEAR 2006 COMPENSATORY REVENUE FOR REFUGEES.]

Notwithstanding Minnesota Statutes, section 126C.05, subdivisions 3 and 16, refugees from the Wat Krabok Refugee Camp in Thailand who were not enrolled in a Minnesota public school on October 1, 2004, but who were enrolled in a Minnesota public school on June 1, 2005, must be included in the calculation of compensatory revenue pupil units for fiscal year 2006.

Sec. 61. [ALTERNATIVE COMPENSATION REVENUE GUARANTEE.]

Notwithstanding Minnesota Statutes, sections 122A.415, subdivision 1, and 126C.10, subdivision 34, paragraphs (a) and (b), a school district that received alternative compensation aid for fiscal year 2005, but does not qualify for alternative compensation revenue for all sites in the district for fiscal year 2006 or 2007, shall receive additional basic alternative compensation aid for that fiscal year equal to the lesser of the amount of alternative compensation aid it received for fiscal year 2005 or the amount it would have received for that fiscal year under Minnesota Statutes 2004, section 122A.415, subdivision 1, for teachers at sites not qualifying for alternative compensation revenue for that fiscal year, if the district submits a timely application and the commissioner determines that the district continues to implement an alternative professional pay system, consistent with its application under Minnesota Statutes 2004, section 122A.415, for fiscal year 2005. The additional basic alternative compensation aid under this section must not be used in calculating the alternative compensation levy under Minnesota Statutes, section 126C.10, subdivision 35. This section applies only to fiscal years 2006 and 2007 and does not apply to later fiscal years.

Sec. 62. [SCHOOL BUS LEVY; CARPENTER SCHOOL BUSES.]

For taxes payable in 2006 through 2010, a school district may levy an amount, not to exceed in the aggregate, $30,000 times the number of Carpenter school buses in its fleet as of January 1, 2004, that have been determined to have potentially defective welds and are subject to limitations imposed by the Department of Public Safety.

Sec. 63. [COMPENSATORY REVENUE ALLOCATION; TEST SCORE PILOT PROGRAM.]

Subdivision 1. [PILOT PROGRAM CREATED.] A three-year pilot program is created to allow a school district to allocate compensatory revenue received under Minnesota Statutes, section 126C.10, subdivision 3, among its school buildings according to each building's school performance measures.

Subd. 2. [APPLICATION PROCESS.] A school district that seeks to allocate its compensatory revenue to school sites based on student performance may submit an application to the commissioner of education by June 1, 2005. The application must include a written resolution approved by the school board that: (1) identifies the test results that will be used to assess student performance; (2) describes the method for distribution of compensatory revenue to the school sites; and (3) summarizes the evaluation procedure the district will use to determine if the redistribution of compensatory revenue improves overall student performance. The application must be submitted in the form and manner specified by the commissioner.

Subd. 3. [COMMISSIONER SELECTION.] The commissioner may select up to five school districts to participate in the pilot program. The commissioner must notify the selected school districts by July 1, 2005.

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Subd. 4. [REPORT.] The commissioner of education must submit a report by February 15, 2008, to the education committees of the legislature evaluating the effectiveness of the pilot program.

[EFFECTIVE DATE.] This section is effective the day following final enactment.

Sec. 64. [FISCAL YEAR 2006 ONLY.]

For fiscal year 2006 only, the increases in equity revenue and operating capital revenue under Minnesota Statutes, section 126C.10, are payable entirely in state aid.

Sec. 65. [APPROPRIATIONS.]

Subdivision 1. [DEPARTMENT OF EDUCATION.] The sums indicated in this section are appropriated from the general fund to the Department of Education for the fiscal years designated.

Subd. 2. [GENERAL EDUCATION AID.] For general education aid under Minnesota Statutes, section 126C.13, subdivision 4:

$5,135,844,000 . . . . . 2006

$5,359,019,000 . . . . . 2007

The 2006 appropriation includes $784,978,000 for 2005 and $4,350,866,000 for 2006.

The 2007 appropriation includes $814,640,000 for 2006 and $4,544,379,000 for 2007.

Subd. 3. [REFERENDUM TAX BASE REPLACEMENT AID.] For referendum tax base replacement aid under Minnesota Statutes, section 126C.17, subdivision 7a:

$8,704,000 . . . . . 2006

$8,704,000 . . . . . 2007

The 2006 appropriation includes $1,366,000 for 2005 and $7,338,000 for 2006.

The 2007 appropriation includes $1,366,000 for 2006 and $7,338,000 for 2007.

Subd. 4. [ENROLLMENT OPTIONS TRANSPORTATION.] For transportation of pupils attending postsecondary institutions under Minnesota Statutes, section 124D.09, or for transportation of pupils attending nonresident districts under Minnesota Statutes, section 124D.03:

$55,000 . . . . . 2006

$55,000 . . . . . 2007

Subd. 5. [ABATEMENT REVENUE.] For abatement aid under Minnesota Statutes, section 127A.49:

$903,000 . . . . . 2006

$955,000 . . . . . 2007

The 2006 appropriation includes $187,000 for 2005 and $716,000 for 2006.

The 2007 appropriation includes $133,000 for 2006 and $822,000 for 2007.

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Subd. 6. [CONSOLIDATION TRANSITION.] For districts consolidating under Minnesota Statutes, section 123A.485:

$253,000 . . . . . 2007

The 2007 appropriation includes $0 for 2006 and $253,000 for 2007.

Subd. 7. [NONPUBLIC PUPIL EDUCATION AID.] For nonpublic pupil education aid under Minnesota Statutes, sections 123B.87 and 123B.40 to 123B.43:

$15,324,000 . . . . . 2006

$16,327,000 . . . . . 2007

The 2006 appropriation includes $2,305,000 for 2005 and $13,019,000 for 2006.

The 2007 appropriation includes $2,424,000 for 2006 and $13,903,000 for 2007.

Subd. 8. [NONPUBLIC PUPIL TRANSPORTATION.] For nonpublic pupil transportation aid under Minnesota Statutes, section 123B.92, subdivision 9:

$21,287,000 . . . . . 2006

$22,670,000 . . . . . 2007

The 2006 appropriation includes $3,274,000 for 2005 and $18,013,000 for 2006.

The 2007 appropriation includes $3,354,000 for 2006 and $19,316,000 for 2007.

Subd. 9. [ONE ROOM SCHOOLHOUSE.] For a grant to Independent School District No. 690, Warroad, to operate the Angle Inlet School:

$50,000 . . . . . 2006

$50,000 . . . . . 2007

Subd. 10. [DECLINING PUPIL AID; ALBERT LEA.] For declining pupil aid to Independent School District No. 241, Albert Lea:

$75,000 . . . . . 2006

Subd. 11. [DECLINING PUPIL AID; MESABI EAST.] For declining pupil aid to Independent School District No. 2711, Mesabi East:

$50,000 . . . . . 2006

Subd. 12. [DECLINING PUPIL AID; ROSEAU.] For declining pupil aid to Independent School District No. 682, Roseau:

$10,000 . . . . . 2006

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Sec. 66. [REPEALER.]

Subdivision 1. [JULY 1, 2005.] Minnesota Statutes 2004, sections 122A.415, subdivision 2; 123B.05; 123B.83, subdivision 1; and 126C.42, subdivisions 1 and 4, are repealed.

Subd. 2. [FISCAL YEAR 2007.] Minnesota Statutes 2004, section 126C.12, is repealed for revenue for fiscal year 2007.

ARTICLE 2

EXCELLENCE IN EDUCATION

Section 1. Minnesota Statutes 2004, section 13.32, subdivision 1, is amended to read:

Subdivision 1. [DEFINITIONS.] As used in this section:

(a) "Continuing truant" means a student under section 260A.02, subdivision 3, who is absent without valid excuse from instruction in a school.

(b) "Educational data" means data on individuals maintained by a public educational agency or institution or by a person acting for the agency or institution which relates to a student.

Records of instructional personnel which are in the sole possession of the maker thereof and are not accessible or revealed to any other individual except a substitute teacher, and are destroyed at the end of the school year, shall not be deemed to be government data.

Records of a law enforcement unit of a public educational agency or institution which are maintained apart from education data and are maintained solely for law enforcement purposes, and are not disclosed to individuals other than law enforcement officials of the jurisdiction are not educational data; provided, that education records maintained by the educational agency or institution are not disclosed to the personnel of the law enforcement unit. The University of Minnesota police department is a law enforcement agency for purposes of section 13.82 and other sections of Minnesota Statutes dealing with law enforcement records. Records of organizations providing security services to a public educational agency or institution must be administered consistent with section 13.861.

Records relating to a student who is employed by a public educational agency or institution which are made and maintained in the normal course of business, relate exclusively to the individual in that individual's capacity as an employee, and are not available for use for any other purpose are classified pursuant to section 13.43.

~~(b)~~ (c) "Habitual truant" means a student under section 260C.007, subdivision 19, who is absent without lawful excuse from attendance at school.

(d) "Juvenile justice system" includes criminal justice agencies and the judiciary when involved in juvenile justice activities.

~~(c)~~ (e) "Student" means an individual currently or formerly enrolled or registered, applicants for enrollment or registration at a public educational agency or institution, or individuals who receive shared time educational services from a public agency or institution.

~~(d)~~ (f) "Substitute teacher" means an individual who performs on a temporary basis the duties of the individual who made the record, but does not include an individual who permanently succeeds to the position of the maker of the record.

[EFFECTIVE DATE.] This section is effective July 1, 2005.

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Sec. 2. Minnesota Statutes 2004, section 13.32, subdivision 8, is amended to read:

Subd. 8. [ACCESS BY JUVENILE JUSTICE SYSTEM.] (a) Upon request, the following education data shall be disclosed under subdivision 3, clause (i), to the juvenile justice system: a student's full name, home address, telephone number, date of birth; a student's school schedule, daily attendance record, and photographs, if any; and parents' names, home addresses, and telephone numbers.

(b) In addition, the existence of the following data about a student may be disclosed under subdivision 3, clause (i):

(1) use of a controlled substance, alcohol, or tobacco;

(2) assaultive or threatening conduct that could result in dismissal from school under section 121A.45, subdivision 2, clause (b) or (c);

(3) possession or use of weapons or look-alike weapons;

(4) theft; or

(5) vandalism or other damage to property.

Any request for access to data under this paragraph must contain an explanation of why access to the data is necessary to serve the student.

(c) A principal or chief administrative officer of a school who receives a request to disclose information about a student to the juvenile justice system under paragraph (b) shall, to the extent permitted by federal law, notify the student's parent or guardian by certified mail of the request to disclose information before disclosing the information. If the student's parent or guardian notifies the principal or chief administrative officer within ten days of receiving the certified notice that the parent or guardian objects to the disclosure, the principal or chief administrative officer must not disclose the information. The principal or chief administrative officer must inform the requesting member of the juvenile justice system of the objection.

(d) A principal or chief administrative officer is not required to create data under this subdivision. Information provided in response to a data request under paragraph (b) shall indicate only whether the data described in paragraph (b) exist. The principal or chief administrative officer is not authorized under paragraph (b) to disclose the actual data or other information contained in the student's education record. A principal or chief administrative officer is not required to provide data that are protected by court order. A principal or chief administrative officer must respond to a data request within 14 days if no objection is received from the parent or guardian.

(e) If the school board does not waive the school attendance requirement for driving privileges, then a principal or chief school administrator may disclose to the juvenile justice system only the student's continuing or habitual truancy status.

(f) Nothing in this subdivision shall limit the disclosure of educational data pursuant to court order.

~~(f)~~ (g) A school district, its agents, and employees who provide data in good faith under this subdivision are not liable for compensatory or exemplary damages or an award of attorney fees in an action under section 13.08, or other law, or for a penalty under section 13.09.

~~(g)~~ (h) Section 13.03, subdivision 4, applies to data that are shared under this subdivision with a government entity. If data are shared with a member of the juvenile justice system who is not a government entity, the person receiving the shared data must treat the data consistent with the requirements of this chapter applicable to a government entity.

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~~(h)~~ (i) A member of the juvenile justice system who falsely certifies a request for data under this section is subject to the penalties under section 13.09.

Sec. 3. Minnesota Statutes 2004, section 120A.22, subdivision 12, is amended to read:

Subd. 12. [LEGITIMATE EXEMPTIONS.] A parent, guardian, or other person having control of a child may apply to a school district to have the child excused from attendance for the whole or any part of the time school is in session during any school year. Application may be made to any member of the board, a truant officer, a principal, or the superintendent. The school district may state in its school attendance policy that it may ask the student's parent or legal guardian to verify in writing the reason for the child's absence from school. The board of the district in which the child resides may approve the application upon the following being demonstrated to the satisfaction of that board:

(1) that the child's bodily or mental condition is such as to prevent attendance at school or application to study for the period required~~; or~~, which includes:

(i) child illness, medical, dental, orthodontic, or counseling appointments;

(ii) family emergencies;

(iii) the death or serious illness or funeral of an immediate family member;

(iv) active duty in any military branch of the United States; or

(v) other exemptions included in the district's school attendance policy;

(2) that for the school years 1988-1989 through 1999-2000 the child has already completed the studies ordinarily required in the 10th grade and that for the school years beginning with the 2000-2001 school year the child has already completed the studies ordinarily required to graduate the child has already completed state and district standards required for graduation from high school; or

(3) that it is the wish of the parent, guardian, or other person having control of the child, that the child attend for a period or periods not exceeding in the aggregate three hours in any week, a school for religious instruction conducted and maintained by some church, or association of churches, or any Sunday school association incorporated under the laws of this state, or any auxiliary thereof. This school for religious instruction must be conducted and maintained in a place other than a public school building, and it must not, in whole or in part, be conducted and maintained at public expense. However, a child may be absent from school on such days as the child attends upon instruction according to the ordinances of some church.

[EFFECTIVE DATE.] This section is effective July 1, 2005.

Sec. 4. [120A.23] [SCHOOL ATTENDANCE REQUIREMENT; DRIVING PRIVILEGES.]

A district school board, board of a state approved alternative program (SAAP), or charter school board of directors by majority vote, may waive the school attendance requirement for driving privileges under section 171.056 for the students it enrolls. The board must vote to waive the requirement before September 1 of the initial school year in which the waiver is effective and immediately must transmit an electronic notice to the Department of Public Safety. If a board intends to rescind its waiver and require students to comply with the school attendance requirement under section 171.056 for any subsequent school year, the board must vote before September 1 of the school year in which the waiver is initially rescinded and immediately must transmit an electronic notice to the Department of Public Safety.

[EFFECTIVE DATE.] This section is effective July 1, 2005.

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Sec. 5. Minnesota Statutes 2004, section 120B.02, is amended to read:

120B.02 [EDUCATIONAL EXPECTATIONS FOR MINNESOTA'S STUDENTS.]

(a) The legislature is committed to establishing rigorous academic standards for Minnesota's public school students. To that end, the commissioner shall adopt in rule statewide academic standards. The commissioner shall not prescribe in rule or otherwise the delivery system, classroom assessments, or form of instruction that school sites must use. For purposes of this chapter, a school site is a separate facility, or a separate program within a facility that a local school board recognizes as a school site for funding purposes.

(b) All commissioner actions regarding the rule must be premised on the following:

(1) the rule is intended to raise academic expectations for students, teachers, and schools;

(2) any state action regarding the rule must evidence consideration of school district autonomy; and

(3) the Department of Education, with the assistance of school districts, must make available information about all state initiatives related to the rule to students and parents, teachers, and the general public in a timely format that is appropriate, comprehensive, and readily understandable.

(c) When fully implemented, the requirements for high school graduation in Minnesota must require students to ~~pass the basic skills test requirements and~~ satisfactorily complete, as determined by the school district, the course credit requirements under section 120B.024 and:

(1) for students enrolled in grade 8 before the 2005-2006 school year, to pass the basic skills test requirements; and

(2) for students enrolled in grade 8 in the 2005-2006 school year and later, to pass the Minnesota Comprehensive Assessments Second Edition (MCA-IIs).

(d) The commissioner shall periodically review and report on the state's assessment process.

(e) School districts are not required to adopt specific provisions of ~~the Goals 2000 and~~ the federal School‑to‑Work programs.

Sec. 6. Minnesota Statutes 2004, section 120B.021, is amended by adding a subdivision to read:

Subd. 1a. [RIGOROUS COURSE OF STUDY; WAIVER.] (a) Upon receiving a student's application signed by the student's parent or guardian, a school district, area learning center, or charter school must declare that a student meets or exceeds a specific academic standard required for graduation under this section if the local school board, the school board of the school district in which the area learning center is located, or the charter school board of directors determines that the student:

(1) is participating in a course of study including an advanced placement course or an international baccalaureate course or program that is consistent with state academic standards, a learning opportunity outside the curriculum of the district, area learning center or charter school, or an approved preparatory program for employment or postsecondary education that is equally or more rigorous than the corresponding state or local academic standard required by the district, area learning center, or charter school;

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(2) would be precluded from participating in the rigorous course of study, learning opportunity, or preparatory employment or postsecondary education program if the student were required to achieve the academic standard to be waived; and

(3) satisfactorily completes the requirements for the rigorous course of study, learning opportunity, or preparatory employment or postsecondary education program.

Consistent with the requirements of this section, the local school board, the school board of the school district in which the area learning center is located, or the charter school board of directors also may formally determine other circumstances in which to declare that a student meets or exceeds a specific academic standard that the site requires for graduation under this section.

(b) A student who satisfactorily completes a postsecondary enrollment options course or program under section 124D.09 is not required to complete other requirements of the academic standards corresponding to that specific rigorous course of study.

Sec. 7. Minnesota Statutes 2004, section 120B.11, subdivision 1, is amended to read:

Subdivision 1. [DEFINITIONS.] For the purposes of this section and section 120B.10, the following terms have the meanings given them.

(a) "Instruction" means methods of providing learning experiences that ~~enables~~ enable a student to meet state and district academic standards and graduation ~~standards~~ requirements.

(b) "Curriculum" means district or school adopted programs and written plans for providing students with learning experiences that lead to expected knowledge, and skills~~, and positive attitudes~~.

Sec. 8. Minnesota Statutes 2004, section 120B.11, subdivision 2, is amended to read:

Subd. 2. [ADOPTING POLICIES.] (a) A school board shall ~~adopt annually a~~ have in place an adopted written policy that includes the following:

(1) district goals for instruction ~~and~~ including the use of best practices, district and school curriculum, and achievement for all student subgroups;

(2) a process for evaluating each student's progress toward meeting ~~graduation~~ academic standards and identifying the strengths and weaknesses of instruction and curriculum affecting students' progress;

(3) a system for periodically reviewing and evaluating all instruction and curriculum;

(4) a plan for improving instruction ~~and~~, curriculum, and student achievement; and

(5) an ~~instruction plan that includes~~ education effectiveness ~~processes developed under~~ plan aligned with section 122A.625 ~~and~~ that integrates instruction, curriculum, and technology.

Sec. 9. Minnesota Statutes 2004, section 120B.11, subdivision 3, is amended to read:

Subd. 3. [~~INSTRUCTION AND CURRICULUM~~ DISTRICT ADVISORY COMMITTEE.] Each school board shall establish an ~~Instruction and Curriculum~~ advisory committee to ensure active community participation in all phases of planning and improving the instruction and curriculum affecting state ~~graduation~~ and district academic

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standards. A district advisory committee, to the extent possible, shall reflect the diversity of the district and its learning sites, and shall include teachers, parents, support staff, ~~pupils~~ students, and other community residents. The district may establish building teams as subcommittees of the district advisory committee under subdivision 4. The district advisory committee shall recommend to the school board ~~districtwide education standards~~ rigorous academic standards, student achievement goals and measures, assessments, and program evaluations. Learning sites may expand upon district evaluations of instruction, curriculum, assessments, or programs. Whenever possible, parents and other community residents shall comprise at least two-thirds of advisory committee members.

Sec. 10. Minnesota Statutes 2004, section 120B.11, subdivision 4, is amended to read:

Subd. 4. [BUILDING TEAM.] A school may establish a building team to develop and implement an education effectiveness plan to improve instruction ~~and~~, curriculum, and student achievement. The team shall advise the board and the advisory committee about developing an instruction and curriculum improvement plan that aligns curriculum, assessment of student progress in meeting state ~~graduation~~ and district academic standards, and instruction.

Sec. 11. Minnesota Statutes 2004, section 120B.11, subdivision 5, is amended to read:

Subd. 5. [REPORT.] (a) By October 1 of each year, the school board shall use standard statewide reporting procedures the commissioner develops and adopt a report that includes the following:

(1) student ~~performance~~ achievement goals for meeting state ~~graduation~~ academic standards ~~adopted for that year~~;

(2) results of local assessment data, and any additional test data;

(3) the annual school district improvement plans including staff development goals under section 122A.60;

(4) information about district and learning site progress in realizing previously adopted improvement plans; and

(5) the amount and type of revenue attributed to each education site as defined in section 123B.04.

(b) The school board shall publish the report in the local newspaper with the largest circulation in the district or, by mail, or by electronic means such as the district Web site. If electronic means are used, school districts must publish notice of the report in a periodical of general circulation in the district. School districts must make copies of the report available to the public on request. The board shall make a copy of the report available to the public for inspection. The board shall send a copy of the report to the commissioner of education by October 15 of each year.

(c) The title of the report shall contain the name and number of the school district and read "Annual Report on Curriculum, Instruction, and Student ~~Performance~~ Achievement." The report must include at least the following information about advisory committee membership:

(1) the name of each committee member and the date when that member's term expires;

(2) the method and criteria the school board uses to select committee members; and

(3) the date by which a community resident must apply to next serve on the committee.

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Sec. 12. Minnesota Statutes 2004, section 120B.11, subdivision 8, is amended to read:

Subd. 8. [BIENNIAL EVALUATION; ASSESSMENT PROGRAM.] At least once every two years, the district report shall include an evaluation of the district testing programs, according to the following:

(1) written objectives of the assessment program;

(2) names of tests and grade levels tested;

(3) use of test results; and

(4) ~~implementation of an assurance of mastery program~~ student achievement results compared to previous years.

Sec. 13. [120B.128] [EDUCATIONAL PLANNING AND ASSESSMENT SYSTEM (EPAS) PROGRAM.]

(a) School districts and charter schools may elect to participate in the Educational Planning and Assessment System (EPAS) program offered by ACT, Inc. to provide a longitudinal, systematic approach to student educational and career planning, assessment, instructional support, and evaluation. The EPAS achievement tests include English, reading, mathematics, science, and components on planning for high school and postsecondary education, interest inventory, needs assessments, and student education plans. These tests are linked to the ACT assessment for college admission and allow students, parents, teachers, and schools to determine the student's college readiness before grades 11 and 12.

(b) The commissioner of education shall provide ACT Explore tests for students in grade 8 and the ACT Plan test for students in grade 10 to assess individual student academic strengths and weaknesses, academic achievement and progress, higher order thinking skills, and college readiness. The state shall pay the test costs for school districts and charter schools that choose to participate in the EPAS program. The commissioner shall establish an application procedure and a process for state payment of costs.

Sec. 14. Minnesota Statutes 2004, section 120B.13, subdivision 1, is amended to read:

Subdivision 1. [PROGRAM STRUCTURE; TRAINING PROGRAMS FOR TEACHERS.] (a) The advanced placement and international baccalaureate programs are well-established academic programs for mature, academically directed high school students. These programs, in addition to providing academic rigor, offer sound curricular design, accountability, comprehensive external assessment, feedback to students and teachers, and the opportunity for high school students to compete academically on a global level. Advanced placement and international baccalaureate programs allow students to leave high school with the academic skills and self-confidence to succeed in college and beyond. The advanced placement and international baccalaureate programs help provide Minnesota students with world-class educational opportunity.

(b) Critical to schools' educational success is ongoing advanced placement/international baccalaureate-approved teacher training. A secondary teacher assigned by a district to teach an advanced placement or international baccalaureate course or other interested educator may participate in a training program offered by The College Board or International Baccalaureate North America, Inc. The state may pay a portion of the tuition, room, ~~and~~ board, and out-of-state travel costs a teacher or other interested educator incurs in participating in a training program. The commissioner shall determine application procedures and deadlines, ~~and~~ select teachers and other interested educators to participate in the training program, and determine the payment process and amount of the subsidy. The procedures determined by the commissioner shall, to the extent possible, ensure that advanced placement and international baccalaureate courses become available in all parts of the state and that a variety of course offerings are available in school districts. This subdivision does not prevent teacher or other interested educator participation in training programs offered by The College Board or International Baccalaureate North America, Inc., when tuition is paid by a source other than the state.

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Sec. 15. Minnesota Statutes 2004, section 120B.13, subdivision 3, is amended to read:

Subd. 3. [SUBSIDY FOR EXAMINATION FEES.] The state may pay all or part of the fee for advanced placement or international baccalaureate examinations ~~for pupils of low-income families in public and nonpublic schools~~. The commissioner shall ~~adopt a schedule for fee subsidies that may allow payment of the entire fee for~~ pay all examination fees for all public and nonpublic students of low-income families, as defined by the commissioner, and to the limit of the available appropriation, shall also pay a portion or all of the examination fees for other public and nonpublic students sitting for an advanced placement examination, international baccalaureate examination, or both. The commissioner shall determine procedures for state payments of fees.

Sec. 16. Minnesota Statutes 2004, section 120B.13, is amended by adding a subdivision to read:

Subd. 3a. [COLLEGE CREDIT.] The colleges and universities of the Minnesota State Colleges and Universities system must award, and the University of Minnesota and private postsecondary institutions are encouraged to award, college credit to high school students who receive a score of three or higher on an advanced placement or four or higher on the international baccalaureate program examination.

Sec. 17. [120B.131] [COLLEGE-LEVEL EXAMINATION PROGRAM (CLEP).]

Subdivision 1. [PROGRAM STRUCTURE.] The College-Level Examination Program (CLEP) offered by the College Board provides students with the opportunity to demonstrate college-level achievement and receive college credit or advanced standing through a program of examinations in undergraduate college courses. Schools must provide information about CLEP and the opportunity to receive college credit from a Minnesota postsecondary institution to students successfully completing a college-level course.

Subd. 2. [REIMBURSEMENT FOR EXAMINATION FEES.] The state may reimburse CLEP examination fees for a Minnesota public high school student who has successfully completed one or more college-level courses in high school and earned a satisfactory score on one or more CLEP examinations in the following subjects: composition and literature, mathematics and science, social sciences and history, foreign languages, and business and humanities. The state may reimburse each successful student for up to six examination fees. The commissioner shall establish application procedures and a process and schedule for fee reimbursements. The commissioner must give priority to reimburse the CLEP examination fees of students of low-income families.

Subd. 3. [COLLEGE CREDIT.] The colleges and universities of the Minnesota State Colleges and Universities system must award, and the University of Minnesota and private postsecondary institutions are encouraged to award, college credit to high school students who receive a satisfactory score on a CLEP examination under this section. The commissioner, in consultation with the Minnesota State Colleges and Universities, shall set a passing score for college credits.

Sec. 18. [120B.15] [GIFTED AND TALENTED STUDENTS PROGRAMS.]

School districts may identify students, locally develop programs, provide staff development, and evaluate programs to provide gifted and talented students with challenging educational programs.

[EFFECTIVE DATE.] This section is effective for the 2005-2006 school year.

Sec. 19. [120B.225] [CHARACTER DEVELOPMENT EDUCATION.]

Subdivision 1. [CHARACTER DEVELOPMENT EDUCATION.] The legislature encourages districts to integrate or offer instruction on character education including, but not limited to, character qualities such as attentiveness, truthfulness, respect for authority, diligence, gratefulness, self-discipline, patience, forgiveness,

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respect for others, peacemaking, and resourcefulness. Districts are not limited to, but may use programs such as Character First and Character Counts. Instruction should be integrated into a district's existing programs, curriculum, or the general school environment. The commissioner shall provide assistance at the request of a district to develop character education curriculum and programs.

Subd. 2. [FUNDING SOURCES.] The commissioner must first use federal funds for character development education programs to the extent available under United States Code, title 20, section 7247. Districts may accept funds from private and other public sources for character development education programs developed and implemented under this section.

[EFFECTIVE DATE.] This section is effective the day following final enactment.

Sec. 20. Minnesota Statutes 2004, section 120B.23, is amended to read:

120B.23 [VIOLENCE PREVENTION AND CHARACTER DEVELOPMENT EDUCATION GRANTS.]

Subdivision 1. [GRANT PROGRAM ESTABLISHED.] The commissioner of education, after consulting with the assistant commissioner of the Office of Drug Policy and Violence Prevention, shall establish a violence prevention and character development education grant program, consistent with section 120B.255, subdivision 1, to enable a school district, an education district, or a group of districts that cooperate for a particular purpose to develop and implement or to continue a violence prevention and character development program for students in kindergarten through grade 12 that can be integrated into existing curriculum. A district or group of districts that elects to develop and implement or to continue a violence prevention and character development program under section 120B.22 is eligible to apply for a grant under this section.

Subd. 2. [GRANT APPLICATION.] To be eligible to receive a grant, a school district, an education district, a service cooperative, or a group of districts that cooperate for a particular purpose must submit an application to the commissioner in the form and manner and according to the timeline established by the commissioner. The application must describe how the applicant will: (1) continue or integrate into its existing K-12 curriculum or into cocurricular or extracurricular activities a program for violence prevention ~~that contains the program components listed in section 120B.22~~ and character development; (2) collaborate with local organizations involved in violence prevention and intervention and character development; and (3) structure the program to reflect the characteristics of the children, their families and the community involved in the program. The commissioner may require additional information from the applicant. When reviewing the applications, the commissioner shall determine whether the applicant has met the requirements of this subdivision.

Subd. 3. [GRANT AWARDS.] The commissioner may award grants for a violence prevention and character development education program to eligible applicants as defined in subdivision 2. Grant amounts may not exceed $3 per resident pupil unit in the district or group of districts in the prior school year. Grant recipients should be geographically distributed throughout the state.

Subd. 4. [GRANT PROCEEDS.] A successful applicant must use the grant money to develop and implement or to continue a violence prevention and character development program according to the terms of the grant application.

[EFFECTIVE DATE.] This section is effective the day following final enactment.

Sec. 21. [120B.25] [AMERICAN HERITAGE EDUCATION.]

(a) School districts shall permit grade-level instruction to ensure students have the opportunity to read and study America's founding documents that provide an understanding of the principles, character, and world view of America's founders; including documents that contributed to the foundation or maintenance of America's representative republican form of limited government, the Bill of Rights, our free-market economic system, and

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patriotism. Districts shall permit a principal or teacher to appropriately use, read, or post in a public school building, classroom, or at any public school event any excerpts or portions of the original source documents, writings, speeches, proclamations, or records relating to the history, heritage, or foundation of the United States or the state of Minnesota, including, but not limited to:

(1) the Mayflower Compact;

(2) the Declaration of Independence;

(3) the Constitutions of the United States and the state of Minnesota;

(4) the Northwest Ordinance of 1787;

(5) the Federalist Papers;

(6) the Pledge of Allegiance;

(7) the national anthem;

(8) Washington's farewell address to the nation;

(9) Lincoln's Gettysburg address;

(10) the acts and published records of Congress; and

(11) the United States Supreme Court decisions and records.

(b) Districts may not censor or restrain instruction in American or Minnesota state history or heritage based on religious references in original source documents, writings, speeches, proclamations, or records described under paragraph (a). These and any other materials must be used for educational purposes and not to establish any religion.

(c) Students may voluntarily choose to read, write, share, report, or otherwise study a topic which is religious in nature provided other students are provided with the same opportunity to freely choose a topic.

Sec. 22. Minnesota Statutes 2004, section 120B.30, subdivision 1, is amended to read:

Subdivision 1. [STATEWIDE TESTING.] (a) The commissioner, with advice from experts with appropriate technical qualifications and experience and stakeholders, consistent with subdivision 1a, shall include in the comprehensive assessment system, for each grade level to be tested, state-constructed tests developed from and aligned with the state's required academic standards under section 120B.021 and administered annually to all students in grades 3 through 8 and at the high school level. A state-developed test in a subject other than writing, developed after the 2002-2003 school year, must include both multiple choice and constructed response questions. The commissioner shall establish one or more months during which schools shall administer the tests to students each school year. For students enrolled in grade 8 before the 2005-2006 school year, only Minnesota basic skills tests in reading, mathematics, and writing shall fulfill students' basic skills testing requirements for a passing state notation. The passing scores of the state tests in reading and mathematics are the equivalent of:

(1) 70 percent correct for students entering grade 9 in 1996; and

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(2) 75 percent correct for students entering grade 9 in 1997 and thereafter, as based on the first uniform test administration of February 1998.

For students enrolled in grade 8 in the 2005-2006 school year and later, only the Minnesota Comprehensive Assessments Second Edition (MCA-IIs) in reading, mathematics, and writing shall fulfill students' academic standard requirements.

(b) The third through 8th grade and high school level test results shall be available to districts for diagnostic purposes affecting student learning and district instruction and curriculum, and for establishing educational accountability. The commissioner must disseminate to the public the test results upon receiving those results.

(c) State tests must be constructed and aligned with state academic standards. The testing process and the order of administration shall be determined by the commissioner. The statewide results shall be aggregated at the site and district level, consistent with subdivision 1a.

(d) In addition to the testing and reporting requirements under this section, the commissioner shall include the following components in the statewide public reporting system:

(1) uniform statewide testing of all students in grades 3 through 8 and at the high school level that provides exemptions, only with parent or guardian approval, for those very few students for whom the student's individual education plan team under sections 125A.05 and 125A.06, determines that the student is incapable of taking a statewide test, or for a limited English proficiency student under section 124D.59, subdivision 2, if the student has been in the United States for fewer than three years;

(2) educational indicators that can be aggregated and compared across school districts and across time on a statewide basis, including average daily attendance, high school graduation rates, and high school drop-out rates by age and grade level;

(3) students' scores on the American College Test; and

(4) state results from participation in the National Assessment of Educational Progress so that the state can benchmark its performance against the nation and other states, and, where possible, against other countries, and contribute to the national effort to monitor achievement.

(e) Districts must report exemptions under paragraph (d), clause (1), to the commissioner consistent with a format provided by the commissioner.

Sec. 23. Minnesota Statutes 2004, section 120B.30, subdivision 1a, is amended to read:

Subd. 1a. [STATEWIDE AND LOCAL ASSESSMENTS; RESULTS.] (a) The commissioner must develop ~~language arts~~ reading, mathematics, and science assessments aligned with state academic standards that districts and sites must use to monitor student growth toward achieving those standards. The commissioner must not develop statewide assessments for academic standards in social studies, health and physical education, and the arts. The commissioner must require:

(1) annual ~~language arts~~ reading and mathematics assessments in grades 3 through 8 and at the high school level for the 2005-2006 school year and later; and

(2) annual science assessments in one grade in the grades 3 through 5 span, the grades 6 through 9 span, and a life sciences assessment in the grades 10 through 12 span for the 2007-2008 school year and later.

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(b) The commissioner must ensure that all statewide tests administered to elementary and secondary students measure students' academic knowledge and skills and not students' values, attitudes, and beliefs.

(1) provide timely, useful, and understandable information on the performance of individual students, schools, school districts, and the state;

(2) include, by the 2006-2007 school year, a value-added component to measure student achievement growth over time; and

(3) for students enrolled in grade 8 before the 2005-2006 school year, determine whether students have met the state's basic skills requirements; and

(4) for students enrolled in grade 8 in the 2005-2006 school year and later, determine whether students have met the state's academic standards.

(d) Consistent with applicable federal law and subdivision 1, paragraph (d), clause (1), the commissioner must include alternative assessments for the very few students with disabilities for whom statewide assessments are inappropriate and for students with limited English proficiency.

(e) A school, school district, and charter school must administer statewide assessments under this section, as the assessments become available, to evaluate student progress in achieving the academic standards. If a state assessment is not available, a school, school district, and charter school must determine locally if a student has met the required academic standards. A school, school district, or charter school may use a student's performance on a statewide assessment as one of multiple criteria to determine grade promotion or retention. A school, school district, or charter school may use a high school student's performance on a statewide assessment as a percentage of the student's final grade in a course, or place a student's assessment score on the student's transcript.

Sec. 24. [120B.362] [VALUE-ADDED ASSESSMENT PROGRAM.]

(a) The commissioner of education must implement a value-added assessment program to assist school districts, public schools, and charter schools in assessing and reporting individual students' growth in academic achievement under section 120B.30, subdivision 1a. The program must use assessments of individual students' academic achievement to make longitudinal comparisons of each student's academic growth over time. School districts, public schools, and charter schools may apply to the commissioner to participate in the initial trial program using a form and in the manner the commissioner prescribes. The commissioner must select program participants from urban, suburban, and rural areas throughout the state.

(b) The commissioner may issue a request for proposals to contract with an organization that provides a value-added assessment model that reliably estimates school and school district effects on students' academic achievement over time. The model the commissioner selects must accommodate diverse data and must use each student's test data across grades. Data on individual teachers generated under the model are personnel data under section 13.43.

(c) The contract under paragraph (b) must be consistent with the definition of "best value" under section 16C.02, subdivision 4.

[EFFECTIVE DATE.] This section is effective the day following final enactment.

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Sec. 25. Minnesota Statutes 2004, section 121A.03, subdivision 1, is amended to read:

Subdivision 1. [MODEL POLICY.] The commissioner shall maintain and make available to school boards a model sexual, religious, and racial harassment and violence policy. The model policy shall address the requirements of subdivision 2, and may encourage violence prevention and character development education programs, consistent with section 120B.225, subdivision 1, to prevent and reduce policy violations.

[EFFECTIVE DATE.] This section is effective the day following final enactment.

Sec. 26. Minnesota Statutes 2004, section 121A.06, subdivision 2, is amended to read:

Subd. 2. [REPORTS; CONTENT.] By January 1, 1994, the commissioner, in consultation with the criminal and juvenile information policy group, shall develop a standardized form to be used by schools to report incidents involving the use or possession of a dangerous weapon in school zones. School districts must electronically report to the commissioner of education incidents involving the use or possession of a dangerous weapon in school zones. The form ~~shall~~ must include the following information:

(1) a description of each incident, including a description of the dangerous weapon involved in the incident;

(2) where, at what time, and under what circumstances the incident occurred;

(3) information about the offender, other than the offender's name, including the offender's age; whether the offender was a student and, if so, where the offender attended school; and whether the offender was under school expulsion or suspension at the time of the incident;

(4) information about the victim other than the victim's name, if any, including the victim's age; whether the victim was a student and, if so, where the victim attended school; and if the victim was not a student, whether the victim was employed at the school;

(5) the cost of the incident to the school and to the victim; and

(6) the action taken by the school administration to respond to the incident.

The commissioner ~~also~~ shall ~~develop~~ provide an ~~alternative~~ electronic reporting format that allows school districts to provide aggregate data~~, with an option to use computer technology to report the data~~.

Sec. 27. Minnesota Statutes 2004, section 121A.06, subdivision 3, is amended to read:

Subd. 3. [REPORTS; FILING REQUIREMENTS.] By ~~February 1 and~~ July 1 31 of each year, each public school shall report incidents involving the use or possession of a dangerous weapon in school zones to the commissioner. The reports must be ~~made on the standardized forms or using the alternative format~~ submitted using the electronic reporting system developed by the commissioner under subdivision 2. The commissioner shall compile the information it receives from the schools and report it annually to the commissioner of public safety~~, the criminal and juvenile information policy group,~~ and the legislature.

Sec. 28. [121A.24] [NOTICE REQUIREMENTS FOR STUDENT SURVEYS AND SIMILAR INSTRUMENTS.]

(a) A school district must obtain prior written informed consent from a parent or guardian of a minor or dependent child before administering an academic or nonacademic student survey, assessment, analysis, evaluation, or similar instrument that solicits information about the student or the student's family concerning:

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(1) political affiliations or beliefs;

(2) mental or psychological problems;

(3) critical appraisals of another individual with whom a student has a close family relationship;

(4) legally recognized privileged or analogous relationships, such as those with a lawyer, physician, or minister;

(5) religious practices, affiliations, or beliefs; or

(6) income or other income-related information required by law to determine eligibility to participate in or receive financial assistance under a program.

(b) When asking a parent or guardian to provide informed written consent, the school district must:

(1) make a copy of the instrument readily accessible to the parent or guardian at a convenient location and reasonable time; and

(2) specifically identify the information in paragraph (a) that will be solicited through the instrument.

The district must request the consent of the parent or guardian at least 14 days before administering the instrument.

(c) A parent or guardian seeking to compel a school district to comply with this section has available the civil remedies under section 13.08, subdivision 4, in addition to other remedies provided by law.

(d) A school district may administer an academic or nonacademic student survey, assessment, analysis, evaluation, or similar instrument that solicits information about the student or the student's family concerning sexual behavior or attitudes or illegal, antisocial, self-incriminating, or demeaning behavior without obtaining prior written informed consent from the parent or guardian of a minor or dependent child. The instrument must not identify the student in any way and the district must give the student's parent or guardian the opportunity to refuse to have the instrument administered to the student.

[EFFECTIVE DATE.] This section is effective the day following final enactment.

Sec. 29. Minnesota Statutes 2004, section 121A.47, subdivision 14, is amended to read:

Subd. 14. [ADMISSION OR READMISSION PLAN.] A school administrator shall prepare and enforce an admission or readmission plan for any pupil who is excluded or expelled from school. The plan may include measures to improve the pupil's behavior, including completing a character education program, consistent with section 120B.225, subdivision 1, and require parental involvement in the admission or readmission process, and may indicate the consequences to the pupil of not improving the pupil's behavior.

[EFFECTIVE DATE.] This section is effective the day following final enactment.

Sec. 30. Minnesota Statutes 2004, section 121A.53, is amended to read:

121A.53 [REPORT TO COMMISSIONER OF EDUCATION.]

Subdivision 1. [EXCLUSIONS AND EXPULSIONS.] The school board ~~shall~~ must report through the department electronic reporting system each exclusion or expulsion within 30 days of the effective date of the action to the commissioner of education. This report ~~shall~~ must include a statement of alternative educational services given the pupil and the reason for, the effective date, and the duration of the exclusion or expulsion. The report must also include the student's age, grade, gender, race, and special education status.

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Subd. 2. [REPORT.] The school board must include state student identification numbers of affected pupils on all dismissal reports required by the department. The department must report annually to the commissioner summary data on the number of dismissals by age, grade, gender, race, and special education status of the affected pupils. All dismissal reports must be submitted through the department electronic reporting system.

Sec. 31. Minnesota Statutes 2004, section 121A.55, is amended to read:

121A.55 [POLICIES TO BE ESTABLISHED.]

(a) The commissioner of education shall promulgate guidelines to assist each school board. Each school board shall establish uniform criteria for dismissal and adopt written policies and rules to effectuate the purposes of sections 121A.40 to 121A.56. The policies shall emphasize preventing dismissals through early detection of problems, using character development or other programs, consistent with section 120B.225, subdivision 1, and shall be designed to address students' inappropriate behavior from recurring. The policies shall recognize the continuing responsibility of the school for the education of the pupil during the dismissal period. The alternative educational services, if the pupil wishes to take advantage of them, must be adequate to allow the pupil to make progress towards meeting the graduation standards adopted under section 120B.02 and help prepare the pupil for readmission.

(b) An area learning center under section 123A.05 may not prohibit an expelled or excluded pupil from enrolling solely because a district expelled or excluded the pupil. The board of the area learning center may use the provisions of the Pupil Fair Dismissal Act to exclude a pupil or to require an admission plan.

(c) Each school district shall develop a policy and report it to the commissioner on the appropriate use of peace officers and crisis teams to remove students who have an individualized education plan from school grounds.

[EFFECTIVE DATE.] This section is effective the day following final enactment.

Sec. 32. [121A.575] [ALTERNATIVES TO PUPIL SUSPENSION.]

Notwithstanding any law to the contrary and in accordance with sections 121A.40 to 121A.56, after a school administration notifies a pupil of the grounds for suspension, the school administration may, instead of imposing the suspension, do one or more of the following:

(1) strongly encourage a parent or guardian of the pupil to attend school with the pupil for one day;

(2) assign the pupil to attend school on Saturday as supervised by the principal or the principal's designee; and

(3) petition the juvenile court that the student is in need of services under chapter 260C.

Sec. 33. [121A.655] [SCHOOL ATTENDANCE REQUIREMENT; DRIVING PRIVILEGES.]

Students enrolled in a school district, charter school, or alternative education program that does not waive the school attendance requirement for driving privileges are subject to section 171.056, among other related sections.

[EFFECTIVE DATE.] This section is effective July 1, 2005.

Sec. 34. Minnesota Statutes 2004, section 122A.06, subdivision 4, is amended to read:

Subd. 4. [~~COMPREHENSIVE, SCIENTIFICALLY BASED~~ EFFECTIVE READING INSTRUCTION.] "Comprehensive, scientifically based reading instruction" includes instruction and practice in phonemic awareness, phonics and other word-recognition skills, and guided oral reading for beginning readers, as well as extensive silent

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~~reading, vocabulary instruction, instruction in comprehension, and instruction that fosters understanding and higher-order thinking for readers of all ages and proficiency levels.~~ "Effective reading instruction" includes a program or collection of instructional practices that is based on reliable evidence showing that when these programs or practices are used, students can be expected to achieve, at a minimum, satisfactory reading progress. The program or collection of practices must include, at a minimum, instruction in five areas of reading: phonemic awareness, phonics, fluency, vocabulary, and text comprehension.

Effective reading instruction also includes and integrates instructional strategies for continuously assessing, evaluating, and communicating the student's reading progress and needs in order to design and implement ongoing interventions so that students of all ages and proficiency levels can read and comprehend text and apply higher level thinking skills.

Sec. 35. Minnesota Statutes 2004, section 122A.09, subdivision 4, is amended to read:

Subd. 4. [LICENSE AND RULES.] (a) The board must adopt rules to license public school teachers and interns subject to chapter 14.

(b) The board must adopt rules requiring a person to successfully complete a skills examination in reading, writing, and mathematics as a requirement for initial teacher licensure. Such rules must require college and universities offering a board-approved teacher preparation program to provide remedial assistance to persons who did not achieve a qualifying score on the skills examination, including those for whom English is a second language.

(c) The board must adopt rules to approve teacher preparation programs. The board, upon the request of a postsecondary student preparing for teacher licensure or a licensed graduate of a teacher preparation program, shall assist in resolving a dispute between the person and a postsecondary institution providing a teacher preparation program when the dispute involves an institution's recommendation for licensure affecting the person or the person's credentials. At the board's discretion, assistance may include the application of chapter 14.

(d) The board must provide the leadership and shall adopt rules for the redesign of teacher education programs to implement a research based, results-oriented curriculum that focuses on the skills teachers need in order to be effective. The board shall implement new systems of teacher preparation program evaluation to assure program effectiveness based on proficiency of graduates in demonstrating attainment of program outcomes.

(e) The board must adopt rules requiring successful completion of an examination of general pedagogical knowledge and examinations of licensure-specific teaching skills. The rules shall be effective on the dates determined by the board but not later than September 1, 2001.

(f) The board must adopt rules requiring teacher educators to work directly with elementary or secondary school teachers in elementary or secondary schools to obtain periodic exposure to the elementary or secondary teaching environment.

(g) The board must grant licenses to interns and to candidates for initial licenses.

(h) The board must design and implement an assessment system which requires a candidate for an initial license and first continuing license to demonstrate the abilities necessary to perform selected, representative teaching tasks at appropriate levels.

(i) The board must receive recommendations from local committees as established by the board for the renewal of teaching licenses.

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(j) The board must grant life licenses to those who qualify according to requirements established by the board, and suspend or revoke licenses pursuant to sections 122A.20 and 214.10. The board must not establish any expiration date for application for life licenses.

(k) The board must adopt rules that require all licensed teachers who are renewing their continuing license to include in their renewal requirements further preparation in the areas of using positive behavior interventions and in accommodating, modifying, and adapting curricula, materials, and strategies to appropriately meet the needs of individual students and ensure adequate progress toward the state's graduation rule.

(l) In adopting rules to license public school teachers who provide health-related services for disabled children, the board shall adopt rules consistent with license or registration requirements of the commissioner of health and the health-related boards who license personnel who perform similar services outside of the school.

(m) The board must adopt rules that require all licensed teachers who are renewing their continuing license to include in their renewal requirements further reading preparation, consistent with section 122A.06, subdivision 4. The rules do not take effect until they are approved by law. Teachers who do not provide direct instruction including, at least, counselors, school psychologists, school nurses, school social workers, audiovisual directors and coordinators, and recreation personnel are exempt from this section.

(n) The board must adopt rules that require all licensed teachers who are renewing their continuing license to include in their renewal requirements further preparation in understanding the key warning signs of early-onset mental illness in children and adolescents.

(o) The board must:

(1) adopt rules to license qualified candidates to teach chemistry, physics, biology, and earth and space science; and

(2) license a science teacher qualified to teach in grades 7 through 12 to teach in a new science content area or level in grades 7 through 12 if the teacher holds a continuing license to teach science, has a continuing contract under section 122A.40, subdivision 7, or section 122A.41, subdivision 4, and receives a qualifying score on an appropriate Praxis II test in a science subject other than the teacher's currently licensed science field or level. A qualifying score is the same test score used for initial licenses to teach science. A science teacher who seeks licensure in a different science content area or level under this paragraph is responsible for the actual costs of the required testing. The board's authority to license science teachers under this paragraph expires August 1, 2009.

Sec. 36. Minnesota Statutes 2004, section 122A.12, subdivision 2, is amended to read:

Subd. 2. [TERMS; COMPENSATION; REMOVAL; ADMINISTRATION; REIMBURSEMENT.] (a) Membership terms, removal of members, and the filling of membership vacancies are as provided in section 214.09. The terms of the initial board members must be determined by lot as follows:

(1) three members must be appointed for terms that expire August 1, 2002;

(2) three members must be appointed for terms that expire August 1, 2003; and

(3) four members must be appointed for terms that expire August 1, 2004.

Members shall not receive the daily payment under section 214.09, subdivision 3. The public employer of a member shall not reduce the member's compensation or benefits for the member's absence from employment when engaging in the business of the board. The provision of staff, administrative services, and office space; the review

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and processing of complaints; the setting of fees; the selection and duties of an executive secretary to serve the board; and other provisions relating to board operations are as provided in chapter 214. Fiscal year and reporting requirements are as provided in sections 214.07 and 214.08.

(b) The board may reimburse local school districts for the cost of a substitute teacher employed when a regular teacher is providing professional assistance to the state by serving on the board or on a committee or task force appointed by the board.

Sec. 37. Minnesota Statutes 2004, section 122A.18, subdivision 2a, is amended to read:

Subd. 2a. [READING STRATEGIES.] (a) All colleges and universities approved by the Board of Teaching to prepare persons for classroom teacher licensure must include in their teacher preparation programs ~~reading best practices that enable classroom teacher licensure candidates to know how to teach reading, such as phonics or other~~ research-based best practices in reading, consistent with section 122A.06, subdivision 4, that enable the licensure candidate to know how to teach reading in the candidate's content areas.

(b) Board-approved teacher preparation programs for teachers of elementary education must require instruction in the application of comprehensive, scientifically based, and balanced reading instruction programs. that:

(1) teach students to read using foundational knowledge, practices, and strategies consistent with section 122A.06, subdivision 4, so that all students will achieve continuous progress in reading; and

(2) teach specialized instruction in reading strategies, interventions, and remediations that enable students of all ages and proficiency levels to become proficient readers.

Sec. 38. Minnesota Statutes 2004, section 122A.41, subdivision 14, is amended to read:

Subd. 14. [SERVICES TERMINATED BY DISCONTINUANCE OR LACK OF PUPILS; PREFERENCE GIVEN.] (a) A teacher whose services are terminated on account of discontinuance of position or lack of pupils must receive first consideration for other positions in the district for which that teacher is qualified. In the event it becomes necessary to discontinue one or more positions, in making such discontinuance, teachers must be discontinued in any department in the inverse order in which they were employed, unless a board and the exclusive representative of teachers in the district negotiate a plan providing otherwise.

(b) Notwithstanding the provisions of clause (a), a teacher is not entitled to exercise any seniority when that exercise results in that teacher being retained by the district in a field for which the teacher holds only a provisional license, as defined by the Board of Teaching, unless that exercise of seniority results in the termination of services, on account of discontinuance of position or lack of pupils, of another teacher who also holds a provisional license in the same field. The provisions of this clause do not apply to vocational education licenses.

(c) Notwithstanding the provisions of clause (a), a teacher must not be reinstated to a position in a field in which the teacher holds only a provisional license, other than a vocational education license, while another teacher who holds a nonprovisional license in the same field is available for reinstatement.

Sec. 39. Minnesota Statutes 2004, section 122A.414, is amended to read:

122A.414 [ALTERNATIVE TEACHER ~~COMPENSATION~~ PAY.]

Subdivision 1. [RESTRUCTURED PAY SYSTEM.] A restructured teacher ~~compensation~~ professional pay system is established under subdivision 2 to provide incentives for teachers to improve their knowledge and skills and for school districts and charter schools to recruit and retain highly qualified teachers, and to support teachers' roles in improving students' educational achievement.

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Subd. 2. [ALTERNATIVE TEACHER PROFESSIONAL PAY SYSTEM.] (a) To participate in this program, a school district, school site, or charter school must have an educational improvement plan as described in section 122A.413 and an alternative teacher professional pay system as described in paragraph (b).

(b) The alternative teacher professional pay system must:

(1) describe ~~the conditions necessary for~~ how teachers can achieve career advancement and additional compensation;

(2) describe how the school district, school site, or charter school will provide teachers with career advancement options ~~for teachers retaining~~, such as master or mentor teacher positions that allow teachers to retain primary roles in student instruction and facilitate job-embedded professional development that helps other teachers improve their skills;

(3) ~~use a professional pay system that replaces the step and lane salary schedule and is not based on years of service;~~

~~(4) encourage teachers' continuous improvement in content knowledge, pedagogy, and use of best practices; and~~

~~(5) implement an objective evaluation system, including classroom observation, that is aligned with the district's or the site's educational improvement plan as described in section 122A.413~~ eliminate the "steps and lanes" salary schedule and compensate teachers for performing satisfactory service, achieving professional teaching goals, and undergoing evaluations under clause (6);

(4) compensate teachers for their performance based on, at a minimum:

(i) schoolwide achievement gains under section 120B.35 or locally selected standardized assessment outcomes, or both;

(ii) individual student achievement gains, where available, under section 120B.35 or locally selected standardized assessment outcomes, or both; and

(iii) results of individual teacher evaluations conducted by a locally selected and trained evaluation team under clause (6);

(5) provide integrated ongoing site-based professional development activities that are aligned with student needs under sections 122A.413 and 122A.60, if enacted, and led during the school day by trained teacher leaders such as master or mentor teachers; and

(6) provide an objective and comprehensive teacher evaluation that is aligned with the educational improvement plan under section 122A.413 and the staff development plan under section 122A.601, if enacted, and that includes multiple evaluations of a teacher's performance during the school year conducted by the locally selected and trained evaluation team that are based on best practice teaching standards and instruction and on classroom observations.

Subd. 3. [REPORT.] Participating districts ~~and~~, school sites, and charter schools must report on the implementation and effectiveness of the alternative teacher ~~compensation plan~~ professional pay system, particularly addressing each requirement under subdivision 2 and make biennial recommendations by January 1 to their school boards. The school ~~boards~~ board shall transmit a copy of the report with a summary of the findings and recommendations of ~~their~~ the district, school site, or charter school to the commissioner.

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Sec. 40. Minnesota Statutes 2004, section 122A.415, subdivision 1, is amended to read:

Subdivision 1. [~~AID~~ REVENUE AMOUNT.] (a) A school district, school site, or charter school that meets the conditions of section 122A.414 and submits an application approved by the commissioner is eligible for alternative compensation ~~aid~~ revenue.

(b) For school district applications, the commissioner must consider only those applications to participate that are submitted jointly by a school district and the exclusive representative of the teachers ~~for participation in the program~~. The application must contain a formally adopted collective bargaining agreement, memorandum of understanding, or other binding agreement that:

(1) implements an alternative teacher professional pay system consistent with section 122A.414;

(2) complies with the Public Employment Labor Relations Act under chapter 179A, except that notwithstanding section 179A.20, subdivision 3, a district may enter into a contract for a term of between two and four years; and

(3) includes all teachers in a district, or all teachers at a school site, or at least 25 percent of the teachers in a district. The commissioner, in approving applications, may give preference to applications involving entire districts or sites or to applications that align measures of teacher performance with student academic achievement and progress under section 120B.35, subdivision 1.

Alternative teacher compensation ~~aid~~ revenue for a qualifying school district, or site~~, or portion of a district or school site is as follows:~~

~~(1) for a school district~~ in which the school board and the exclusive representative of the teachers agree to place all teachers in the district or at the site on the alternative ~~compensation schedule, alternative compensation aid~~ teacher professional pay system equals ~~$150~~ $260 times the district's or the site's number of pupils enrolled on October 1 of the previous fiscal year~~; or~~

(2) for a district in which the school board and the exclusive representative of the teachers agree that at least 25 percent of the district's licensed teachers will be paid on the alternative compensation schedule, alternative compensation aid equals $150 times the percentage of participating teachers times the district's number of pupils enrolled as of October 1 of the previous fiscal year.

(c) For charter school applications, the board of directors of a charter school that satisfies the conditions under section 122A.414 must submit to the commissioner an application that contains:

(1) an agreement to implement an alternative teacher professional pay system under section 122A.414;

(2) a resolution by the charter school board of directors adopting the agreement; and

(3) the record of a formal vote by the teachers employed at the charter school indicating that at least 70 percent of all teachers agree to implement the alternative teacher professional pay system, unless the charter school submits an alternative teacher professional pay system under section 122A.414 before the first year of operation.

Alternative compensation revenue for a qualifying charter school must be calculated under section 126C.10, subdivision 34, paragraphs (a) and (b).

~~(b)~~ (d) The revenue is available only to school districts, school sites, and charter schools that implement an alternative teacher professional pay system before the school year begins.

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Sec. 41. Minnesota Statutes 2004, section 122A.415, subdivision 3, is amended to read:

Subd. 3. [~~AID~~ REVENUE TIMING.] (a) Districts or, school sites, or charter schools with approved applications must receive alternative compensation ~~aid~~ revenue for each school year that the district or, school site, or charter school participates in the program ~~as described in~~ under this subdivision. Districts or, school sites, or charter schools with applications ~~received~~ approved by the commissioner ~~before June 1 of the first year of a two-year contract~~ shall receive alternative compensation ~~aid~~ revenue for ~~both~~ school years of the contract. Districts or sites with applications received by the commissioner after June 1 of the first year of a two-year contract shall receive alternative compensation aid only for the second year of the contract in which the alternative teacher professional pay system is implemented for the full school year. For fiscal year 2007 and later, a qualifying district or, school site, or charter school that received alternative compensation aid for the previous fiscal year must receive at least an amount of alternative teacher compensation revenue equal to the lesser of the amount it received for the previous fiscal year or ~~its proportionate share of the previous year's appropriation~~ the amount it qualifies for under subdivision 1 for the current fiscal year if the district or, school site, or charter school submits a timely application and the commissioner determines that the district or, school site, or charter school continues to implement an alternative teacher professional pay system, consistent with its application under this section. The commissioner must approve initial applications for school districts qualifying under subdivision 1, paragraph (b), clause (1), by January 15 of each year. If any money remains, the commissioner must approve aid amounts for school districts qualifying under subdivision 1, paragraph (b), clause (2), by February 15 of each year.

(b) The commissioner shall approve applications that comply with sections 122A.414, subdivision 2, paragraph (b), and 122A.415, subdivision 1, in the order in which they are received, select applicants that qualify for this program, notify school districts ~~and~~, school sites, and charter schools about the program, develop and disseminate application materials, and carry out other activities needed to implement this section.

[EFFECTIVE DATE.] This section is effective August 1, 2005.

Sec. 42. Minnesota Statutes 2004, section 123A.06, subdivision 1, is amended to read:

Subdivision 1. [PROGRAM FOCUS.] (a) The programs and services of a center must focus on academic and learning skills, applied learning opportunities, trade and vocational skills, work-based learning opportunities, work experience, youth service to the community, transition services, and English language and literacy programs for children whose primary language is a language other than English, and may focus on character development, consistent with section 120B.225, subdivision 1. Applied learning, work-based learning, and service learning may best be developed in collaboration with a local education and transitions partnership, culturally based organizations, mutual assistance associations, or other community resources. In addition to offering programs, the center shall coordinate the use of other available educational services, special education services, social services, health services, and postsecondary institutions in the community and services area.

(b) Consistent with the requirements of sections 121A.40 to 121A.56, a school district may provide an alternative education program for a student who is within the compulsory attendance age under section 120A.20, and who is involved in severe or repeated disciplinary action.

[EFFECTIVE DATE.] This section is effective the day following final enactment.

Sec. 43. [123A.10] [EDUCATION ADMINISTRATIVE DISTRICTS.]

Subdivision 1. [ADMINISTRATIVE EFFICIENCY.] An education administrative district is intended to increase the efficiency of administrative services for kindergarten through grade 12 public schools by combining the administrative functions of multiple school districts while preserving independent school district control of individual school sites.

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Subd. 2. [AGREEMENT TO ESTABLISH EDUCATION ADMINISTRATIVE DISTRICT.] School boards that meet the requirements of subdivision 3 may enter into a written agreement to establish an education administrative district. The agreement must include methods to improve the efficient delivery of administrative services. A majority of the full board of each member district that is a party to the agreement must adopt the agreement and any subsequent modifications of the agreement.

Subd. 3. [COMMISSIONER REVIEW AND COMMENT.] Before entering into an agreement to establish an education administrative district, the school boards of the proposed member districts jointly must submit the proposed agreement to the commissioner for review and comment. The commissioner must submit a review and comment on the educational and economic advisability of the proposed agreement to the affected school boards within 60 days of receiving the proposal. If the commissioner submits a negative review and comment, the districts do not qualify for levy authority under section 123A.12, subdivision 5.

Subd. 4. [NOTICE AND PUBLIC HEARING ON PROPOSED AGREEMENT.] Before entering into an agreement to establish an education administrative district, the school boards of the proposed member districts each must publish the commissioner's review and comment and a summary of the proposed agreement and its anticipated effect upon the district at least once in a newspaper of general circulation in the district. The board must conduct a public hearing on the proposed agreement not more than ten days after the notice is published and at least 30 days before entering into the agreement.

[EFFECTIVE DATE.] This section is effective for the 2005-2006 school year and later.

Sec. 44. [123A.11] [EDUCATION ADMINISTRATIVE DISTRICT BOARD.]

Subdivision 1. [SCHOOL DISTRICT REPRESENTATION.] The education administrative district board is composed of at least one representative appointed by the school board of each member district. Each representative must be a member of the appointing school board. Each representative serves at the pleasure of the appointing board and may be recalled by a majority vote of the appointing board. Each representative serves for the term specified in the agreement. The board must select its officers from among its members and determine the officers' terms. The board must adopt bylaws for conducting business. The board may conduct public meetings using interactive television if it complies with chapter 13 in each location where board members are present.

Subd. 2. [PROVIDING ADMINISTRATIVE SERVICES.] An education administrative district board must implement the agreement for efficiently delivering needed administrative services under section 123A.12 to the education administrative district.

Subd. 3. [PERSONNEL.] The board may employ personnel needed to provide administrative services to the education administrative district. Personnel employed by the education administrative district are eligible to participate in retirement programs. Notwithstanding section 123B.143, subdivision 1, a district member of an education administrative district must contract with the education administrative district to obtain superintendent services. The person providing superintendent services need not be an employee of the education administrative district or a member district at the time the person contracts to provide superintendent services.

Subd. 4. [CONTRACTS.] The education administrative district board may contract with school districts and other public and private agencies to provide needed administrative services in the education administrative district.

Subd. 5. [GENERAL LAW.] The education administrative district board is governed by section 471.59 unless specifically provided otherwise under sections 123A.10 to 123A.12.

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Subd. 6. [ANNUAL REPORT.] After each of its first five years of operation, the education administrative district board must submit an annual report to its member districts and the commissioner about the education administrative district's activities, including an analysis of its administrative costs and efficiencies.

[EFFECTIVE DATE.] This section is effective for the 2005-2006 school year and later.

Sec. 45. [123A.12] [EDUCATION ADMINISTRATIVE DISTRICT AGREEMENT.]

Subdivision 1. [IMPLEMENTATION; REVIEW.] An education administrative district board must implement the agreement of its member districts under section 123A.10, subdivision 2, to provide efficient administrative services to the education administrative district. The board must review the agreement annually and propose needed modifications to its member districts.

Subd. 2. [ADMINISTRATIVE SERVICES.] (a) Consistent with section 123B.143, subdivision 1, the agreement must allow the education administrative district board within 24 months of implementing the agreement to select one superintendent to serve the education administrative district for a specified term.

(b) The agreement must specify other noninstructional services the education administrative district intends to provide to member districts, including, among other services, business management, human resources, payroll, food service, buildings and ground maintenance, pupil transportation, technology coordination, curriculum coordination, community education, nursing services, student records, student administrative services, and school building administration.

Subd. 3. [TIMING AND DURATION.] (a) The initial agreement must contain a timeline for implementing the agreement.

(b) The initial agreement must be for a period of at least three years. After completing the first two years, the agreement may be extended by a majority vote of the full board of each member district.

Subd. 4. [FINANCES.] The initial agreement must:

(1) include a three-year budget projection comparing existing administrative services and costs with proposed administrative services and costs for each year;

(2) specify the retirement and severance incentives, consistent with section 123A.48, subdivision 23, that may be offered to licensed and nonlicensed staff, and how these costs will be apportioned among member districts;

(3) specify other start-up costs for the education administrative district and how these costs will be apportioned among member districts;

(4) specify the estimated amounts each member district will levy under subdivision 5 for the specified costs in clauses (2) and (3); and

(5) specify an equitable distribution formula for the education administrative district board to assess and certify a proportionate share of expenses to member districts, which must remit their assessment to the education administrative district board within 30 days of receiving the certified assessment.

Subd. 5. [LEVY.] A school district that is a member of an education administrative district may levy an amount equal to the member district's share of costs approved by the commissioner for retirement and severance incentives and other start-up costs included in the initial agreement under subdivision 4, clauses (2) and (3), over a term of not more than 36 months.

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Subd. 6. [REPORTS TO EDUCATION DEPARTMENT.] Member school districts jointly may submit reports and provide required information to the department. The joint reports clearly must attribute information, including expenditures for the education administrative district, to individual member districts.

Subd. 7. [ADDITIONAL AND WITHDRAWING DISTRICTS.] (a) Upon approval by a majority vote of a district school board and the education administrative district board, an adjoining school district may become a member of an education administrative district and is governed by this section and the education administrative district agreement in effect. A noncontiguous district may become a member with the commissioner's approval based on the criteria under section 123A.10, subdivision 3. A new member added to an education administrative district may levy for approved retirement and severance incentive costs under subdivision 5.

(b) After three consecutive years of membership, a member district, by majority vote of its full board and after complying with the applicable terms in the education administrative district agreement, may withdraw from the education administrative district and the agreement at the end of the subsequent fiscal year.

Subd. 8. [DISSOLUTION.] After the first three years of the education administrative district, the boards of each member district may agree to dissolve the education administrative district at the end of any fiscal year or at an earlier, mutually agreeable time. Member districts must dissolve the education administrative district according to the applicable provisions in the agreement establishing the education administrative district. The dissolution must not affect the continuing liability of any district formerly a member of the education administrative district for continuing obligations, including employment benefits.

[EFFECTIVE DATE.] This section is effective for the 2005-2006 school year and later.

Sec. 46. Minnesota Statutes 2004, section 123A.24, subdivision 2, is amended to read:

Subd. 2. [COOPERATIVE UNIT DEFINED.] For the purposes of this section, a cooperative unit is:

(1) an education district organized under sections 123A.15 to 123A.19;

(2) a cooperative vocational center organized under section 123A.22;

(3) an intermediate district organized under chapter 136D;

(4) an education administrative district organized under sections 123A.10 to 123A.12;

(5) a service cooperative organized under section 123A.21; or

~~(5)~~ (6) a regional management information center organized under section 123A.23 or as a joint powers district according to section 471.59.

Sec. 47. Minnesota Statutes 2004, section 123B.02, is amended by adding a subdivision to read:

Subd. 22. [REWARD.] A school board, after formally adopting a policy consistent with this subdivision, may offer a reward to a person who provides accurate and reliable information leading to the conviction of a person who has committed, attempted to commit, or conspired to commit a crime against students or school employees, volunteers or board members as a result of their affiliation with the school district, or against school district property.

[EFFECTIVE DATE.] This section is effective the day following final enactment.

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Sec. 48. [123B.022] [PROHIBITING SCHOOL EMPLOYEES FROM USING PUBLIC RESOURCES FOR ADVOCACY; ENDORSING TIMELY AND CURRENT FACTUAL INFORMATION.]

(a) A school board must adopt and implement a districtwide policy that prohibits district employees from using district funds or other publicly funded district resources, including time, materials, equipment, facilities, and communication technologies, among other resources, to advocate for electing or defeating a candidate, passing or defeating a ballot question, or passing or defeating pending legislation. The policy must apply when the employee performs the duties assigned to the employee under the employee's employment contract with the district, and includes the periods when the employee represents the district in an official capacity, among other duties. The policy must not apply when an employee disseminates factual information consistent with the employee's contractual duties.

(b) The school board must provide the district's electorate with timely factual information about a pending ballot question.

[EFFECTIVE DATE.] This section is effective January 1, 2006.

Sec. 49. [123B.042] [SCHOOL SITE GOVERNANCE PROGRAM.]

Subdivision 1. [ESTABLISHMENT.] A school site governance program is established to provide schools with more authority and flexibility to teach and provide services to students at the school site. Nothing in this section affects a school district's ability to enter into a school site decision-making agreement under section 123B.04.

Subd. 2. [SITE DECISION-MAKING TEAM.] (a) To participate in the program, a school must form a site decision-making team that includes a school principal or other persons having general control and supervision of the school, at least one teacher in the school, one noninstructional staff person in the school, and at least one parent of a student enrolled in the school or other community member. By October 1 of the school year before participating in the program, the school site decision-making team must:

(1) be approved by a 60 percent vote of employees in the school;

(2) adopt a policy describing how it will delegate authority and responsibilities among its members; and

(3) notify the school board of its intent to participate in the program.

(b) After notifying the school board under paragraph (a), clause (3), the school site decision-making team shall publish a notice in a newspaper of general circulation in the district of its intent to participate in the program and the date it will hold a public hearing about its intended participation. In addition to holding the public hearing, the decision-making team, for a period of 30 days, must also solicit parent and community input regarding its intended participation.

(c) By January 15, the decision-making team shall demonstrate to the school board how the team's plan responds to public comment.

Subd. 3. [RESPONSIBILITIES; REVENUE.] (a) A school site decision-making team participating in this program:

(1) has the control and responsibilities of the school board for operating and managing the site after the agreement under paragraph (b) is signed, including such responsibilities as instructional practices, personnel selection from within the district, and staffing assignments for the school; and

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(2) retains control of the revenue and determines its use as necessary to operate the school for the school years it participates in the program under this section.

(b) By January 15 of the school year before participating in the program, the school site decision-making team must enter into a written agreement with the local school board describing the control and responsibilities of the decision-making team and of the school board. Revenue for a fiscal year received or receivable by the district and that the district would expend for the particular school site participating in the program is allocated to that school site. All other district revenue not reserved for other purposes must be proportionately allocated to the site based on the site's pupil count. The agreement must include provisions describing how the decision-making team and school board will resolve disputes over assigned authority and responsibilities. The school board members must vote whether to authorize the agreement under this paragraph according to section 123B.09, subdivision 6. The decision of the school board is final. If the school board does not authorize the agreement, the school board must publish its decision and reasons in a newspaper of general circulation in the district.

(d) The school site decision-making team must comply with section 13D.04, subdivision 1.

Subd. 4. [EMPLOYEES.] The employees of the school site remain employees of the school district for salary, benefits, seniority, retirement, and other personnel issues. Consistent with current law and the collective bargaining agreement in effect, the school site decision-making team selects employees from within the district into licensed and nonlicensed positions at the school site, including the position of principal or other person having general control and supervision of the school. When negotiating a new contract under chapter 179A, an exclusive representative and school board must provide for the employees of a school site participating in the program under this section.

Subd. 5. [PERFORMANCE AGREEMENTS.] By March 15 of the school year before participating in the program, the school site decision-making team shall enter into a performance agreement with the school board. The agreement shall include:

(1) the previous year's baseline information at the site regarding student achievement based on:

(i) aggregated and disaggregated statewide testing data;

(ii) other nationally normed standardized tests;

(iii) student attendance; and

(iv) dropout rates and graduation rates, where applicable;

(2) the expected levels of improvement in selected areas of student performance during the next year;

(3) how student performance will be measured, including assessment procedures required by law and rule;

(4) status of the school's revenues and expenditures;

(5) other performance expectations and measures agreed upon by the school site and school board;

(6) the frequency of reporting by the school site to the school board; and

(7) how the performance results will be made available to parents and the public.

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The term of an agreement shall be for no more than two years.

The performance agreement must include provisions describing how the school board and school site decision-making team will resolve disputes over the school's compliance with provisions of the agreement.

If the school site decision-making team and school board cannot agree on the provisions of a performance agreement as required under this subdivision, either party may request assistance from the commissioner of education. The commissioner shall provide assistance to the parties to ensure they reach an agreement.

Subd. 6. [TERMINATION OF SITE-BASED PROGRAM AUTHORITY.] If a school site fails to meet the agreed upon expectations as specified in the performance agreement with the school board for two consecutive school years, its authority to participate in the program is terminated.

School sites that have had their authority to participate in this program terminated under this subdivision may not participate in this program for three years after termination.

Subd. 7. [REPORTS.] A school site decision-making team shall, and its respective school board may, make an annual report to the commissioner of education by September 1. The reports shall be consistent with the requirements of section 120B.11, subdivision 5, paragraph (a).

Subd. 8. [COMMISSIONER'S DUTY.] The commissioner of education shall evaluate the effectiveness of the program by January 1, 2010.

Sec. 50. Minnesota Statutes 2004, section 123B.09, subdivision 8, is amended to read:

Subd. 8. [DUTIES.] The board must superintend and manage the schools of the district; adopt rules for their organization, government, and instruction; keep registers; and prescribe textbooks and courses of study. The board may enter into an agreement with a postsecondary institution for secondary or postsecondary nonsectarian courses to be taught at a secondary school, nonsectarian postsecondary institution, or another location. The board must not enter into an agreement that limits its authority to assign and reassign teachers or administrators to the schools in which the teachers will teach or the administrators will administer.

[EFFECTIVE DATE.] This section is effective for agreements entered into on or after July 1, 2005.

Sec. 51. Minnesota Statutes 2004, section 123B.143, subdivision 1, is amended to read:

Subdivision 1. [CONTRACT; DUTIES.] All districts maintaining a classified secondary school must employ a superintendent who shall be an ex officio nonvoting member of the school board. The authority for selection and employment of a superintendent must be vested in the board in all cases. An individual employed by a board as a superintendent shall have an initial employment contract for a period of time no longer than three years from the date of employment. Any subsequent employment contract must not exceed a period of three years. A board, at its discretion, may or may not renew an employment contract. A board must not, by action or inaction, extend the duration of an existing employment contract. Beginning 365 days prior to the expiration date of an existing employment contract, a board may negotiate and enter into a subsequent employment contract to take effect upon the expiration of the existing contract. A subsequent contract must be contingent upon the employee completing the terms of an existing contract. If a contract between a board and a superintendent is terminated prior to the date specified in the contract, the board may not enter into another superintendent contract with that same individual that has a term that extends beyond the date specified in the terminated contract. A board may terminate a superintendent during the term of an employment contract for any of the grounds specified in section 122A.40, subdivision 9 or 13. A superintendent shall not rely upon an employment contract with a board to assert any other

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continuing contract rights in the position of superintendent under section 122A.40. Notwithstanding the provisions of sections 122A.40, subdivision 10 or 11, 123A.32, 123A.75, or any other law to the contrary, no individual shall have a right to employment as a superintendent based on order of employment in any district. If two or more districts enter into an agreement for the purchase or sharing of the services of a superintendent, the contracting districts have the absolute right to select one of the individuals employed to serve as superintendent in one of the contracting districts and no individual has a right to employment as the superintendent to provide all or part of the services based on order of employment in a contracting district. The superintendent of a district shall perform the following:

(1) visit and supervise the schools in the district, report and make recommendations about their condition when advisable or on request by the board;

(2) recommend to the board employment and dismissal of teachers;

(3) superintend school grading practices and examinations for promotions;

(4) make reports required by the commissioner; and

(5) by January 10, submit an annual report to the commissioner in a manner prescribed by the commissioner, in consultation with school districts, identifying the expenditures that the district requires to ensure an 80 percent student passage rate on the basic standards test taken in the eighth grade, identifying the highest student passage rate the district expects it will be able to attain on the basic standards test by grade 12, the amount of expenditures that the district requires to attain the targeted student passage rate, and how much the district is cross-subsidizing programs with special education, basic skills, and general education revenue; and

~~(6)~~ perform other duties prescribed by the board.

Sec. 52. Minnesota Statutes 2004, section 123B.36, subdivision 1, is amended to read:

Subdivision 1. [SCHOOL BOARDS MAY REQUIRE FEES.] (a) For purposes of this subdivision, "home school" means a home school as defined in sections 120A.22 and 120A.24 with five or fewer students receiving instruction.

(b) A school board is authorized to require payment of fees in the following areas:

(1) in any program where the resultant product, in excess of minimum requirements and at the pupil's option, becomes the personal property of the pupil;

(2) admission fees or charges for extracurricular activities, where attendance is optional and where the admission fees or charges a student must pay to attend or participate in an extracurricular activity is the same for all students, regardless of whether the student is enrolled in a public or a home school;

(3) a security deposit for the return of materials, supplies, or equipment;

(4) personal physical education and athletic equipment and apparel, although any pupil may personally provide it if it meets reasonable requirements and standards relating to health and safety established by the board;

(5) items of personal use or products that a student has an option to purchase such as student publications, class rings, annuals, and graduation announcements;

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(6) fees specifically permitted by any other statute, including but not limited to section 171.05, subdivision 2; provided (i) driver education fees do not exceed the actual cost to the school and school district of providing driver education, and (ii) the driver education courses are open to enrollment to persons between the ages of 15 and 18 who reside or attend school in the school district;

(7) field trips considered supplementary to a district educational program;

(8) any authorized voluntary student health and accident benefit plan;

(9) for the use of musical instruments owned or rented by the district, a reasonable rental fee not to exceed either the rental cost to the district or the annual depreciation plus the actual annual maintenance cost for each instrument;

(10) transportation of pupils to and from extracurricular activities conducted at locations other than school, where attendance is optional, and transportation of charter school students participating in extracurricular activities in their resident district under section 123B.49, subdivision 4, paragraph (a), which must be charged to the charter school;

(11) transportation to and from school of pupils living within two miles from school and all other transportation services not required by law. If a district charges fees for transportation of pupils, it must establish guidelines for that transportation to ensure that no pupil is denied transportation solely because of inability to pay;

(12) motorcycle classroom education courses conducted outside of regular school hours; provided the charge must not exceed the actual cost of these courses to the school district;

(13) transportation to and from postsecondary institutions for pupils enrolled under the postsecondary enrollment options program under section 123B.88, subdivision 22. Fees collected for this service must be reasonable and must be used to reduce the cost of operating the route. Families who qualify for mileage reimbursement under section 124D.09, subdivision 22, may use their state mileage reimbursement to pay this fee. If no fee is charged, districts must allocate costs based on the number of pupils riding the route.

[EFFECTIVE DATE.] This section is effective for the 2005-2006 school year and later.

Sec. 53. Minnesota Statutes 2004, section 123B.49, subdivision 4, is amended to read:

Subd. 4. [BOARD CONTROL OF EXTRACURRICULAR ACTIVITIES.] (a) The board may take charge of and control all extracurricular activities of the teachers and children of the public schools in the district. Extracurricular activities means all direct and personal services for pupils for their enjoyment that are managed and operated under the guidance of an adult or staff member. The board shall allow all resident pupils receiving instruction in a home school as defined in section 123B.36, subdivision 1, paragraph (a), and all resident pupils receiving instruction in a charter school as defined in section 124D.10 to be eligible to fully participate in extracurricular activities on the same basis as public school students. enrolled in the district's schools. A charter school student must give the enrolling charter school and the resident school district at least a 30-day notice of the student's intent to participate in an extracurricular activity in the resident district. Before a charter school student begins participating in an extracurricular activity in the resident district, the charter school must agree in writing to pay the direct and indirect costs attributable to that student that the district may charge to the charter school under paragraph (f). A charter school student is not eligible to participate in an extracurricular activity in the resident district if that extracurricular activity is offered by the enrolling charter school or the extracurricular activity is not controlled by the high school league under chapter 128C. Charter school students participating in extracurricular activities must meet the academic and student conduct requirements of the resident district. The charter school must:

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(1) collect the same information that a district collects on a student's eligibility to participate in an extracurricular activity;

(2) transmit that information to the district at least ten days before a student begins to participate in the extracurricular activity; and

(3) immediately transmit to the district any additional information affecting the student's eligibility.

(b) Extracurricular activities have all of the following characteristics:

(1) they are not offered for school credit nor required for graduation;

(2) they are generally conducted outside school hours, or if partly during school hours, at times agreed by the participants, and approved by school authorities;

(3) the content of the activities is determined primarily by the pupil participants under the guidance of a staff member or other adult.

(c) If the board does not take charge of and control extracurricular activities, these activities shall be self-sustaining with all expenses, except direct salary costs and indirect costs of the use of school facilities, met by dues, admissions, or other student fund-raising events. The general fund must reflect only those salaries directly related to and readily identified with the activity and paid by public funds. Other revenues and expenditures for extracurricular activities must be recorded according to the "Manual ~~of Instruction~~ for ~~Uniform Student Activities~~ Activity Fund Accounting ~~for Minnesota School Districts and Area Vocational-Technical Colleges~~." Extracurricular activities not under board control must have an annual financial audit and must also be audited annually for compliance with this section.

(d) If the board takes charge of and controls extracurricular activities, any or all costs of these activities may be provided from school revenues and all revenues and expenditures for these activities shall be recorded in the same manner as other revenues and expenditures of the district.

(e) If the board takes charge of and controls extracurricular activities, the teachers or pupils in the district must not participate in such activity, nor shall the school name or any allied name be used in connection therewith, except by consent and direction of the board.

(f) School districts may charge charter schools their proportional share of the direct and indirect costs of the extracurricular activities that are not covered by student fees under section 123B.36, subdivision 1, ticket revenues, fund-raising efforts, sponsorships, or other income generated for those activities for which the charter school is charged. A district may charge charter school students the same fees it charges enrolled students to participate in an extracurricular activity. All charges to a charter school and charter school students must be paid when the charter school students are selected to participate in the activity. A district is not required to provide transportation from the charter school to the resident district for a charter school student who participates in an extracurricular activity in the resident district.

[EFFECTIVE DATE.] This section is effective for the 2005-2006 school year and later.

Sec. 54. Minnesota Statutes 2004, section 124D.095, subdivision 8, is amended to read:

Subd. 8. [FINANCIAL ARRANGEMENTS.] (a) For a student enrolled in an on-line learning course, the department must calculate average daily membership and make payments according to this subdivision.

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(b) The initial on-line learning average daily membership equals 1/12 for each semester course or a proportionate amount for courses of different lengths. The adjusted on-line learning average daily membership equals the initial on-line learning average daily membership times .88.

(c) No on-line learning average daily membership shall be generated if: (1) the student does not complete the on-line learning course, or (2) the student is enrolled in on-line learning provided by the enrolling district ~~and the student was enrolled in a Minnesota public school for the school year before the school year in which the student first enrolled in on-line learning~~.

(d) On-line learning average daily membership under this subdivision for a student currently enrolled in a Minnesota public school ~~and who was enrolled in a Minnesota public school for the school year before the school year in which the student first enrolled in on-line learning~~ shall be used only for computing average daily membership according to section 126C.05, subdivision 19, paragraph (a), clause (ii), and for computing on-line learning aid according to section ~~126C.24~~ 124D.096.

(e) On-line learning average daily membership under this subdivision for students not included in paragraph (c) or (d) shall be used only for computing average daily membership according to section 126C.05, subdivision 19, paragraph (a), clause (ii), and for computing payments under paragraphs (f) and (g).

(f) Subject to the limitations in this subdivision, the department must pay an on-line learning provider an amount equal to the product of the adjusted on-line learning average daily membership for students under paragraph (e) times the student grade level weighting under section 126C.05, subdivision 1, times the formula allowance.

(g) The department must pay each on-line learning provider 100 percent of the amount in paragraph (f) within 45 days of receiving final enrollment and course completion information each quarter or semester.

[EFFECTIVE DATE.] This section is effective for revenue for fiscal year 2006.

Sec. 55. Minnesota Statutes 2004, section 124D.10, subdivision 3, is amended to read:

Subd. 3. [SPONSOR.] (a) A school board; intermediate school district school board; education district organized under sections 123A.15 to 123A.19; charitable organization under section 501(c)(3) of the Internal Revenue Code of 1986 that is a member of the Minnesota Council of Nonprofits or the Minnesota Council on Foundations, registered with the attorney general's office, and reports an end-of-year fund balance of at least $2,000,000; Minnesota private college that grants two- or four-year degrees and is registered with the Higher Education Services Office under chapter 136A; community college, state university, or technical college, governed by the Board of Trustees of the Minnesota State Colleges and Universities; or the University of Minnesota may sponsor one or more charter schools.

(b) A nonprofit corporation subject to chapter 317A, described in section 317A.905, and exempt from federal income tax under section 501(c)(6) of the Internal Revenue Code of 1986, may sponsor one or more charter schools if the charter school has operated for at least three years under a different sponsor and if the nonprofit corporation has existed for at least 25 years.

(c) The commissioner of education may approve up to five charitable organizations under section 501(c)(3) of the Internal Revenue Code of 1986 that sponsor charter schools as their sole charitable purpose. Eligible charitable organizations interested in being approved as a sponsor under this paragraph must submit a proposal to the commissioner that includes:

(1) the articles, bylaws, and initial membership of the charitable organization's board of directors;

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(2) financial information consistent with section 309.53, subdivision 3;

(3) a description of how the charitable organization plans to realize its principle charitable purpose; and

(4) other information requested by the commissioner.

A charitable organization that is approved as a sponsor under this paragraph annually must report to the commissioner in the form and manner the commissioner determines. The report must describe the charter schools authorized by the charitable organization, the effectiveness of those charter schools in promoting student achievement, and the governance structure of those charter schools, and also must include other information requested by the commissioner. An approved charitable organization may sponsor one or more charter schools. The commissioner may withdraw the approval of a charitable organization to sponsor a charter school under this paragraph if the commissioner determines that the charitable organization fails to meet generally accepted standards of fiscal management, violates the law, or shows other good cause. The commissioner's determination is final. When the commissioner withdraws the approval of a charitable organization to sponsor a charter school, the commissioner may approve the decision of a different eligible sponsor to authorize the charter school or may apply subdivision 24 governing student enrollment when a charter school contract is not renewed or terminated.

[EFFECTIVE DATE.] This section is effective the day following final enactment.

Sec. 56. Minnesota Statutes 2004, section 124D.10, subdivision 4, is amended to read:

Subd. 4. [FORMATION OF SCHOOL.] (a) A sponsor may authorize one or more licensed teachers under section 122A.18, subdivision 1, to operate a charter school subject to approval by the commissioner. A board must vote on charter school application for sponsorship no later than 90 days after receiving the application. After 90 days, the applicant may apply to the commissioner. If a board elects not to sponsor a charter school, the applicant may appeal the board's decision to the commissioner~~. The commissioner~~ who may elect to ~~sponsor the charter school or~~ assist the applicant in finding an eligible sponsor. The school must be organized and operated as a cooperative under chapter 308A or nonprofit corporation under chapter 317A and the provisions under the applicable chapter shall apply to the school except as provided in this section. Notwithstanding sections 465.717 and 465.719, a school district may create a corporation for the purpose of creating a charter school.

(b) Before the operators may form and operate a school, the sponsor must file an affidavit with the commissioner stating its intent to authorize a charter school. The affidavit must state the terms and conditions under which the sponsor would authorize a charter school and how the sponsor intends to oversee the fiscal and student performance of the charter school and to comply with the terms of the written contract between the sponsor and the charter school board of directors under subdivision 6. The commissioner must approve or disapprove the sponsor's proposed authorization within 60 90 days of receipt of the affidavit. Failure to obtain commissioner approval precludes a sponsor from authorizing the charter school that was the subject of the affidavit.

(c) The operators authorized to organize and operate a school, before entering into a contract or other agreement for professional or other services, goods, or facilities, must incorporate as a cooperative under chapter 308A or as a nonprofit corporation under chapter 317A and must establish a board of directors composed of at least five members until a timely election for members of the charter school board of directors is held according to the school's articles and bylaws. A charter school board of directors must be composed of at least five members. Any staff members who are employed at the school, including teachers providing instruction under a contract with a cooperative, and all parents of children enrolled in the school may participate in the election for members of the school's board of directors. Licensed teachers employed at the school, including teachers providing instruction under a contract with a cooperative, must be a majority of the members of the board of directors before the school completes its third year of operation, unless the commissioner waives the requirement for a majority of licensed teachers on the board. Board of director meetings must comply with chapter 13D.

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(d) The granting or renewal of a charter by a sponsoring entity must not be conditioned upon the bargaining unit status of the employees of the school.

(e) A sponsor may authorize the operators of a charter school to expand the operation of the charter school to additional sites or to add additional grades at the school beyond those described in the sponsor's application as approved by the commissioner only after submitting a supplemental application to the commissioner in a form and manner prescribed by the commissioner. The supplemental application must provide evidence that:

(1) the expansion of the charter school is supported by need and projected enrollment;

(2) the charter school is fiscally sound;

(3) the sponsor supports the expansion; and

(4) the building of the additional site meets all health and safety requirements to be eligible for lease aid.

(f) The commissioner annually must provide timely financial management training to newly elected members of a charter school board of directors and ongoing training to other members of a charter school board of directors. Training must address ways to:

(1) proactively assess opportunities for a charter school to maximize all available revenue sources;

(2) establish and maintain complete, auditable records for the charter school;

(3) establish proper filing techniques;

(4) document formal actions of the charter school, including meetings of the charter school board of directors;

(5) properly manage and retain charter school and student records;

(6) comply with state and federal payroll record-keeping requirements; and

(7) address other similar factors that facilitate establishing and maintaining complete records on the charter school's operations.

[EFFECTIVE DATE.] This section is effective for the 2005-2006 school year and later.

Sec. 57. Minnesota Statutes 2004, section 124D.10, subdivision 6, is amended to read:

Subd. 6. [CONTRACT.] The sponsor's authorization for a charter school must be in the form of a written contract signed by the sponsor and the board of directors of the charter school. The contract must be completed within 90 days of the commissioner's approval of the sponsor's proposed authorization. The contract for a charter school must be in writing and contain at least the following:

(1) a description of a program that carries out one or more of the purposes in subdivision 1;

(2) specific outcomes pupils are to achieve under subdivision 10;

(3) admission policies and procedures;

(4) management and administration of the school;

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(5) requirements and procedures for program and financial audits;

(6) how the school will comply with subdivisions 8, 13, 16, and 23;

(7) assumption of liability by the charter school;

(8) types and amounts of insurance coverage to be obtained by the charter school;

(9) the term of the contract, which may be up to three years; ~~and~~

(10) if the board of directors or the operators of the charter school provide special instruction and services for children with a disability under sections 125A.03 to 125A.24, and 125A.65, a description of the financial parameters within which the charter school will operate to provide the special instruction and services to children with a disability; and

(11) the process and criteria the sponsor intends to use to monitor and evaluate the fiscal and student performance of the charter school, consistent with subdivision 15.

[EFFECTIVE DATE.] This section is effective for the 2005-2006 school year and later.

Sec. 58. Minnesota Statutes 2004, section 124D.10, subdivision 8, is amended to read:

Subd. 8. [STATE AND LOCAL REQUIREMENTS.] (a) A charter school shall meet all applicable state and local health and safety requirements.

(b) A school sponsored by a school board may be located in any district, unless the school board of the district of the proposed location disapproves by written resolution.

(c) A charter school must be nonsectarian in its programs, admission policies, employment practices, and all other operations. A sponsor may not authorize a charter school or program that is affiliated with a nonpublic sectarian school or a religious institution.

(d) Charter schools must not be used as a method of providing education or generating revenue for students who are being homeschooled.

(e) The primary focus of a charter school must be to provide a comprehensive program of instruction for at least one grade or age group from five through 18 years of age. Instruction may be provided to people younger than five years and older than 18 years of age.

(f) A charter school may not charge tuition.

(g) A charter school is subject to and must comply with chapter 363A and section 121A.04.

(h) A charter school is subject to and must comply with the Pupil Fair Dismissal Act, sections 121A.40 to 121A.56, and the Minnesota Public School Fee Law, sections 123B.34 to 123B.39.

(i) A charter school is subject to the same financial audits, audit procedures, and audit requirements as a district. Audits must be conducted in compliance with generally accepted governmental auditing standards, the Federal Single Audit Act, if applicable, and section 6.65. A charter school is subject to and must comply with sections 15.054; 118A.01; 118A.02; 118A.03; 118A.04; 118A.05; 118A.06; 123B.52, subdivision 5; 471.38; 471.391; 471.392; 471.425; 471.87; 471.88, subdivisions 1, 2, 3, 4, 5, 6, 12, 13, and 15; 471.881; and 471.89. The audit must

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comply with the requirements of sections 123B.75 to 123B.83, except to the extent deviations are necessary because of the program at the school. Deviations must be approved by the commissioner. The Department of Education, state auditor, or legislative auditor may conduct financial, program, or compliance audits. A charter school determined to be in statutory operating debt under sections 123B.81 to 123B.83 must submit a plan under section 123B.81, subdivision 4.

(j) A charter school is a district for the purposes of tort liability under chapter 466.

(k) A charter school must comply with sections 13.32; 120A.22, subdivision 7; 121A.75; and 260B.171, subdivisions 3 and 5.

(l) A charter school is subject to the Pledge of Allegiance requirement under section 121A.11, subdivision 3.

(m) A charter school is subject to sections 123B.36, subdivision 1, paragraph (b), clause (10), and 123B.49, subdivision 4, paragraphs (a) and (f), when its students participate in extracurricular activities in their resident district.

(n) Charter school board of director open meeting requirements are governed according to subdivision 4.

[EFFECTIVE DATE.] This section is effective for the 2005-2006 school year and later.

Sec. 59. Minnesota Statutes 2004, section 124D.10, subdivision 15, is amended to read:

Subd. 15. [REVIEW AND COMMENT.] (a) The department must review and comment on the evaluation, by the sponsor, of the performance of a charter school before the charter school's contract is renewed for another contract term. The sponsor must submit to the commissioner timely information for the review and comment.

(b) A sponsor shall monitor and evaluate the fiscal and student performance of the school, and may for this purpose annually assess a charter school: (1) in its first, second, or third year of operation up to $30 per student up to a maximum of $10,000; and (2) in its fourth or a subsequent year of operation up to $10 per student up to a maximum of $3,500. ~~The information for the review and comment shall be reported by the sponsor to the commissioner of education in a timely manner.~~

[EFFECTIVE DATE.] This section is effective for the 2005-2006 school year and later.

Sec. 60. Minnesota Statutes 2004, section 124D.10, subdivision 23, is amended to read:

Subd. 23. [CAUSES FOR NONRENEWAL OR TERMINATION OF CHARTER SCHOOL CONTRACT.] (a) The duration of the contract with a sponsor must be for the term contained in the contract according to subdivision 6. The sponsor may or may not renew a contract at the end of the term for any ground listed in paragraph (b). A sponsor may unilaterally terminate a contract during the term of the contract for any ground listed in paragraph (b). At least 60 days before not renewing or terminating a contract, the sponsor shall notify the board of directors of the charter school of the proposed action in writing. The notice shall state the grounds for the proposed action in reasonable detail and that the charter school's board of directors may request in writing an informal hearing before the sponsor within 14 days of receiving notice of nonrenewal or termination of the contract. Failure by the board of directors to make a written request for a hearing within the 14-day period shall be treated as acquiescence to the proposed action. Upon receiving a timely written request for a hearing, the sponsor shall give reasonable notice to the charter school's board of directors of the hearing date. The sponsor shall conduct an informal hearing before taking final action. The sponsor shall take final action to renew or not renew a contract by the last day of classes in the school year. If the sponsor is a local board, the school's board of directors may appeal the sponsor's decision to the commissioner.

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(b) A contract may be terminated or not renewed upon any of the following grounds:

(1) failure to meet the requirements for pupil performance contained in the contract;

(2) failure to meet generally accepted standards of fiscal management;

(3) violations of law; or

(4) other good cause shown.

If a contract is terminated or not renewed under this paragraph, the school must be dissolved according to the applicable provisions of chapter 308A or 317A, except when the commissioner approves the decision of a different eligible sponsor to authorize the charter school.

(c) If at the end of a contract term, either the sponsor or the charter school board of directors wants to voluntarily terminate the contract, a change in sponsors is allowed if the commissioner approves the decision of a different eligible sponsor to authorize the charter school. The party intending to terminate the contract must notify the other party and the commissioner of its intent at least 90 days before the date on which the contract ends. The sponsor that is a party to the existing contract at least must inform the approved different eligible sponsor about the fiscal and student performance of the school. If no different eligible sponsor is approved, the school must be dissolved according to applicable law and the terms of the contract.

(d) The commissioner, after providing reasonable notice to the board of directors of a charter school and the existing sponsor, and after providing an opportunity for a public hearing, may terminate the existing sponsorial relationship if the charter school has a history of:

(1) financial mismanagement; or

(2) repeated violations of the law.

[EFFECTIVE DATE.] This section is effective for the 2005-2006 school year and later.

Sec. 61. Minnesota Statutes 2004, section 124D.11, subdivision 1, is amended to read:

Subdivision 1. [GENERAL EDUCATION REVENUE.] (a) General education revenue must be paid to a charter school as though it were a district. The general education revenue for each adjusted marginal cost pupil unit is the state average general education revenue per pupil unit, plus the referendum equalization aid allowance in the pupil's district of residence, minus an amount equal to the product of the formula allowance according to section 126C.10, subdivision 2, times .0485, calculated without basic skills revenue, extended time revenue, alternative compensation revenue, transition revenue, and transportation sparsity revenue, plus basic skills revenue, extended time revenue, basic alternative compensation aid according to section 126C.10, subdivision 34, and transition revenue as though the school were a school district. The general education revenue for each extended time marginal cost pupil unit equals $4,378.

(b) Notwithstanding paragraph (a), for charter schools in the first year of operation, general education revenue shall be computed using the number of adjusted pupil units in the current fiscal year.

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Sec. 62. Minnesota Statutes 2004, section 124D.11, subdivision 2, is amended to read:

Subd. 2. [TRANSPORTATION REVENUE.] Transportation revenue must be paid to a charter school that provides transportation services according to section 124D.10, subdivision 16, according to this subdivision. Transportation aid shall equal transportation revenue.

In addition to the revenue under subdivision 1, a charter school providing transportation services must receive general education aid ~~for each pupil unit~~ equal to the sum of the product of (i) an amount equal to the product of the formula allowance according to section 126C.10, subdivision 2, times .0485, plus the transportation sparsity allowance for the school district in which the charter school is located times (ii) the adjusted marginal cost pupil units, plus the product of $223 times the extended time marginal cost pupil units.

Sec. 63. Minnesota Statutes 2004, section 124D.11, subdivision 6, is amended to read:

Subd. 6. [OTHER AID, GRANTS, REVENUE.] (a) A charter school is eligible to receive other aids, grants, and revenue according to chapters 120A to 129C, as though it were a district.

(b) Notwithstanding paragraph (a), a charter school may not receive aid, a grant, or revenue if a levy, other than a levy required by sections 125A.76 or 126C.10, is required to obtain the money, or if the aid, grant, or revenue is a replacement of levy revenue, except as otherwise provided in this section.

(c) Federal aid received by the state must be paid to the school, if it qualifies for the aid as though it were a school district.

(d) A charter school may receive money from any source for capital facilities needs. In the year-end report to the commissioner of education, the charter school shall report the total amount of funds received from grants and other outside sources.

Sec. 64. [124D.4531] [CAREER AND TECHNICAL LEVY.]

Subdivision 1. [CAREER AND TECHNICAL LEVY.] (a) A district with a career and technical program approved under this section for the fiscal year in which the levy is certified may levy an amount equal to the lesser of:

(1) $80 times the district's average daily membership in grades 10 through 12 for the fiscal year in which the levy is certified; or

(2) 25 percent of approved expenditures in the fiscal year in which the levy is certified for the following:

(i) salaries paid to essential, licensed personnel providing direct instructional services to students in that fiscal year for services rendered in the district's approved career and technical education programs;

(ii) contracted services provided by a public or private agency other than a Minnesota school district or cooperative center under subdivision 7;

(iii) necessary travel between instructional sites by licensed career and technical education personnel;

(iv) necessary travel by licensed career and technical education personnel for vocational student organization activities held within the state for instructional purposes;

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(v) curriculum development activities that are part of a five-year plan for improvement based on program assessment;

(vi) necessary travel by licensed career and technical education personnel for noncollegiate credit-bearing professional development; and

(vii) specialized vocational instructional supplies.

(b) Up to ten percent of a district's career and technical levy may be spent on equipment purchases. Districts using the career and technical levy for equipment purchases must report to the department on the improved learning opportunities for students that result from the investment in equipment.

Subd. 2. [ALLOCATION FROM COOPERATIVE CENTERS AND INTERMEDIATE DISTRICTS.] For purposes of this section, a cooperative center or an intermediate district must allocate its approved expenditures for career and technical education programs among participating districts.

Subd. 3. [LEVY GUARANTEE.] Notwithstanding subdivision 1, the career and technical education levy for a district is not less than the lesser of:

(1) the district's career and technical education levy authority for the previous fiscal year; or

(2) 100 percent of the approved expenditures for career and technical programs included in subdivision 1, paragraph (b), for the fiscal year in which the levy is certified.

Subd. 4. [COMPLIANCE WITH RULES.] (a) Levy authority must be granted under this section only for services rendered or for costs incurred in career and technical education programs approved by the commissioner and operated in accordance with rules adopted by the commissioner. The rules must not require any minimum number of administrative staff, any minimum period of coordination time or extended employment for career and technical education personnel, or the availability of vocational student activities or organizations for a career and technical education program to qualify for this levy. Levy authority shall be granted only for services rendered and for costs incurred by essential, licensed personnel, or approved paraprofessionals who meet the requirements for licensure pursuant to the rules of the Minnesota Board of Teaching.

For the purposes of this paragraph, "licensed personnel" means persons holding a valid career and technical license issued by the commissioner. If an average of five or fewer secondary full-time equivalent students are enrolled per teacher in an approved postsecondary program at Intermediate District No. 287, 916, or 917, "licensed personnel" means persons holding a valid vocational license issued by the commissioner or the Board of Trustees of the Minnesota State Colleges and Universities.

(b) Notwithstanding section 127A.42, the commissioner may modify or withdraw the program or levy authority under this section without proceeding under section 127A.42, at any time. To do so, the commissioner must determine that the program does not comply with rules of the Department of Education or that any facts concerning the program or its budget differ from the facts in the district's approved application.

Subd. 5. [LIMIT.] The commissioner may reduce the levy under this section for a career and technical education program that receives funds from any other source. A district or center must not receive a total amount of levy authority pursuant to this section which, when added to funds from other sources, will provide the program an amount for salaries and travel which exceeds 100 percent of the amount of its expenditures for salaries and travel in the program.

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Subd. 6. [LEVY FOR CONTRACTED SERVICES.] In addition to the provisions of subdivisions 4 and 5, a school district or cooperative center may contract with a public or private agency other than a Minnesota school district or cooperative center for the provision of career and technical education services. The commissioner must adopt rules relating to program approval procedures and criteria for these contracts and levy authority must be granted only for contracts approved by the commissioner. The district or cooperative center contracting for these services must be construed to be providing the services.

Subd. 7. [DISTRICT REPORTS.] Each district or cooperative center must report data to the department for all career and technical education programs as required by the department to implement the career and technical levy formula.

[EFFECTIVE DATE.] This section is effective for taxes payable in 2008.

Sec. 65. Minnesota Statutes 2004, section 124D.66, subdivision 3, is amended to read:

Subd. 3. [ELIGIBLE SERVICES.] (a) Assurance of mastery programs may provide direct instructional services to an eligible pupil, or a group of eligible pupils, under the following conditions in paragraphs (b) to (d).

(b) Instruction may be provided at one or more grade levels from kindergarten to grade 8 and for students in grades 9 through 12 who were enrolled in grade 8 before the 2005-2006 school year and have failed the basic skills tests, or who were enrolled in grade 8 in the 2005-2006 school year and later and have failed the Minnesota Comprehensive Assessments (MCA-IIs) in reading, mathematics, or writing as required for high school graduation under section 120B.02. If an assessment of pupils' needs within a district demonstrates that the eligible pupils in grades kindergarten to grade 8 are being appropriately served, a district may serve eligible pupils in grades 9 to 12.

(c) Instruction must be provided under the supervision of the eligible pupil's regular classroom teacher. Instruction may be provided by the eligible pupil's classroom teacher, by another teacher, by a team of teachers, or by an education assistant or aide. A special education teacher may provide instruction, but instruction that is provided under this section is not eligible for aid under section 125A.76.

(d) The instruction that is provided must differ from the initial instruction the pupil received in the regular classroom setting. The instruction may differ by presenting different curriculum than was initially presented in the regular classroom or by presenting the same curriculum:

(1) at a different rate or in a different sequence than it was initially presented;

(2) using different teaching methods or techniques than were used initially; or

(3) using different instructional materials than were used initially.

Sec. 66. Minnesota Statutes 2004, section 124D.74, subdivision 1, is amended to read:

Subdivision 1. [PROGRAM DESCRIBED.] American Indian education programs are programs in public elementary and secondary schools, nonsectarian nonpublic, community, tribal, charter, or alternative schools enrolling American Indian children designed to:

(1) support postsecondary preparation for pupils;

(2) support the academic achievement of American Indian students with identified focus to improve reading and mathematic skills;

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(3) make the curriculum more relevant to the needs, interests, and cultural heritage of American Indian pupils;

(4) provide positive reinforcement of the self-image of American Indian pupils;

(5) develop intercultural awareness among pupils, parents, and staff; and

(6) supplement, not supplant, state and federal educational and cocurricular programs.

Program components may include: development of support components for students in the areas of academic achievement, retention, and attendance; development of support components for staff, including in-service training and technical assistance in methods of teaching American Indian pupils; research projects, including experimentation with and evaluation of methods of relating to American Indian pupils; provision of personal and vocational counseling to American Indian pupils; modification of curriculum, instructional methods, and administrative procedures to meet the needs of American Indian pupils; and supplemental instruction in American Indian language, literature, history, and culture. Districts offering programs may make contracts for the provision of program components by establishing cooperative liaisons with tribal programs and American Indian social service agencies. These programs may also be provided as components of early childhood and family education programs.

Sec. 67. Minnesota Statutes 2004, section 124D.81, subdivision 1, is amended to read:

Subdivision 1. [GRANTS; PROCEDURES.] Each fiscal year the commissioner of education must make grants to no fewer than six American Indian education programs. At least three programs must be in urban areas and at least three must be on or near reservations. The board of a local district, a participating school or a group of boards may develop a proposal for grants in support of American Indian education programs. Proposals may provide for contracts for the provision of program components by nonsectarian nonpublic, community, tribal, charter, or alternative schools. The commissioner shall prescribe the form and manner of application for grants, and no grant shall be made for a proposal not complying with the requirements of sections 124D.71 to 124D.82. The commissioner must submit all proposals to the state Advisory Committee on American Indian Education Programs for its recommendations concerning approval, modification, or disapproval and the amounts of grants to approved programs.

Sec. 68. Minnesota Statutes 2004, section 124D.84, subdivision 1, is amended to read:

Subdivision 1. [AWARDS.] The commissioner~~, with the advice and counsel of the Minnesota Indian Education Committee,~~ may award scholarships to any Minnesota resident student who is of one-fourth or more Indian ancestry, who has applied for other existing state and federal scholarship and grant programs, and who, in the opinion of the commissioner, has the capabilities to benefit from further education. Scholarships must be for accredited degree programs in accredited Minnesota colleges or universities or for courses in accredited Minnesota business, technical, or vocational schools. Scholarships may also be given to students attending Minnesota colleges that are in candidacy status for obtaining full accreditation, and are eligible for and receiving federal financial aid programs. Students are also eligible for scholarships when enrolled as students in Minnesota higher education institutions that have joint programs with other accredited higher education institutions. Scholarships shall be used to defray the total cost of education including tuition, incidental fees, books, supplies, transportation, other related school costs and the cost of board and room and shall be paid directly to the college or school concerned where the student receives federal financial aid. The total cost of education includes all tuition and fees for each student enrolling in a public institution and the portion of tuition and fees for each student enrolling in a private institution that does not exceed the tuition and fees at a comparable public institution. Each student shall be awarded a scholarship based on the total cost of the student's education and a federal standardized need analysis. Applicants are encouraged to apply for all other sources of financial aid. ~~The amount and type of each scholarship shall be determined through the advice and counsel of the Minnesota Indian education committee.~~

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When an Indian student satisfactorily completes the work required by a certain college or school in a school year the student is eligible for additional scholarships, if additional training is necessary to reach the student's educational and vocational objective. Scholarships may not be given to any Indian student for more than five years of study ~~without special recommendation of the Minnesota Indian Education Committee~~.

Sec. 69. Minnesota Statutes 2004, section 126C.457, is amended to read:

126C.457 [CAREER AND TECHNICAL LEVY.]

For taxes payable in 2006 and 2007, a school district may levy an amount equal to the greater of (1) $10,000, or (2) the district's fiscal year 2001 entitlement for career and technical aid under Minnesota Statutes 2000, section 124D.453. The district must recognize the full amount of this levy as revenue for the fiscal year in which it is certified. Revenue received under this section must be reserved and used only for career and technical programs.

Sec. 70. Minnesota Statutes 2004, section 127A.47, subdivision 8, is amended to read:

Subd. 8. [CHARTER SCHOOLS.] (a) The general education aid for districts must be adjusted for each pupil attending a charter school under section 124D.10. The adjustments must be made according to this subdivision.

(b) General education aid paid to a district in which a charter school not providing transportation according to section 124D.10, subdivision 16, is located must be increased by an amount equal to the sum of:

(1) the product of: ~~(1)~~ (i) the sum of an amount equal to the product of the formula allowance according to section 126C.10, subdivision 2, times .0485, plus the transportation sparsity allowance for the district; times ~~(2)~~ (ii) the adjusted marginal cost pupil units attributable to the pupil; plus

(2) the product of $223 times the extended time marginal cost pupil units attributable to the pupil.

Sec. 71. Minnesota Statutes 2004, section 128C.12, subdivision 1, is amended to read:

Subdivision 1. [DUES AND EVENTS REVENUE.] The state auditor annually must examine the accounts of, and audit all money paid to, the State High School League by its members. The audit must include financial and compliance issues. The state auditor must also audit all money derived from any event sponsored by the league. ~~League audits must include audits of~~ The state auditor may audit administrative regions of the league. The ~~league and its~~ league's administrative regions may ~~not~~ contract with private auditors. The scope of the state auditor's examinations of the league must be agreed upon by the board and the state auditor, provided that all requirements of this section must be met.

[EFFECTIVE DATE.] This section is effective for the 2005-2006 school year and thereafter.

Sec. 72. [129C.105] [BOARD MEETINGS BY TELEPHONE OR OTHER ELECTRONIC MEANS.]

(a) Notwithstanding section 13D.01 and if complying with section 13D.02 is impractical, the board for the Perpich Center for Arts Education may conduct a meeting of its members by telephone or other electronic means so long as the following conditions are met:

(1) all members of the board participating in the meeting, wherever their physical location, can hear one another and all discussion and testimony;

(2) members of the public present at the regular meeting location of the board can hear all discussion and testimony and all votes of members of the board;

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(3) at least one member of the board is physically present at the regular meeting location; and

(4) all votes are conducted by roll call, so each member's vote on each issue can be identified and recorded.

(b) Each member of the board participating in a meeting by telephone or other electronic means is considered present at the meeting for purposes of determining a quorum and participating in all proceedings.

(c) If telephone or other electronic means is used to conduct a meeting, the board, to the extent practical, shall allow a person to monitor the meeting electronically from a remote location. The board may require the person making such a connection to pay for documented marginal costs that the board incurs as a result of the additional connection.

(d) If telephone or other electronic means is used to conduct a regular, special, or emergency meeting, the board shall provide notice of the regular meeting location, of the fact that some members may participate by telephone or other electronic means, and of the provisions of paragraph (c). The timing and method of providing notice is governed by section 13D.04.

[EFFECTIVE DATE.] This section is effective the day following final enactment.

Sec. 73. Minnesota Statutes 2004, section 171.04, subdivision 1, is amended to read:

Subdivision 1. [PERSONS NOT ELIGIBLE.] The department shall not issue a driver's license:

(1) to any person under 18 years unless:

(i) the applicant is 16 or 17 years of age and has a previously issued valid license from another state or country or the applicant has, for the 12 consecutive months preceding application, held a provisional license and during that time has incurred (A) no conviction for a violation of section 169A.20, 169A.33, 169A.35, or sections 169A.50 to 169A.53, (B) no conviction for a crash-related moving violation, and (C) not more than one conviction for a moving violation that is not crash related. "Moving violation" means a violation of a traffic regulation but does not include a parking violation, vehicle equipment violation, or warning citation;

(ii) the application for a license is approved by (A) either parent when both reside in the same household as the minor applicant or, if otherwise, then (B) the parent or spouse of the parent having custody or, in the event there is no court order for custody, then (C) the parent or spouse of the parent with whom the minor is living or, if subitems (A) to (C) do not apply, then (D) the guardian having custody of the minor or, in the event a person under the age of 18 has no living father, mother, or guardian, or is married or otherwise legally emancipated, then (E) the minor's adult spouse, adult close family member, or adult employer; provided, that the approval required by this item contains a verification of the age of the applicant and the identity of the parent, guardian, adult spouse, adult close family member, or adult employer; ~~and~~

(iii) the applicant presents a certification by the person who approves the application under item (ii), stating that the applicant has driven a motor vehicle accompanied by and under supervision of a licensed driver at least 21 years of age for at least ten hours during the period of provisional licensure; and

(iv) the applicant certifies either (A) the applicant's school attendance under section 171.056 and the district, charter school, or alternative education program in which the applicant is currently enrolled, or (B) that the enrolling district, charter school, or alternative education program board waived the attendance requirement under section 120A.23;

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(2) to any person who is 18 years of age or younger, unless the person has applied for, been issued, and possessed the appropriate instruction permit for a minimum of six months, and, with respect to a person under 18 years of age, a provisional license for a minimum of 12 months;

(3) to any person who is 19 years of age or older, unless that person has applied for, been issued, and possessed the appropriate instruction permit for a minimum of three months;

(4) to any person whose license has been suspended during the period of suspension except that a suspended license may be reinstated during the period of suspension upon the licensee furnishing proof of financial responsibility in the same manner as provided in the Minnesota No-Fault Automobile Insurance Act;

(5) to any person whose license has been revoked except upon furnishing proof of financial responsibility in the same manner as provided in the Minnesota No-Fault Automobile Insurance Act and if otherwise qualified;

(6) to any drug-dependent person, as defined in section 254A.02, subdivision 5;

(7) to any person who has been adjudged legally incompetent by reason of mental illness, mental deficiency, or inebriation, and has not been restored to capacity, unless the department is satisfied that the person is competent to operate a motor vehicle with safety to persons or property;

(8) to any person who is required by this chapter to take a vision, knowledge, or road examination, unless the person has successfully passed the examination. An applicant who fails four road tests must complete a minimum of six hours of behind-the-wheel instruction with an approved instructor before taking the road test again;

(9) to any person who is required under the Minnesota No-Fault Automobile Insurance Act to deposit proof of financial responsibility and who has not deposited the proof;

(10) to any person when the commissioner has good cause to believe that the operation of a motor vehicle on the highways by the person would be inimical to public safety or welfare;

(11) to any person when, in the opinion of the commissioner, the person is afflicted with or suffering from a physical or mental disability or disease that will affect the person in a manner as to prevent the person from exercising reasonable and ordinary control over a motor vehicle while operating it upon the highways;

(12) to a person who is unable to read and understand official signs regulating, warning, and directing traffic;

(13) to a child for whom a court has ordered denial of driving privileges under section 260C.201, subdivision 1, or 260B.235, subdivision 5, until the period of denial is completed; or

(14) to any person whose license has been canceled, during the period of cancellation.

[EFFECTIVE DATE.] This section is effective September 1, 2005, and applies to all persons under age 18 possessing or applying for a driver's instruction permit or provisional license on or after that date.

Sec. 74. Minnesota Statutes 2004, section 171.05, subdivision 2, is amended to read:

Subd. 2. [PERSON LESS THAN 18 YEARS OF AGE.] (a) Notwithstanding any provision in subdivision 1 to the contrary, the department may issue an instruction permit to an applicant who is 15, 16, or 17 years of age and who:

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(1) has completed a course of driver education in another state, has a previously issued valid license from another state, or is enrolled in either:

(i) a public, private, or commercial driver education program that is approved by the commissioner of public safety and that includes classroom and behind-the-wheel training; or

(ii) an approved behind-the-wheel driver education program when the student is receiving full-time instruction in a home school within the meaning of sections 120A.22 and 120A.24, the student is working toward a homeschool diploma, the student's status as a homeschool student has been certified by the superintendent of the school district in which the student resides, and the student is taking home-classroom driver training with classroom materials approved by the commissioner of public safety;

(2) has completed the classroom phase of instruction in the driver education program;

(3) has passed a test of the applicant's eyesight;

(4) has passed a department-administered test of the applicant's knowledge of traffic laws;

(5) has completed the required application, which must be approved by (i) either parent when both reside in the same household as the minor applicant or, if otherwise, then (ii) the parent or spouse of the parent having custody or, in the event there is no court order for custody, then (iii) the parent or spouse of the parent with whom the minor is living or, if items (i) to (iii) do not apply, then (iv) the guardian having custody of the minor or, in the event a person under the age of 18 has no living father, mother, or guardian, or is married or otherwise legally emancipated, then (v) the applicant's adult spouse, adult close family member, or adult employer; provided, that the approval required by this clause contains a verification of the age of the applicant and the identity of the parent, guardian, adult spouse, adult close family member, or adult employer; ~~and~~

(6) certifies either (i) the applicant's school attendance under section 171.056 and the district, charter school, or alternative education program in which the applicant is currently enrolled, or (ii) that the enrolling district, charter school, or alternative education program board waived the attendance requirement under section 120A.23; and

(7) has paid the fee required in section 171.06, subdivision 2.

(b) The instruction permit is valid for one year from the date of application and may be renewed upon payment of a fee equal to the fee for issuance of an instruction permit under section 171.06, subdivision 2.

[EFFECTIVE DATE.] This section is effective September 1, 2005, and applies to all persons under age 18 possessing or applying for a driver's instruction permit on or after that date.

Sec. 75. Minnesota Statutes 2004, section 171.05, subdivision 2b, is amended to read:

Subd. 2b. [INSTRUCTION PERMIT USE BY PERSON UNDER AGE 18.] (a) This subdivision applies to persons who have applied for and received an instruction permit under subdivision 2.

(b) The permit holder may, with the permit in possession, operate a motor vehicle, but must be accompanied by and be under the supervision of a certified driver education instructor, the permit holder's parent or guardian, or another licensed driver age 21 or older. The supervisor must occupy the seat beside the permit holder.

(c) The permit holder may operate a motor vehicle only when every occupant under the age of 18 has a seat belt or child passenger restraint system properly fastened. A person who violates this paragraph is subject to a fine of $25. A peace officer may not issue a citation for a violation of this paragraph unless the officer lawfully stopped or detained the driver of the motor vehicle for a moving violation as defined in section 171.04, subdivision 1. The commissioner shall not record a violation of this paragraph on a person's driving record.

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(d) The permit holder must maintain a driving record free of convictions for moving violations, as defined in section 171.04, subdivision 1, and free of convictions for violation of section 169A.20, 169A.33, 169A.35, or sections 169A.50 to 169A.53. If the permit holder drives a motor vehicle in violation of the law, the commissioner shall suspend, cancel, or revoke the permit in accordance with the statutory section violated.

(e) The permit holder must comply with the school attendance requirement under section 171.056, except when the attendance requirement is waived under section 120A.23. If the permit holder does not attend school as required, the commissioner must cancel the permit under section 171.056.

[EFFECTIVE DATE.] This section is effective September 1, 2005, and applies to all persons under age 18 possessing or applying for a driver's instruction permit on or after that date.

Sec. 76. Minnesota Statutes 2004, section 171.05, subdivision 3, is amended to read:

Subd. 3. [MOTORIZED BICYCLE.] Notwithstanding any provision in subdivision 1 to the contrary, the department, upon application and payment of the fee prescribed in section 171.02, subdivision 3, may issue a motorized bicycle instruction permit to an applicant who is 15 years of age ~~and~~, who has successfully completed the written portion of the examination prescribed by the commissioner, and who certifies either (1) the applicant's school attendance under section 171.056 and the district, charter school, or alternative education program in which the applicant is currently enrolled, or (2) that the enrolling district, charter school, or alternative education program board waived the attendance requirement under section 120A.23. The holder of this instruction permit who has the permit in possession may operate a motorized bicycle within one mile of the holder's residence for the purpose of practicing to take the operator portion of the examination prescribed by the commissioner.

[EFFECTIVE DATE.] This section is effective September 1, 2005, and applies to all persons under age 18 possessing or applying for a motorized bicycle instruction permit on or after that date.

Sec. 77. [171.056] [SCHOOL ATTENDANCE REQUIREMENT FOR DRIVER'S INSTRUCTION PERMIT, MOTORIZED BICYCLE PERMIT, AND PROVISIONAL LICENSE.]

Subdivision 1. [DEFINITIONS.] (a) As used in this section the terms defined in this subdivision have the meanings given them.

(b) "Continuing truant" means a student under section 260A.02, subdivision 3, who is absent without valid excuse from instruction in a school.

(c) "Habitual truant" means a person under section 260C.007, subdivision 19, who is absent without lawful excuse from attendance at school.

(d) "High school diploma" means an official record or document indicating that the student has satisfied the graduation requirements of that school as defined under section 120A.22, subdivision 4.

(e) "Public school" means a public school, state approved alternative program (SAAP), or charter school.

(f) "School board" means a public school district school board, SAAP board, or charter school board of directors.

(g) "School principal" means a principal or chief administrative officer of a public school.

Subd. 2. [ISSUANCE OR RENEWAL OF DRIVER'S INSTRUCTION PERMIT, MOTORIZED BICYCLE PERMIT, OR PROVISIONAL LICENSE.] (a) Notwithstanding any law to the contrary, except when the attendance requirement is waived under section 120A.23, school attendance is a requirement for issuing a new driver's instruction permit, motorized bicycle permit, or provisional license or renewing the permit of a person under age 18. The person meets the school attendance requirement when the person:

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(1) has a high school diploma or general education development certificate (GED);

(2) has withdrawn from school under section 120A.22, subdivision 8; or

(3) is enrolled and attending a public school and is not a continuing truant or habitually truant, is enrolled and attending a nonpublic school, or is homeschooled.

(b) A person under age 18 who applies for a motorized bicycle permit, instruction permit, or provisional license must submit information to the Department of Public Safety in the manner and format it prescribes documenting that the person has met the requirements of paragraph (a).

Subd. 3. [EXPUNGEMENT OF RECORD.] Upon receiving the written or electronic request of a student who is age 18 or older, the Department of Public Safety must expunge from the department's motor vehicle records all the student's truancy data related to the department refusing to issue or canceling the student's permit or license under this section.

[EFFECTIVE DATE.] This section is effective September 1, 2005, and applies to all persons under age 18 possessing or applying for a motorized bicycle permit, driver's instruction permit, or provisional license on or after that date.

Sec. 78. [179A.145] [PERIOD DURING WHICH NEGOTIATIONS ARE PROHIBITED; FINANCIAL PENALTY FOR FAILING TO SETTLE.]

Subdivision 1. [PROHIBITION; FINANCIAL INCENTIVE AND PENALTY.] (a) A school board and the exclusive representative of the teachers in a district may not meet and negotiate and may not enter into a contract during the period beginning November 15 and ending with the last student contact day the next spring in the even-numbered year and ending March 1 in the odd-numbered year.

(b) Notwithstanding paragraph (a), a school board and the exclusive representative of the teachers may mutually agree to meet and negotiate an agreement or contract, meet and confer under section 179A.03, subdivision 10, negotiate a memorandum of understanding or meet for another particular purpose after November 15.

(c) If the school board and the exclusive representative of the teachers in a district fail to enter into a contract before November 15 or 90 days after the date on which the governor signs the bill providing for elementary and secondary school funding, whichever is later, unless subdivision 2 applies, the education commissioner must withhold from the district all district basic revenue increases under section 126C.10 that are allowed over the previous fiscal year until the school board and the exclusive representative of the teachers enter into a contract.

Subd. 2. [EXCEPTIONS.] Subdivision 1 does not apply:

(1) if the school board and the exclusive representative of teachers certify in writing to the commissioner of mediation services that they have entered into a tentative agreement before November 15, to the extent the parties enter into a final contract based on the tentative agreement certified to the commissioner;

(2) if the school board and the exclusive representative agree, before November 15, to binding interest arbitration of items in dispute, to the extent the parties enter into a contract to confirm the results of the arbitrator's decision;

(3) if the teachers in the district are on strike on November 15; or

(4) the commissioner has approved the district's application to participate in an alternative teacher professional pay system under sections 122A.414 and 122A.415.

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Subd. 3. [RELATION TO OTHER LAW.] This section supersedes any conflicting provisions of other law.

[EFFECTIVE DATE.] This section is effective July 1, 2007.

Sec. 79. Minnesota Statutes 2004, section 260C.007, subdivision 6, is amended to read:

Subd. 6. [CHILD IN NEED OF PROTECTION OR SERVICES.] "Child in need of protection or services" means a child who is in need of protection or services because the child:

(1) is abandoned or without parent, guardian, or custodian;

(2)(i) has been a victim of physical or sexual abuse, (ii) resides with or has resided with a victim of domestic child abuse as defined in subdivision 5, (iii) resides with or would reside with a perpetrator of domestic child abuse or child abuse as defined in subdivision 5, or (iv) is a victim of emotional maltreatment as defined in subdivision 8;

(3) is without necessary food, clothing, shelter, education, or other required care for the child's physical or mental health or morals because the child's parent, guardian, or custodian is unable or unwilling to provide that care;

(4) is without the special care made necessary by a physical, mental, or emotional condition because the child's parent, guardian, or custodian is unable or unwilling to provide that care, including a child in voluntary placement due solely to the child's developmental disability or emotional disturbance;

(5) is medically neglected, which includes, but is not limited to, the withholding of medically indicated treatment from a disabled infant with a life-threatening condition. The term "withholding of medically indicated treatment" means the failure to respond to the infant's life-threatening conditions by providing treatment, including appropriate nutrition, hydration, and medication which, in the treating physician's or physicians' reasonable medical judgment, will be most likely to be effective in ameliorating or correcting all conditions, except that the term does not include the failure to provide treatment other than appropriate nutrition, hydration, or medication to an infant when, in the treating physician's or physicians' reasonable medical judgment:

(i) the infant is chronically and irreversibly comatose;

(ii) the provision of the treatment would merely prolong dying, not be effective in ameliorating or correcting all of the infant's life-threatening conditions, or otherwise be futile in terms of the survival of the infant; or

(iii) the provision of the treatment would be virtually futile in terms of the survival of the infant and the treatment itself under the circumstances would be inhumane;

(6) is one whose parent, guardian, or other custodian for good cause desires to be relieved of the child's care and custody, including a child in placement according to voluntary release by the parent under section 260C.212, subdivision 8;

(7) has been placed for adoption or care in violation of law;

(8) is without proper parental care because of the emotional, mental, or physical disability, or state of immaturity of the child's parent, guardian, or other custodian;

(9) is one whose behavior, condition, or environment is such as to be injurious or dangerous to the child or others. An injurious or dangerous environment may include, but is not limited to, the exposure of a child to criminal activity in the child's home;

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(10) is experiencing growth delays, which may be referred to as failure to thrive, that have been diagnosed by a physician and are due to parental neglect;

(11) has engaged in prostitution as defined in section 609.321, subdivision 9;

(12) has committed a delinquent act or a juvenile petty offense before becoming ten years old;

(13) is a runaway;

(14) is a continuing or habitual truant;

(15) has been found incompetent to proceed or has been found not guilty by reason of mental illness or mental deficiency in connection with a delinquency proceeding, a certification under section 260B.125, an extended jurisdiction juvenile prosecution, or a proceeding involving a juvenile petty offense; or

(16) has been found by the court to have committed domestic abuse perpetrated by a minor under Laws 1997, chapter 239, article 10, sections 2 to 26, has been ordered excluded from the child's parent's home by an order for protection/minor respondent, and the parent or guardian is either unwilling or unable to provide an alternative safe living arrangement for the child.

[EFFECTIVE DATE.] This section is effective July 1, 2005.

Sec. 80. Minnesota Statutes 2004, section 260C.007, is amended by adding a subdivision to read:

Subd. 8a. [CONTINUING TRUANT.] "Continuing truant" means a student under section 260A.02, subdivision 3, who is absent without valid excuse from instruction in a school.

[EFFECTIVE DATE.] This section is effective July 1, 2005.

Sec. 81. Minnesota Statutes 2004, section 260C.201, subdivision 1, is amended to read:

Subdivision 1. [DISPOSITIONS.] (a) If the court finds that the child is in need of protection or services or neglected and in foster care, it shall enter an order making any of the following dispositions of the case:

(1) place the child under the protective supervision of the responsible social services agency or child-placing agency in the home of a parent of the child under conditions prescribed by the court directed to the correction of the child's need for protection or services:

(i) the court may order the child into the home of a parent who does not otherwise have legal custody of the child, however, an order under this section does not confer legal custody on that parent;

(ii) if the court orders the child into the home of a father who is not adjudicated, he must cooperate with paternity establishment proceedings regarding the child in the appropriate jurisdiction as one of the conditions prescribed by the court for the child to continue in his home;

(iii) the court may order the child into the home of a noncustodial parent with conditions and may also order both the noncustodial and the custodial parent to comply with the requirements of a case plan under subdivision 2; or

(2) transfer legal custody to one of the following:

(i) a child-placing agency; or

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(ii) the responsible social services agency. In placing a child whose custody has been transferred under this paragraph, the agencies shall make an individualized determination of how the placement is in the child's best interests using the consideration for relatives and the best interest factors in section 260C.212, subdivision 2, paragraph (b); or

(3) if the child has been adjudicated as a child in need of protection or services because the child is in need of special services or care to treat or ameliorate a physical or mental disability, the court may order the child's parent, guardian, or custodian to provide it. The court may order the child's health plan company to provide mental health services to the child. Section 62Q.535 applies to an order for mental health services directed to the child's health plan company. If the health plan, parent, guardian, or custodian fails or is unable to provide this treatment or care, the court may order it provided. Absent specific written findings by the court that the child's disability is the result of abuse or neglect by the child's parent or guardian, the court shall not transfer legal custody of the child for the purpose of obtaining special treatment or care solely because the parent is unable to provide the treatment or care. If the court's order for mental health treatment is based on a diagnosis made by a treatment professional, the court may order that the diagnosing professional not provide the treatment to the child if it finds that such an order is in the child's best interests; or

(4) if the court believes that the child has sufficient maturity and judgment and that it is in the best interests of the child, the court may order a child 16 years old or older to be allowed to live independently, either alone or with others as approved by the court under supervision the court considers appropriate, if the county board, after consultation with the court, has specifically authorized this dispositional alternative for a child.

(b) If the child was adjudicated in need of protection or services because the child is a runaway, or is a continuing or habitual truant, the court may order any of the following dispositions in addition to or as alternatives to the dispositions authorized under paragraph (a):

(1) counsel the child or the child's parents, guardian, or custodian;

(2) place the child under the supervision of a probation officer or other suitable person in the child's own home under conditions prescribed by the court, including reasonable rules for the child's conduct and the conduct of the parents, guardian, or custodian, designed for the physical, mental, and moral well-being and behavior of the child; or with the consent of the commissioner of corrections, place the child in a group foster care facility which is under the commissioner's management and supervision;

(3) subject to the court's supervision, transfer legal custody of the child to one of the following:

(i) a reputable person of good moral character. No person may receive custody of two or more unrelated children unless licensed to operate a residential program under sections 245A.01 to 245A.16; or

(ii) a county probation officer for placement in a group foster home established under the direction of the juvenile court and licensed pursuant to section 241.021;

(4) require the child to pay a fine of up to $100. The court shall order payment of the fine in a manner that will not impose undue financial hardship upon the child;

(5) require the child to participate in a community service project;

(6) order the child to undergo a chemical dependency evaluation and, if warranted by the evaluation, order participation by the child in a drug awareness program or an inpatient or outpatient chemical dependency treatment program;

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(7) if the court believes that it is in the best interests of the child ~~and~~ or of public safety that the child's driver's license or instruction permit be canceled, the court may order the commissioner of public safety to cancel the child's license or permit for any period up to the child's 18th birthday. If the child does not have a driver's license or permit, the court may order a denial of driving privileges for any period up to the child's 18th birthday. If the child is a continuing or habitual truant, the court must cancel the child's driving privileges. The court shall forward an order issued under this clause to the commissioner, who shall cancel the license or permit or deny driving privileges without a hearing for the period specified by the court. At any time before the expiration of the period of cancellation or denial, the court may, for good cause, order the commissioner of public safety to allow the child to apply for a license or permit, and the commissioner shall so authorize;

(8) order that the child's parent or legal guardian deliver the child to school at the beginning of each school day for a period of time specified by the court; or

(9) require the child to perform any other activities or participate in any other treatment programs deemed appropriate by the court.

To the extent practicable, the court shall enter a disposition order the same day it makes a finding that a child is in need of protection or services or neglected and in foster care, but in no event more than 15 days after the finding unless the court finds that the best interests of the child will be served by granting a delay. If the child was under eight years of age at the time the petition was filed, the disposition order must be entered within ten days of the finding and the court may not grant a delay unless good cause is shown and the court finds the best interests of the child will be served by the delay.

(c) If a child who is 14 years of age or older is adjudicated in need of protection or services because the child is a habitual truant and truancy procedures involving the child were previously dealt with by a school attendance review board or county attorney mediation program under section 260A.06 or 260A.07, the court shall order a cancellation or denial of driving privileges under paragraph (b), clause (7), for any period up to the child's 18th birthday.

(d) In the case of a child adjudicated in need of protection or services because the child has committed domestic abuse and been ordered excluded from the child's parent's home, the court shall dismiss jurisdiction if the court, at any time, finds the parent is able or willing to provide an alternative safe living arrangement for the child, as defined in Laws 1997, chapter 239, article 10, section 2.

(e) When a parent has complied with a case plan ordered under subdivision 6 and the child is in the care of the parent, the court may order the responsible social services agency to monitor the parent's continued ability to maintain the child safely in the home under such terms and conditions as the court determines appropriate under the circumstances.

[EFFECTIVE DATE.] This section is effective July 1, 2005.

Sec. 82. [BOARD OF SCHOOL ADMINISTRATORS; RULEMAKING AUTHORITY.]

On or before June 30, 2007, the Board of School Administrators may adopt expedited rules under Minnesota Statutes, section 14.389, to make technical revisions and clarifications to Minnesota Rules, chapter 3512.

Sec. 83. [CAREER AND TECHNICAL EDUCATION PROGRAM RULES.]

By January 1, 2007, the commissioner of education must adopt rules for approval of career and technical education programs consistent with Minnesota Statutes, section 124D.4531, subdivisions 4 and 6, that emphasize emerging workforce skills. Program approval for fiscal year 2008 and later must be based on the rules.

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Sec. 84. [MINNESOTA COMPREHENSIVE ASSESSMENTS; RULES.]

The commissioner of education shall adopt rules on or before January 1, 2006, to implement the Minnesota Comprehensive Assessments Second Edition (MCA-IIs) in reading, mathematics, and writing. For purposes of state and local high school graduation requirements, and consistent with applicable federal and state law, the rules must include criteria and an alternative assessment process to enable school districts to accommodate students, including at least students with disabilities, English language learners, and students performing below their grade level, who do not receive a passing score on the Minnesota Comprehensive Assessments Second Edition.

Sec. 85. [EDUCATION EXCELLENCE REVENUE.]

(a) In fiscal year 2007 only, a school district is eligible for education excellence revenue based on the school district's performance on the following six standards:

(1) graduation rate;

(2) attendance rate;

(3) achievement of educational standards;

(4) adequate yearly progress;

(5) value added measures of student performance; and

(6) publication of a school report card.

The commissioner of education must establish minimum qualifying benchmarks for each of the six standards listed in this paragraph. A school district that meets or exceeds the benchmarks established by the commissioner for that school district is eligible for educational excellence revenue for each standard that is met.

(b) Total revenue for education excellence equals $1,000,000.

(c) The commissioner shall determine the education excellence revenue allowance. The allowance is equal to total revenue for education excellence under paragraph (b) divided by the sum of the product of the number of adjusted marginal cost pupil units in each school district and the number of standards under paragraph (a) that have been met or exceeded for each school district for the previous school year for all school districts.

(d) A school district's education excellence allowance equals the product of the education excellence allowance, the district's adjusted marginal cost pupil units for that year, and the number of standards that have been met or exceeded for the previous school year. A school district's education excellence revenue must not exceed $100 times the district's adjusted marginal cost per pupil units for that year.

[EFFECTIVE DATE.] This section is effective for revenue for fiscal year 2007.

Sec. 86. [TITLE.]

Minnesota Statutes, section 120B.25, shall be known as the American Heritage Education in Minnesota Public Schools Act.

[EFFECTIVE DATE.] This section is effective the day following final enactment.

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Sec. 87. [STUDY; SPONSOR EVALUATION AND CHARGES.]

The Department of Education by December 31, 2005, after consulting with representatives of charter schools and charter school sponsors, must submit to the legislature recommendations on how a charter school sponsor effectively evaluates the performance of a charter school under Minnesota Statutes, section 124D.10, subdivision 15, and what annual fees a sponsor may charge for that evaluation.

Sec. 88. [MODEL POLICY.]

The commissioner of education, after consulting with representatives of teachers, school administrators, parents, students, student support service providers, law enforcement officials, community service providers, and the juvenile justice and district court systems, must develop and make available upon request to interested school boards a model policy to effect a reward for information about persons committing crimes against students, school employees, school volunteers, school board members, or school property, consistent with section 123B.02, subdivision 22.

[EFFECTIVE DATE.] This section is effective the day following final enactment.

Sec. 89. [APPROPRIATIONS.]

Subdivision 1. [DEPARTMENT.] The sums indicated in this section are appropriated from the general fund to the Department of Education for the fiscal years designated.

Subd. 2. [CHARTER SCHOOL BUILDING LEASE AID.] For building lease aid under Minnesota Statutes, section 124D.11, subdivision 4:

$25,465,000 . . . . . 2006

$30,929,000 . . . . . 2007

The 2006 appropriation includes $3,324,000 for 2005 and $22,141,000 for 2006.

The 2007 appropriation includes $4,123,000 for 2006 and $26,806,000 for 2007.

Subd. 3. [CHARTER SCHOOL STARTUP AID.] For charter school startup cost aid under Minnesota Statutes, section 124D.11:

$1,393,000 . . . . . 2006

$3,185,000 . . . . . 2007

The 2006 appropriation includes $0 for 2005 and $1,393,000 for 2006.

The 2007 appropriation includes $259,000 for 2006 and $2,926,000 for 2007.

Subd. 4. [INTEGRATION AID.] For integration aid under Minnesota Statutes, section 124D.86, subdivision 5:

$57,812,000 . . . . . 2006

$57,556,000 . . . . . 2007

The 2006 appropriation includes $8,545,000 for 2005 and $49,267,000 for 2006.

The 2007 appropriation includes $9,174,000 for 2006 and $48,382,000 for 2007.

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Subd. 5. [MAGNET SCHOOL GRANTS.] For magnet school and program grants:

$750,000 . . . . . 2006

$750,000 . . . . . 2007

These amounts may be used for magnet school programs under Minnesota Statutes, section 124D.88.

Subd. 6. [INTERDISTRICT DESEGREGATION OR INTEGRATION TRANSPORTATION GRANTS.] For interdistrict desegregation or integration transportation grants under Minnesota Statutes, section 124D.87:

$7,768,000 . . . . . 2006

$9,908,000 . . . . . 2007

Subd. 7. [SUCCESS FOR THE FUTURE.] For American Indian success for the future grants under Minnesota Statutes, section 124D.81:

$2,137,000 . . . . . 2006

$2,137,000 . . . . . 2007

The 2006 appropriation includes $335,000 for 2005 and $1,802,000 for 2006.

The 2007 appropriation includes $335,000 for 2006 and $1,802,000 for 2007.

Subd. 8. [AMERICAN INDIAN SCHOLARSHIPS.] For American Indian scholarships under Minnesota Statutes, section 124D.84:

$1,875,000 . . . . . 2006

$1,875,000 . . . . . 2007

Subd. 9. [AMERICAN INDIAN TEACHER PREPARATION GRANTS.] For joint grants to assist American Indian people to become teachers under Minnesota Statutes, section 122A.63:

$190,000 . . . . . 2006

$190,000 . . . . . 2007

Subd. 10. [TRIBAL CONTRACT SCHOOLS.] For tribal contract school aid under Minnesota Statutes, section 124D.83:

$2,372,000 . . . . . 2006

$2,559,000 . . . . . 2007

The 2006 appropriation includes $348,000 for 2005 and $2,024,000 for 2006.

The 2007 appropriation includes $376,000 for 2006 and $2,183,000 for 2007.

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Subd. 11. [EARLY CHILDHOOD PROGRAMS AT TRIBAL SCHOOLS.] For early childhood family education programs at tribal contract schools under Minnesota Statutes, section 124D.83, subdivision 4:

$68,000 . . . . . 2006

$68,000 . . . . . 2007

Subd. 12. [STATEWIDE TESTING.] For statewide testing support under Minnesota Statutes, section 120B.30:

$10,200,000 . . . . . 2006

$10,200,000 . . . . . 2007

Of this appropriation, $1,200,000 each year is for development of interactive science assessments.

Subd. 13. [EXAMINATION FEES; TEACHER TRAINING AND SUPPORT PROGRAMS.] For student examination fees and training and related costs for teachers and other interested educators under Minnesota Statutes, section 120B.13:

$4,500,000 . . . . . 2006

$4,500,000 . . . . . 2007

The advanced placement program shall receive 90 percent of the appropriation each year and the international baccalaureate program shall receive ten percent of the appropriation each year. The department, in consultation with representatives of the advanced placement and international baccalaureate programs selected by the Advanced Placement Advisory Council and IBMN, respectively, shall determine the amounts of the expenditures each year for examination fees and training and support programs.

Any balance in the first year does not cancel but is available in the second year.

Subd. 14. [FIRST GRADE PREPAREDNESS.] For first grade preparedness grants under Minnesota Statutes, section 124D.081:

$7,250,000 . . . . . 2006

$7,250,000 . . . . . 2007

Subd. 15. [COLLABORATIVE URBAN EDUCATOR.] For the collaborative urban educator program:

$528,000 . . . . . 2006

$528,000 . . . . . 2007

Subd. 16. [YOUTH WORKS PROGRAM.] For funding youth works programs under Minnesota Statutes, sections 124D.37 to 124D.45:

$900,000 . . . . . 2006

$900,000 . . . . . 2007

A grantee organization may provide health and child care coverage to the dependents of each participant enrolled in a full-time youth works program to the extent such coverage is not otherwise available.

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Subd. 17. [STUDENT ORGANIZATIONS.] For student organizations:

$625,000 . . . . . 2006

$625,000 . . . . . 2007

Subd. 18. [EDUCATION PLANNING AND ASSESSMENT PROGRAM.] For the Educational Planning and Assessment (EPAS) program under Minnesota Statutes, section 120B.128:

$829,000 . . . . . 2006

$829,000 . . . . . 2007

Subd. 19. [COLLEGE LEVEL EXAMINATION PROGRAM (CLEP).] For the College Level Examination program (CLEP) under Minnesota Statutes, section 120B.131:

$825,000 . . . . . 2006

$1,650,000 . . . . . 2007

Subd. 20. [CAREER AND TECHNICAL EDUCATION GRANTS.] For career and technical education grants:

$1,000,000 . . . . . 2006

$1,000,000 . . . . . 2007

This appropriation is for grants to school districts to establish emerging technology demonstration programs for students in grades 7 through 9. The commissioner shall prescribe the form and manner of grant applications, and shall make up to 20 grant awards each year of the biennium. The grant award process must take into consideration regional distribution, district instructional history with emerging technologies, plans to link the program with high school emerging technology programs, ability to provide local matching funds, and plans to serve as a demonstration program.

Any balance in the first year does not cancel but is available in the second year. This is a onetime appropriation.

Subd. 21. [MINNESOTA LEARNING RESOURCE CENTER.] For a grant to A Chance to Grow/New Visions for the Minnesota Learning Resource Center's comprehensive training program for education professionals charged with helping children acquire basic reading and math skills:

$125,000 . . . . . 2006

$125,000 . . . . . 2007

This is a onetime appropriation.

Subd. 22. [TEACHER PROFESSIONAL DEVELOPMENT.] For a grant to the Minnesota Humanities Commission to provide content-based professional development for teachers:

$500,000 . . . . . 2006

$500,000 . . . . . 2007

This is a onetime appropriation.

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Subd. 23. [MINNESOTA HISTORICAL SOCIETY.] For a grant to the Minnesota Historical Society to provide teacher professional development:

$100,000 . . . . . 2006

$100,000 . . . . . 2007

This is a onetime appropriation.

Subd. 24. [REWARDING EDUCATIONAL EXCELLENCE.] For rewarding educational excellence under Minnesota Statutes, section 126C.10, subdivision 2b:

$-0- . . . . . 2006

$1,000,000 . . . . . 2007

This is a onetime appropriation.

Sec. 90. [REPEALER.]

Minnesota Statutes 2004, section 124D.095, is repealed.

[EFFECTIVE DATE.] This section is effective for revenue for fiscal year 2006.

ARTICLE 3

SPECIAL PROGRAMS

Section 1. Minnesota Statutes 2004, section 124D.11, subdivision 5, is amended to read:

Subd. 5. [SPECIAL EDUCATION AID.] (a) Except as provided in subdivision 2, special education aid must be paid to a charter school according to section 125A.76, as though it were a school district.

(b) For fiscal year 2006, the charter school may charge tuition to the district of residence as follows:

(1) if the charter school does not receive general education revenue on behalf of the student according to subdivision 1, tuition shall be charged as provided in section 125A.11; or

(2) if the charter school receives general education revenue on behalf of the student according to subdivision 1, tuition shall be charged as provided in section 127A.47, subdivision 7, paragraph (d).

(1) if the charter school does not receive general education revenue on behalf of the student according to subdivision 1, the aid shall be adjusted as provided in section 125A.11; or

(2) if the charter school receives general education revenue on behalf of the student according to subdivision 1, the aid shall be adjusted as provided in section 127A.47, subdivision 7, paragraph (d).

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Sec. 2. Minnesota Statutes 2004, section 125A.091, subdivision 5, is amended to read:

Subd. 5. [INITIAL ACTION; PARENT CONSENT.] (a) The district must not proceed with the initial evaluation of a child, the initial placement of a child in a special education program, or the initial provision of special education services for a child without the prior written consent of the child's parent. A district may not override the written refusal of a parent to consent to an initial evaluation or reevaluation. If a parent refuses to consent to the initial evaluation of a child, a school district may apply to the child in any subsequent disciplinary action those provisions of the Pupil Fair Dismissal Act under sections 121A.40 to 121A.56 applicable to students without disabilities. A parent's refusal to consent to an initial evaluation or reevaluation under this paragraph is not a ground for disciplinary action under sections 121A.40 to 121A.56.

(b) A parent, after consulting with health care, education, or other professional providers, may agree or disagree to provide the parent's child with sympathomimetic medications unless section 144.344 applies.

[EFFECTIVE DATE.] This section is effective for the 2005-2006 school year and later.

Sec. 3. Minnesota Statutes 2004, section 125A.11, subdivision 1, is amended to read:

Subdivision 1. [NONRESIDENT TUITION RATE; OTHER COSTS.] (a) For fiscal year 2006, when a school district provides instruction and services outside the district of residence, board and lodging, and any tuition to be paid, shall be paid by the district of residence. The tuition rate to be charged for any child with a disability, excluding a pupil for whom tuition is calculated according to section 127A.47, subdivision 7, paragraph (d), must be the sum of (1) the actual cost of providing special instruction and services to the child including a proportionate amount for ~~capital outlay and debt service but not including any amount for~~ special transportation and unreimbursed building lease and debt service costs for facilities used primarily for special education, plus (2) the amount of general education revenue and referendum aid attributable to the pupil, minus (3) the amount of special education aid for children with a disability received on behalf of that child, minus (4) if the pupil receives special instruction and services outside the regular classroom for more than 60 percent of the school day, the amount of general education revenue and referendum aid, excluding portions attributable to district and school administration, district support services, operations and maintenance, capital expenditures, and pupil transportation, attributable to that pupil for the portion of time the pupil receives instruction in the regular classroom. If the boards involved do not agree upon the tuition rate, either board may apply to the commissioner to fix the rate. Notwithstanding chapter 14, the commissioner must then set a date for a hearing or request a written statement from each board, giving each board at least ten days' notice, and after the hearing or review of the written statements the commissioner must make an order fixing the tuition rate, which is binding on both school districts. General education revenue and referendum aid attributable to a pupil must be calculated using the resident district's average general education and referendum revenue per adjusted pupil unit.

(b) For fiscal year 2007 and later, when a school district provides special instruction and services for a pupil with a disability as defined in section 125A.02 outside the district of residence, excluding a pupil for whom an adjustment to special education aid is calculated according to section 127A.47, subdivision 7, paragraph (e), special education aid paid to the resident district must be reduced by an amount equal to (1) the actual cost of providing special instruction and services to the pupil, including a proportionate amount for special transportation and unreimbursed building lease and debt service costs for facilities used primarily for special education, plus (2) the amount of general education revenue and referendum aid attributable to that pupil, minus (3) the amount of special education aid for children with a disability received on behalf of that child, minus (4) if the pupil receives special instruction and services outside the regular classroom for more than 60 percent of the school day, the amount of general education revenue and referendum aid, excluding portions attributable to district and school administration, district support services, operations and maintenance, capital expenditures, and pupil transportation, attributable to that pupil for the portion of time the pupil receives instruction in the regular classroom. General education revenue and referendum aid attributable to a pupil must be calculated using the resident district's average general education revenue and referendum aid per adjusted pupil unit. If the resident district's special education aid is insufficient to make the full adjustment, the remaining adjustment shall be made to other state aid due to the district.

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Sec. 4. Minnesota Statutes 2004, section 125A.24, is amended to read:

125A.24 [PARENT ADVISORY COUNCILS.]

In order to increase the involvement of parents of children with disabilities in district policy making and decision making, school districts must have a special education advisory council that is incorporated into the district's special education system plan.

(1) This advisory council may be established either for individual districts or in cooperation with other districts who are members of the same special education cooperative.

(2) A district may set up this council as a subgroup of an existing board, council, or committee.

(3) At least half of the designated council members must be parents of students with a disability. The council must include at least one member who is a parent of a nonpublic school student with a disability or an employee of a nonpublic school if a nonpublic school is located in the district. Each local council must meet no less than once each year. The number of members, frequency of meetings, and operational procedures are to be locally determined.

Sec. 5. Minnesota Statutes 2004, section 125A.28, is amended to read:

125A.28 [STATE INTERAGENCY COORDINATING COUNCIL.]

An Interagency Coordinating Council of at least 17, but not more than 25 members is established, in compliance with Public Law 102-119, section 682. The members must be appointed by the governor. Council members must elect the council chair. The representative of the commissioner may not serve as the chair. The council must be composed of at least five parents, including persons of color, of children with disabilities under age 12, including at least three parents of a child with a disability under age seven, five representatives of public or private providers of services for children with disabilities under age five, including a special education director, county social service director, local Head Start director, and a community health services or public health nursing administrator, one member of the senate, one member of the house of representatives, one representative of teacher preparation programs in early childhood-special education or other preparation programs in early childhood intervention, at least one representative of advocacy organizations for children with disabilities under age five, one physician who cares for young children with special health care needs, one representative each from the commissioners of commerce, education, health, human services, a representative from the state agency responsible for child care, and a representative from Indian health services or a tribal council. Section 15.059, subdivisions 2 to 5, apply to the council. The council must meet at least quarterly.

The council must address methods of implementing the state policy of developing and implementing comprehensive, coordinated, multidisciplinary interagency programs of early intervention services for children with disabilities and their families.

The duties of the council include recommending policies to ensure a comprehensive and coordinated system of all state and local agency services for children under age five with disabilities and their families. The policies must address how to incorporate each agency's services into a unified state and local system of multidisciplinary assessment practices, individual intervention plans, comprehensive systems to find children in need of services, methods to improve public awareness, and assistance in determining the role of interagency early intervention committees.

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~~By September 1~~ On the date that Minnesota Part C Annual Performance Report is submitted to the federal Office of Special Education, the council must recommend to the governor and the commissioners of education, health, human services, commerce, and employment and economic development policies for a comprehensive and coordinated system.

Notwithstanding any other law to the contrary, the State Interagency Coordinating Council expires on June 30, ~~2005~~ 2009.

Sec. 6. Minnesota Statutes 2004, section 125A.76, subdivision 1, is amended to read:

Subdivision 1. [DEFINITIONS.] For the purposes of this section, the definitions in this subdivision apply.

(a) "Base year" for fiscal year 1998 and later fiscal years means the second fiscal year preceding the fiscal year for which aid will be paid.

(b) "Basic revenue" has the meaning given it in section 126C.10, subdivision 2. For the purposes of computing basic revenue pursuant to this section, each child with a disability shall be counted as prescribed in section 126C.05, subdivision 1.

(c) "Essential personnel" means teachers, cultural liaisons, related services, and support services staff providing direct services to students. Essential personnel may also include special education paraprofessionals or clericals providing support to teachers and students by preparing paperwork and making arrangements related to special education compliance requirements, including parent meetings and individual education plans.

(d) "Average daily membership" has the meaning given it in section 126C.05.

(e) "Program growth factor" means ~~1.046~~ 1.04 for fiscal ~~year 2003~~ years 2007 and 2008, and 1.0 for fiscal year ~~2004~~ 2009 and later.

Sec. 7. Minnesota Statutes 2004, section 125A.76, subdivision 4, is amended to read:

Subd. 4. [STATE TOTAL SPECIAL EDUCATION AID.] ~~The state total special education aid for fiscal year 2004 equals $530,642,000.~~ The state total special education aid for fiscal year 2005 equals $529,164,000. The state total special education aid for later fiscal years equals:

(1) the state total special education aid for the preceding fiscal year; times

(2) ~~the program growth factor; times~~

~~(3)~~ the ratio of the state total average daily membership for the current fiscal year to the state total average daily membership for the preceding fiscal year.

Sec. 8. Minnesota Statutes 2004, section 125A.76, is amended by adding a subdivision to read:

Subd. 5a. [SPECIAL EDUCATION LEVY REVENUE.] (a) For fiscal year 2007, the state total special education revenue equals the state total special education aid times the program growth factor. For fiscal year 2008 and later, the state total special education revenue equals:

(1) the state total special education revenue for the preceding fiscal year, times

(2) the program growth factor, times

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(3) the ratio of the state total average daily membership for the current fiscal year to the state total average daily membership for the preceding fiscal year.

(b) For fiscal year 2007 and later, the state total special education levy revenue equals the difference between the state total special education revenue and the state total special education aid.

(c) For fiscal year 2007 and later, the special education levy revenue for a school district, charter school, or state academy equals the product of the state total special education levy revenue times the ratio of the school district, charter school, or state academy's special education aid to the state total special education aid.

Sec. 9. Minnesota Statutes 2004, section 125A.76, is amended by adding a subdivision to read:

Subd. 5b. [SPECIAL EDUCATION LEVY.] To obtain special education levy revenue for fiscal year 2007 and later, a district may levy an amount not more than the product of its special education levy revenue for the fiscal year times the lesser of one or the ratio of its adjusted net tax capacity per adjusted pupil unit to $5,913.

Sec. 10. Minnesota Statutes 2004, section 125A.76, is amended by adding a subdivision to read:

Subd. 5c. [SPECIAL EDUCATION LEVY EQUALIZATION AID.] (a) For fiscal year 2007 and later, a school district's special education levy equalization aid equals its special education levy equalization revenue minus its special education levy times the ratio of the actual amount levied to the permitted levy.

(b) The special education levy equalization aid for a charter school or a state academy equals the charter school or state academy's special education levy revenue.

Sec. 11. Minnesota Statutes 2004, section 125A.79, subdivision 1, is amended to read:

Subdivision 1. [DEFINITIONS.] For the purposes of this section, the definitions in this subdivision apply.

(a) "Unreimbursed special education cost" means the sum of the following:

(1) expenditures for teachers' salaries, contracted services, supplies, equipment, and transportation services eligible for revenue under section 125A.76; plus

(2) expenditures for tuition bills received under sections 125A.03 to 125A.24 and 125A.65 for services eligible for revenue under section 125A.76, subdivision 2; minus

(3) revenue for teachers' salaries, contracted services, supplies, and equipment under section 125A.76; minus

(4) tuition receipts under sections 125A.03 to 125A.24 and 125A.65 for services eligible for revenue under section 125A.76, subdivision 2.

(b) "General revenue" means for fiscal year 1996, the sum of the general education revenue according to section 126C.10, subdivision 1, as adjusted according to section 127A.47, subdivision 7, plus the total referendum revenue according to section 126C.17, subdivision 4. For fiscal years 1997 and later, "General revenue" means the sum of the general education revenue according to section 126C.10, subdivision 1, as adjusted according to section 127A.47, subdivisions 7 and 8, ~~plus the total referendum revenue~~ minus transportation sparsity revenue minus total operating capital revenue.

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(d) "Program growth factor" means 1.02 for fiscal year 2003, and 1.0 for fiscal year 2004 and later.

Sec. 12. Minnesota Statutes 2004, section 125A.79, subdivision 5, is amended to read:

Subd. 5. [INITIAL EXCESS COST AID; FISCAL YEARS 2004 and 2005.] For fiscal years ~~2002~~ 2004 and ~~later~~ 2005, a district's initial excess cost aid equals the greatest of:

(1) 75 percent of the difference between (i) the district's unreimbursed special education cost and (ii) 4.36 percent of the district's general revenue;

(2) 70 percent of the difference between (i) the increase in the district's unreimbursed special education cost between the base year as defined in section 125A.76, subdivision 1, and the current year and (ii) 1.6 percent of the district's general revenue; or

(3) zero.

Sec. 13. Minnesota Statutes 2004, section 125A.79, is amended by adding a subdivision to read:

Subd. 5a. [INITIAL EXCESS COST AID.] For fiscal years 2006 and later, a district's initial excess cost aid equals the greater of:

(1) 75 percent of the difference between (i) the district's unreimbursed special education cost for the previous fiscal year, and (ii) 4.36 percent of the district's general revenue for the previous fiscal year; or

(2) zero.

Sec. 14. Minnesota Statutes 2004, section 125A.79, is amended by adding a subdivision to read:

Subd. 5b. [SUPPLEMENTAL EXCESS COST AID.] (a) For fiscal years 2006 and later, a district's supplemental excess cost aid equals the greater of:

(1) 75 percent of the difference between (i) the increase in the district's unreimbursed special education excess cost between the previous fiscal year and the current fiscal year, and (ii) $80 times the district's adjusted marginal cost pupil units for the current fiscal year; or

(2) zero.

(b) The state total supplemental excess cost aid for any fiscal year must not exceed $2,000,000. If the state total supplemental excess cost aid according to paragraph (a) exceeds $2,000,000, the supplemental excess cost aid for each district shall be reduced proportionately so that the state total equals $2,000,000.

Sec. 15. Minnesota Statutes 2004, section 125A.79, subdivision 6, is amended to read:

Subd. 6. [STATE TOTAL SPECIAL EDUCATION EXCESS COST AID.] ~~The state total special education excess cost aid for fiscal year 2004 equals $92,067,000.~~ The state total special education excess cost aid for fiscal year 2005 equals $91,811,000. The state total special education excess cost aid for fiscal year 2006 equals $102,746,000. The state total special education excess cost aid for fiscal year ~~2006~~ 2007 and later fiscal years equals:

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(1) the state total special education excess cost aid for the preceding fiscal year; times

(2) the program growth factor; times

(3) the ratio of the state total average daily membership for the current fiscal year to the state total average daily membership for the preceding fiscal year.

Sec. 16. Minnesota Statutes 2004, section 125A.79, subdivision 7, is amended to read:

Subd. 7. [DISTRICT SPECIAL EDUCATION EXCESS COST AID.] (a) A district's special education excess cost aid for fiscal ~~year 2002 and later~~ years 2004 and 2005 equals the state total special education excess cost aid times the ratio of the district's initial excess cost aid to the state total initial excess cost aid.

(b) A district's special education excess cost aid for fiscal year 2006 and later equals the sum of:

(1) the product of the difference between the state total special education excess cost aid and the state total supplemental excess cost aid times the ratio of the district's initial excess cost aid to the state total initial excess cost aid; and

(2) the district's supplemental excess cost aid according to subdivision 5b.

Sec. 17. Minnesota Statutes 2004, section 127A.45, subdivision 13, is amended to read:

Subd. 13. [AID PAYMENT PERCENTAGE.] Except as provided in subdivisions 11, 12, 12a, and 14, each fiscal year, all education aids and credits in this chapter and chapters 120A, 120B, 121A, 122A, 123A, 123B, 124D, 125A, 125B, 126C, 134, and section 273.1392, shall be paid at ~~80 percent~~ the current year aid payment percentage of the estimated entitlement during the fiscal year of the entitlement. For the purposes of this subdivision, a district's estimated entitlement for special education excess cost aid under section 125A.79 for fiscal year 2005 equals 70 percent of the district's entitlement for the second prior fiscal year. For the purposes of this subdivision, a district's estimated entitlement for special education excess cost aid under section 125A.79 for fiscal year 2006 and later equals 75.5 percent of the district's entitlement for the current fiscal year. The final adjustment payment, according to subdivision 9, must be the amount of the actual entitlement, after adjustment for actual data, minus the payments made during the fiscal year of the entitlement.

[EFFECTIVE DATE.] This section is effective the day following final enactment and applies to aid payments for fiscal year 2005 and later.

Sec. 18. Minnesota Statutes 2004, section 127A.47, subdivision 7, is amended to read:

Subd. 7. [ALTERNATIVE ATTENDANCE PROGRAMS.] The general education aid and special education aid for districts must be adjusted for each pupil attending a nonresident district under sections 123A.05 to 123A.08, 124D.03, 124D.06, 124D.08, and 124D.68. The adjustments must be made according to this subdivision.

(a) General education aid paid to a resident district must be reduced by an amount equal to the referendum equalization aid attributable to the pupil in the resident district.

(b) General education aid paid to a district serving a pupil in programs listed in this subdivision must be increased by an amount equal to the referendum equalization aid attributable to the pupil in the nonresident district.

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(c) If the amount of the reduction to be made from the general education aid of the resident district is greater than the amount of general education aid otherwise due the district, the excess reduction must be made from other state aids due the district.

(d) For fiscal year 2006, the district of residence must pay tuition to a district or an area learning center, operated according to paragraph ~~(e)~~ (f), providing special instruction and services to a pupil with a disability, as defined in section 125A.02, or a pupil, as defined in section 125A.51, who is enrolled in a program listed in this subdivision. The tuition must be equal to (1) the actual cost of providing special instruction and services to the pupil, including a proportionate amount for ~~debt service and for capital expenditure facilities and equipment, and debt service but not including any amount for~~ special transportation and unreimbursed building lease and debt service costs for facilities used primarily for special education, minus (2) if the pupil receives special instruction and services outside the regular classroom for more than 60 percent of the school day, the amount of general education revenue and referendum aid attributable to that pupil for the portion of time the pupil receives special instruction and services outside of the regular classroom, excluding portions attributable to district and school administration, district support services, operations and maintenance, capital expenditures, and pupil transportation, minus (3) special education aid ~~but not including any amount for transportation,~~ attributable to that pupil, that is received by the district providing special instruction and services. For purposes of this paragraph, general education revenue and referendum aid attributable to a pupil must be calculated using the serving district's average general education revenue and referendum aid per adjusted pupil unit.

(e) For fiscal year 2007 and later, special education aid paid to a resident district must be reduced by an amount equal to (1) the actual cost of providing special instruction and services, including special transportation and unreimbursed building lease and debt service costs for facilities used primarily for special education, for a pupil with a disability, as defined in section 125A.02, or a pupil, as defined in section 125A.51, who is enrolled in a program listed in this subdivision, minus (2) if the pupil receives special instruction and services outside the regular classroom for more than 60 percent of the school day, the amount of general education revenue and referendum aid attributable to that pupil for the portion of time the pupil receives special instruction and services outside of the regular classroom, excluding portions attributable to district and school administration, district support services, operations and maintenance, capital expenditures, and pupil transportation, minus (3) special education aid attributable to that pupil, that is received by the district providing special instruction and services. For purposes of this paragraph, general education revenue and referendum aid attributable to a pupil must be calculated using the serving district's average general education revenue and referendum aid per adjusted pupil unit. Special education aid paid to the district providing special instruction and services for the pupil, or to the fiscal agent district for a cooperative, must be increased by the amount of the reduction in the aid paid to the resident district. If the resident district's special education aid is insufficient to make the full adjustment, the remaining adjustment shall be made to other state aids due to the district.

(f) An area learning center operated by a service cooperative, intermediate district, education district, or a joint powers cooperative may elect through the action of the constituent boards to charge the resident district tuition for pupils rather than to have the general education revenue paid to a fiscal agent school district. Except as provided in paragraph (d) or (e), the district of residence must pay tuition equal to at least 90 percent of the district average general education revenue per pupil unit minus an amount equal to the product of the formula allowance according to section 126C.10, subdivision 2, times .0485, calculated without basic skills revenue and transportation sparsity revenue, times the number of pupil units for pupils attending the area learning center, plus the amount of compensatory revenue generated by pupils attending the area learning center.

Sec. 19. Minnesota Statutes 2004, section 134.31, is amended by adding a subdivision to read:

Subd. 5a. [ADVISORY COMMITTEE.] The commissioner shall appoint an advisory committee of five members to advise the staff of the Minnesota Library for the Blind and Physically Handicapped on long-range plans and library services. Members shall be people who use the library. Section 15.059 governs this committee except that the committee shall not expire.

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Sec. 20. Laws 2003, First Special Session chapter 9, article 3, section 20, subdivision 6, as amended by Laws 2004, chapter 272, article 1, section 16, is amended to read:

Subd. 6. [SPECIAL EDUCATION; EXCESS COSTS.] For excess cost aid under Minnesota Statutes, section 125A.79, subdivision 7:

$92,605,000 . . . . . 2004

~~$92,799,000~~ $95,572,000 . . . . . 2005

The 2004 appropriation includes $41,754,000 for 2003 and $50,851,000 for 2004.

The 2005 appropriation includes $41,216,000 for 2004 and ~~$51,583,000~~ $54,356,000 for 2005.

Of the state total excess cost aid for fiscal year 2005, $150,000 shall be paid to Independent School District No. 2580, East Central, for unfunded special education costs that would otherwise be cross-subsidized with general education aid. For purposes of Minnesota Statutes, section 125A.79, subdivision 7, the state total excess cost aid used in calculating district special education excess cost aid must be reduced by the amount paid to Independent School District No. 2580, East Central.

[EFFECTIVE DATE.] This section is effective the day following final enactment.

Sec. 21. [TASK FORCE ON DELIVERY OF SPECIAL EDUCATION TO NONPUBLIC SCHOOL STUDENTS BY PUBLIC SCHOOL DISTRICTS.]

Subdivision 1. [PURPOSE; ESTABLISHMENT.] A task force on the delivery of special education services to nonpublic school students by public school districts shall be established to compare and evaluate how the individual needs of each child are being met, if services are provided in the least restrictive environment, and whether best practices and program efficiencies are being used in the specific areas of transportation, location of services, and shared time aid.

Subd. 2. [MEMBERS.] The governor shall appoint the members of the task force from each of the following:

(1) two members from the Department of Education, one representing special education programs and policy and one representing district finances;

(2) two special education teachers with one member from a public school and one member from a nonpublic school;

(3) two special education administrators with one member from a public school and one member from a nonpublic school;

(4) two members with one from each of two special education advocacy organizations;

(5) two parents of children receiving special education services with one member from a public school and one member from a nonpublic school;

(6) two elementary school principals with one member from a public school and one member from a nonpublic school;

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(7) two superintendents with one member from a public school district and one member from a nonpublic school district;

(8) two school business officials with one from a public school and one from a nonpublic school; and

(9) two school board officials with one from a public school and one from a nonpublic school.

The task force may select additional members to work on the task force. The commissioner of education shall provide necessary materials and assistance.

Subd. 3. [REPORT.] The task force shall submit a report by January 15, 2006, to the house of representatives and senate committees having jurisdiction over education on the delivery of special education services to nonpublic school students by public school districts, to compare and evaluate how the individual needs of each child are being met in the least restrictive environment, and whether best practices and program efficiencies are being used.

Subd. 4. [EXPIRATION.] This section expires January 31, 2006.

[EFFECTIVE DATE.] This section is effective the day following final enactment.

Sec. 22. [APPROPRIATIONS.]

Subdivision 1. [DEPARTMENT OF EDUCATION.] The sums indicated in this section are appropriated from the general fund to the Department of Education for the fiscal years designated.

Subd. 2. [SPECIAL EDUCATION; REGULAR.] For special education aid under Minnesota Statutes, section 125A.75:

$528,846,000 . . . . . 2006

$527,446,000 . . . . . 2007

The 2006 appropriation includes $83,078,000 for 2005 and $445,768,000 for 2006.

The 2007 appropriation includes $83,019,000 for 2006 and $444,427,000 for 2007.

Subd. 3. [SPECIAL EDUCATION; REGULAR EQUALIZATION AID.] For special education regular equalization aid:

$2,176,000 . . . . . 2007

The 2007 appropriation includes $0 for 2006 and $2,176,000 for 2007.

Subd. 4. [AID FOR CHILDREN WITH DISABILITIES.] For aid under Minnesota Statutes, section 125A.75, subdivision 3, for children with disabilities placed in residential facilities within the district boundaries for whom no district of residence can be determined:

$2,212,000 . . . . . 2006

$2,615,000 . . . . . 2007

If the appropriation for either year is insufficient, the appropriation for the other year is available.

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Subd. 5. [TRAVEL FOR HOME-BASED SERVICES.] For aid for teacher travel for home-based services under Minnesota Statutes, section 125A.75, subdivision 1:

$187,000 . . . . . 2006

$195,000 . . . . . 2007

The 2006 appropriation includes $28,000 for 2005 and $159,000 for 2006.

The 2007 appropriation includes $29,000 for 2006 and $166,000 for 2007.

Subd. 6. [SPECIAL EDUCATION; EXCESS COSTS.] For excess cost aid under Minnesota Statutes, section 125A.79, subdivision 7:

$102,782,000 . . . . . 2006

$102,483,000 . . . . . 2007

The 2006 appropriation includes $37,455,000 for 2005 and $65,327,000 for 2006.

The 2007 appropriation includes $37,339,000 for 2006 and $65,144,000 for 2007.

Subd. 7. [LITIGATION COSTS FOR SPECIAL EDUCATION.] For paying the costs a district incurs under Minnesota Statutes, section 125A.75, subdivision 8:

$17,000 . . . . . 2006

$17,000 . . . . . 2007

Subd. 8. [TRANSITION FOR DISABLED STUDENTS.] For aid for transition programs for children with disabilities under Minnesota Statutes, section 124D.454:

$8,788,000 . . . . . 2006

$8,765,000 . . . . . 2007

The 2006 appropriation includes $1,380,000 for 2005 and $7,408,000 for 2006.

The 2007 appropriation includes $1,379,000 for 2006 and $7,386,000 for 2007.

Subd. 9. [COURT-PLACED SPECIAL EDUCATION REVENUE.] For reimbursing serving school districts for unreimbursed eligible expenditures attributable to children placed in the serving school district by court action under Minnesota Statutes, section 125A.79, subdivision 4:

$65,000 . . . . . 2006