Bill Text: AZ HB2003 | 2013 | Fifty-first Legislature 1st Special | Engrossed

NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: 2013-2014; K-12 education; budget reconciliation.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Passed) 2013-06-17 - Governor Signed [HB2003 Detail]

Download: Arizona-2013-HB2003-Engrossed.html

 

 

 

House Engrossed

 

 

 

State of Arizona

House of Representatives

Fifty-first Legislature

First Special Session

2013

 

 

HOUSE BILL 2003

 

 

 

AN ACT

 

REPEALING section 15‑105, Arizona Revised Statutes; amending sections 15‑107, 15‑185 and 15‑241, arizona revised statutes; amending Title 15, chapter 2, article 2, Arizona Revised Statutes, by adding section 15-249.04; amending sections 15‑341, 15‑393, 15‑448, 15‑481, 15‑491, 15‑792.03, 15‑795.01, 15‑808, 15‑901, 15‑901.05, 15‑903, 15‑904, 15‑905, 15‑906, 15‑909 and 15‑910, Arizona Revised Statutes; amending title 15, chapter 9, article 1, Arizona Revised Statutes, by adding section 15‑917; amending sections 15‑945, 15‑947, 15‑947.01, 15‑951 and 15-961, Arizona Revised Statutes; repealing section 15‑962, Arizona Revised Statutes; amending sections 15‑962.01, 15‑963, 15‑964, 15‑971, 15‑974, 15‑996, 15‑1021, 15‑1371, 15‑1372, 15-2002, 15‑2004, 15‑2005 and 15‑2011, Arizona Revised Statutes; repealing section 15-2031, Arizona Revised Statutes; amending sections 15-2032 and 15‑2041, Arizona Revised Statutes; repealing Laws 2011, second special session, chapter 1, section 135; MAKING APPROPRIATIONS; relating to kindergarten through grade twelve budget reconciliation.

 

 

(TEXT OF BILL BEGINS ON NEXT PAGE)

 



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

Section 1.  Repeal; transfer of monies

A.  Section 15-105, Arizona Revised Statutes, is repealed.

B.  All monies remaining in the early graduation scholarship fund established by section 15-105, Arizona Revised Statutes, are transferred on the effective date of this act to the commission for postsecondary education IGA and ISA fund for the purpose of funding a one-year continuation of the special education grant program that provides forgivable student loans to juniors and seniors who attend private postsecondary educational institutions in this state.

Sec. 2.  Section 15-107, Arizona Revised Statutes, is amended to read:

START_STATUTE15-107.  School district overexpenditures; fiscal crisis teams; quarterly progress reports; fiscal management report; annual report; actions resulting from overexpenditures; professional development; definition

A.  A county school superintendent, within two business days, shall provide written notice to the department of education, if, in the county school superintendent's judgment, a school district has committed an overexpenditure under this section.  Notwithstanding any other law, a warrant shall not be drawn by a county school superintendent for an expenditure that is in excess of the amount budgeted and that has not been previously expended, unless the county school superintendent is notified in writing by the department of education that budget capacity exists as determined by the department based on information provided by the school district.

B.  The department of education, in conjunction with the county school superintendent, shall monitor the school district and provide technical assistance to the school district and to the county school superintendent to resolve the overexpenditure.

C.  If the department of education determines that the school district has failed to take appropriate action to resolve the overexpenditure or that the original notice of overexpenditure pursuant to subsection A of this section constitutes an overexpenditure that will cause the school district's overall expenditures to exceed the school district's general budget limit or unrestricted capital budget limit or soft capital allocation limit by fifty thousand dollars or one-half of one per cent, whichever is less, the department shall request that the matter be placed on the agenda of a meeting of the state board of education for action pursuant to this section.

D.  At the request of the department of education, the state board of education shall call a public meeting to consider overexpenditures by any school district.  The state board of education shall require the superintendent of the school district and any other school district personnel who may have information relevant to the overexpenditure to appear before the state board of education.  After testimony from all interested parties, the state board of education shall take one of the following actions:

1.  Require the department of education, in conjunction with the county school superintendent, to monitor the expenditures of the school district.

2.  Direct the department of education to contract with a level one fiscal crisis team.  The level one fiscal crisis team shall provide on-site oversight and off-site monitoring for the school district for no longer than twelve months and shall advise the school district on all financial issues and professional development training related to financial issues.

3.  Direct the department of education to contract with a level two fiscal crisis team.  The level two fiscal crisis team shall provide on-site oversight and off-site monitoring for the school district for no longer than twenty-four months, shall have the authority prescribed for level one fiscal crisis teams and may override any financial act or decision of the school district, including expenditures.

4.  Appoint a receiver who, subject to the discretion of the state board of education, may take any actions prescribed in section 15-103, subsection F.

E.  The level one and level two fiscal crisis teams shall be composed of at least one person who has knowledge of school finance and may include current or former school district financial officers, current or former school district business managers, certified public accountants and current or former school district superintendents.  The fiscal crisis teams shall not include employees of the state board of education or the department of education.

F.  The expenses incurred by a fiscal crisis team or by a receiver appointed pursuant to this section shall be paid by the school district.  The state board of education shall review the expenses and costs of each fiscal crisis team at least once each calendar quarter.

G.  Beginning ninety days after submitting the fiscal management report prescribed in subsection H of this section, the fiscal crisis team or receiver appointed pursuant to this section shall submit a detailed written quarterly progress report to the state board of education that includes all of the following:

1.  The results of the review of the school district's finances, including expenditures.

2.  The recommendations and decisions made by the fiscal crisis team or the receiver appointed pursuant to this section.

3.  The status of the fiscal management plan described pursuant to subsection H of this section.

4.  Recommendations to the state board of education on the content of professional development training related to overexpenditures.

5.  Any recommendations of potential action to be taken concerning professional certificates issued to school district personnel by the state board of education or the department of education.  The state board of education shall review the recommendations submitted pursuant to this paragraph and shall take appropriate action.

H.  After appointment, the fiscal crisis team or the receiver appointed pursuant to this section shall review the financial affairs of the school district and may work with school finance personnel at the department of education to ensure that the finances of the school district are in compliance with the laws of this state.  A school district that has been assigned a fiscal crisis team or a receiver pursuant to this section shall submit, in consultation with the receiver or the fiscal crisis team, a fiscal management report to the state board of education within one hundred twenty days after the date that the state board of education appointed the receiver or the fiscal crisis team.  The fiscal management report shall include the following:

1.  A description of the fiscal management plan that has been implemented to correct the overexpenditure, including the following:

(a)  The manner in which the fiscal management plan will address the findings and recommendations of the fiscal crisis team.

(b)  A timeline for complete resolution of the overexpenditure.

(c)  A detailed explanation of the methods and procedures that will be implemented to prevent future overexpenditures.

(d)  The identification of any issues that need to be resolved before the fiscal management plan may be fully implemented.

(e)  The identification of any long-term issues resulting from the overexpenditure that will extend to future fiscal years.

2.  A description of the manner in which the fiscal management plan was developed, including identification of the role of the fiscal crisis team or the receiver, the role of the school district governing board and the role of the administrators of the school district.

I.  On or before December 31, the state board of education shall submit an annual report to the governor, the president of the senate and the speaker of the house of representatives.  The state board shall provide a copy of this report to the secretary of state and the director of the Arizona state library, archives and public records.  The annual report shall include the following:

1.  A summarized compilation of the fiscal management reports submitted by school districts pursuant to subsection H of this section.

2.  The actions taken by the state board of education, the department of education, school districts, fiscal crisis teams and receivers during the most recently completed fiscal year.

3.  Recommendations regarding improvements to the laws of this state or to administrative actions required under the laws of this state.

J.  A school district that is assigned a level two fiscal crisis team or a receiver pursuant to this section shall require professional development training for school district governing board members and appropriate administrative personnel of the school district, including the school district superintendent, who are involved in district finances and budgeting, as determined by the level two fiscal crisis team or by the receiver.  The professional development training shall be selected from a list approved by the state board of education, and the cost of the professional development training shall be paid by the school district.  Governing board members and district administrative personnel shall complete at least twelve hours of professional development training within one hundred twenty days after the assignment of a level two fiscal crisis team or the appointment of a receiver.  The fiscal crisis team or the receiver shall report to the state board of education whether the professional development training requirements prescribed in this subsection have been met.

K.  A school district governing board member who fails to complete the professional development training within the time prescribed in subsection J of this section is guilty of nonfeasance in office, and the state board of education shall forward a complaint to the attorney general.  The attorney general may bring an action in superior court against a school district governing board member for failure to comply with the professional development training requirements prescribed in subsection J of this section. If a court determines that a school district governing board member failed to comply with the professional development training requirements prescribed in subsection J of this section, the court shall issue an order removing the school district governing board member from office.  Any vacancy in the office of the school district governing board as a result of a court order issued pursuant to this subsection shall be filled in the manner provided by law.

L.  If any of the administrative personnel of the school district fail fails to complete the professional development training within the time prescribed in subsection J of this section, the state board of education may take appropriate action concerning current certificates held by that person.

M.  All information received and records or reports kept by the state board of education during an investigation resulting from a complaint against a receiver appointed pursuant to this section or section 15‑103 are confidential and not a public record.

N.  For the purposes of this section, "overexpenditure" means an expenditure in excess of any of the following:

1.  The general budget limit of the school district or the amount budgeted by the school district, whichever is less.

2.  The unrestricted capital budget limit of the school district or the amount budgeted for capital by the school district, whichever is less.

3.  The soft capital allocation limit of the school district or the amount budgeted for soft capital by the school district, whichever is less. END_STATUTE

Sec. 3.  Section 15-185, Arizona Revised Statutes, is amended to read:

START_STATUTE15-185.  Charter schools; financing; civil penalty; transportation; definitions

A.  Financial provisions for a charter school that is sponsored by a school district governing board are as follows:

1.  The charter school shall be included in the district's budget and financial assistance calculations pursuant to paragraph 3 of this subsection and chapter 9 of this title, except for chapter 9, article 4 of this title. The charter of the charter school shall include a description of the methods of funding the charter school by the school district.  The school district shall send a copy of the charter and application, including a description of how the school district plans to fund the school, to the state board of education before the start of the first fiscal year of operation of the charter school.  The charter or application shall include an estimate of the student count for the charter school for its first fiscal year of operation. This estimate shall be computed pursuant to the requirements of paragraph 3 of this subsection.

2.  A school district is not financially responsible for any charter school that is sponsored by the state board of education, the state board for charter schools, a university under the jurisdiction of the Arizona board of regents, a community college district or a group of community college districts.

3.  A school district that sponsors a charter school may:

(a)  Increase its student count as provided in subsection B, paragraph 2 of this section during the first year of the charter school's operation to include those charter school pupils who were not previously enrolled in the school district.  A charter school sponsored by a school district governing board is eligible for the charter additional assistance prescribed in subsection B, paragraph 4 of this section.  The soft capital district additional assistance allocation as provided in section 15‑962 15-961 for the school district sponsoring the charter school shall be increased by the amount of the charter additional assistance.  The school district shall include the full amount of the charter additional assistance in the funding provided to the charter school.

(b)  Compute separate weighted student counts pursuant to section 15‑943, paragraph 2, subdivision (a) for its noncharter school versus charter school pupils in order to maintain eligibility for small school district support level weights authorized in section 15‑943, paragraph 1 for its noncharter school pupils only.  The portion of a district's student count that is attributable to charter school pupils is not eligible for small school district support level weights.

4.  If a school district uses the provisions of paragraph 3 of this subsection, the school district is not eligible to include those pupils in its student count for the purposes of computing an increase in its revenue control limit and district support level as provided in section 15‑948.

5.  A school district that sponsors a charter school is not eligible to include the charter school pupils in its student count for the purpose of computing an increase in its capital outlay revenue limit district additional assistance as provided in section 15‑961, subsection B, except that if the charter school was previously a school in the district, the district may include in its student count any charter school pupils who were enrolled in the school district in the prior year.

6.  A school district that sponsors a charter school is not eligible to include the charter school pupils in its student count for the purpose of computing the revenue control limit which is used to determine the maximum budget increase as provided in chapter 4, article 4 of this title unless the charter school is located within the boundaries of the school district.

7.  If a school district converts one or more of its district public schools to a charter school and receives assistance as prescribed in subsection B, paragraph 4 of this section, and subsequently converts the charter school back to a district public school, the school district shall repay the state the total charter additional assistance received for the charter school for all years that the charter school was in operation.  The repayment shall be in one lump sum and shall be reduced from the school district's current year equalization assistance.  The school district's general budget limit shall be reduced by the same lump sum amount in the current year.

B.  Financial provisions for a charter school that is sponsored by the state board of education, the state board for charter schools, a university, a community college district or a group of community college districts are as follows:

1.  The charter school shall calculate a base support level as prescribed in section 15‑943, except that section 15‑941 does not apply to these charter schools.

2.  Notwithstanding paragraph 1 of this subsection, the student count shall be determined initially using an estimated student count based on actual registration of pupils before the beginning of the school year.  After the first one hundred days or two hundred days in session, as applicable, the charter school shall revise the student count to be equal to the actual average daily membership, as defined in section 15‑901, of the charter school.  Before the one hundredth day or two hundredth day in session, as applicable, the state board of education, the state board for charter schools, the sponsoring university, the sponsoring community college district or the sponsoring group of community college districts may require a charter school to report periodically regarding pupil enrollment and attendance, and the department of education may revise its computation of equalization assistance based on the report.  A charter school shall revise its student count, base support level and charter additional assistance before May 15.  A charter school that overestimated its student count shall revise its budget before May 15.  A charter school that underestimated its student count may revise its budget before May 15.

3.  A charter school may utilize section 15‑855 for the purposes of this section.  The charter school and the department of education shall prescribe procedures for determining average daily membership.

4.  Equalization assistance for the charter school shall be determined by adding the amount of the base support level and charter additional assistance.  The amount of the charter additional assistance is one thousand six hundred fifty‑four eighty-four dollars forty‑one nineteen cents per student count in kindergarten programs and grades one through eight and one thousand nine hundred twenty‑eight sixty-two dollars nineteen ninety cents per student count in grades nine through twelve.

5.  The state board of education shall apportion state aid from the appropriations made for such purposes to the state treasurer for disbursement to the charter schools in each county in an amount as determined by this paragraph.  The apportionments shall be made as prescribed in section 15‑973, subsection B.

6.  The charter school shall not charge tuition for pupils who reside in this state, levy taxes or issue bonds.  A charter school may admit pupils who are not residents of this state and shall charge tuition for those pupils in the same manner prescribed in section 15‑823.

7.  Not later than noon on the day preceding each apportionment date established by paragraph 5 of this subsection, the superintendent of public instruction shall furnish to the state treasurer an abstract of the apportionment and shall certify the apportionment to the department of administration, which shall draw its warrant in favor of the charter schools for the amount apportioned.

C.  If a pupil is enrolled in both a charter school and a public school that is not a charter school, the sum of the daily membership, which includes enrollment as prescribed in section 15‑901, subsection A, paragraph 1, subdivisions (a) and (b) and daily attendance as prescribed in section 15‑901, subsection A, paragraph 5, for that pupil in the school district and the charter school shall not exceed 1.0, except that if the pupil is enrolled in both a charter school and a joint technical education district and resides within the boundaries of a school district participating in the joint technical education district, the sum of the average daily membership for that pupil in the charter school and the joint technical education district shall not exceed 1.25.  If a pupil is enrolled in both a charter school and a public school that is not a charter school, the department of education shall direct the average daily membership to the school with the most recent enrollment date.  Upon validation of actual enrollment in both a charter school and a public school that is not a charter school and if the sum of the daily membership or daily attendance for that pupil is greater than 1.0, the sum shall be reduced to 1.0 and shall be apportioned between the public school and the charter school based on the percentage of total time that the pupil is enrolled or in attendance in the public school and the charter school, except that if the pupil is enrolled in both a charter school and a joint technical education district and resides within the boundaries of a school district participating in the joint technical education district, the sum of the average daily membership for that pupil in the charter school and the joint technical education district shall be reduced to 1.25 and shall be apportioned between the charter school and the joint technical education district based on the percentage of total time that the pupil is enrolled or in attendance in the charter school and the joint technical education district.  The uniform system of financial records shall include guidelines for the apportionment of the pupil enrollment and attendance as provided in this section.

D.  Charter schools are allowed to accept grants and gifts to supplement their state funding, but it is not the intent of the charter school law to require taxpayers to pay twice to educate the same pupils.  The base support level for a charter school or for a school district sponsoring a charter school shall be reduced by an amount equal to the total amount of monies received by a charter school from a federal or state agency if the federal or state monies are intended for the basic maintenance and operations of the school.  The superintendent of public instruction shall estimate the amount of the reduction for the budget year and shall revise the reduction to reflect the actual amount before May 15 of the current year.  If the reduction results in a negative amount, the negative amount shall be used in computing all budget limits and equalization assistance, except that:

1.  Equalization assistance shall not be less than zero.

2.  For a charter school sponsored by the state board of education, the state board for charter schools, a university, a community college district or a group of community college districts, the total of the base support level and the charter additional assistance shall not be less than zero.

3.  For a charter school sponsored by a school district, the base support level for the school district shall not be reduced by more than the amount that the charter school increased the district's base support level, capital outlay revenue limit and soft capital district additional assistance allocation.

E.  If a charter school was a district public school in the prior year and is now being operated for or by the same school district and sponsored by the state board of education, the state board for charter schools, a university, a community college district, a group of community college districts or a school district governing board, the reduction in subsection D of this section applies.  The reduction to the base support level of the charter school or the sponsoring district of the charter school shall equal the sum of the base support level and the charter additional assistance received in the current year for those pupils who were enrolled in the traditional public school in the prior year and are now enrolled in the charter school in the current year.

F.  Equalization assistance for charter schools shall be provided as a single amount based on average daily membership without categorical distinctions between maintenance and operations or capital.

G.  At the request of a charter school, the county school superintendent of the county where the charter school is located may provide the same educational services to the charter school as prescribed in section 15‑308, subsection A.  The county school superintendent may charge a fee to recover costs for providing educational services to charter schools.

H.  If the sponsor of the charter school determines at a public meeting that the charter school is not in compliance with federal law, with the laws of this state or with its charter, the sponsor of a charter school may submit a request to the department of education to withhold up to ten per cent of the monthly apportionment of state aid that would otherwise be due the charter school.  The department of education shall adjust the charter school's apportionment accordingly.  The sponsor shall provide written notice to the charter school at least seventy‑two hours before the meeting and shall allow the charter school to respond to the allegations of noncompliance at the meeting before the sponsor makes a final determination to notify the department of education of noncompliance.  The charter school shall submit a corrective action plan to the sponsor on a date specified by the sponsor at the meeting.  The corrective action plan shall be designed to correct deficiencies at the charter school and to ensure that the charter school promptly returns to compliance.  When the sponsor determines that the charter school is in compliance, the department of education shall restore the full amount of state aid payments to the charter school.

I.  In addition to the withholding of state aid payments pursuant to subsection H of this section, the sponsor of a charter school may impose a civil penalty of one thousand dollars per occurrence if a charter school fails to comply with the fingerprinting requirements prescribed in section 15‑183, subsection C or section 15‑512.  The sponsor of a charter school shall not impose a civil penalty if it is the first time that a charter school is out of compliance with the fingerprinting requirements and if the charter school provides proof within forty-eight hours of written notification that an application for the appropriate fingerprint check has been received by the department of public safety.  The sponsor of the charter school shall obtain proof that the charter school has been notified, and the notification shall identify the date of the deadline and shall be signed by both parties.  The sponsor of a charter school shall automatically impose a civil penalty of one thousand dollars per occurrence if the sponsor determines that the charter school subsequently violates the fingerprinting requirements.  Civil penalties pursuant to this subsection shall be assessed by requesting the department of education to reduce the amount of state aid that the charter school would otherwise receive by an amount equal to the civil penalty.  The amount of state aid withheld shall revert to the state general fund at the end of the fiscal year.

J.  A charter school may receive and spend monies distributed by the department of education pursuant to section 42‑5029, subsection E and section 37‑521, subsection B.

K.  If a school district transports or contracts to transport pupils to the Arizona state schools for the deaf and the blind during any fiscal year, the school district may transport or contract with a charter school to transport sensory impaired pupils during that same fiscal year to a charter school if requested by the parent of the pupil and if the distance from the pupil's place of actual residence within the school district to the charter school is less than the distance from the pupil's place of actual residence within the school district to the campus of the Arizona state schools for the deaf and the blind.

L.  Notwithstanding any other law, a university under the jurisdiction of the Arizona board of regents, a community college district or a group of community college districts shall not include any student in the student count of the university, community college district or group of community college districts for state funding purposes if that student is enrolled in and attending a charter school sponsored by the university, community college district or group of community college districts.

M.  The governing body of a charter school shall transmit a copy of its proposed budget or the summary of the proposed budget and a notice of the public hearing to the department of education for posting on the department of education's website no later than ten days before the hearing and meeting. If the charter school maintains a website, the charter school governing body shall post on its website a copy of its proposed budget or the summary of the proposed budget and a notice of the public hearing.

N.  The governing body of a charter school shall collaborate with the private organization that is approved by the state board of education pursuant to section 15‑792.02 to provide approved board examination systems for the charter school.

O.  If permitted by federal law, a charter school may opt out of federal grant opportunities if the charter holder or the appropriate governing body of the charter school determines that the federal requirements impose unduly burdensome reporting requirements.

P.  For the purposes of this section:

1.  "Monies intended for the basic maintenance and operations of the school" means monies intended to provide support for the educational program of the school, except that it does not include supplemental assistance for a specific purpose or title VIII of the elementary and secondary education act of 1965 monies.  The auditor general shall determine which federal or state monies meet the definition in this paragraph.

2.  "Operated for or by the same school district" means the charter school is either governed by the same district governing board or operated by the district in the same manner as other traditional schools in the district or is operated by an independent party that has a contract with the school district.  The auditor general and the department of education shall determine which charter schools meet the definition in this subsection. END_STATUTE

Sec. 4.  Section 15-241, Arizona Revised Statutes, is amended to read:

START_STATUTE15-241.  School and school district accountability; failing schools tutoring fund; classification label for school districts and charter school operators

A.  The department of education shall compile an annual achievement profile for each public school and school district.

B.  Each school and school district shall submit to the department any data that is required and requested and that is necessary to compile the achievement profile.  A school or school district that fails to submit the information that is necessary is not eligible to receive monies from the classroom site fund established by section 15‑977.

C.  The department shall establish a baseline achievement profile for each school and school district.  The baseline achievement profile shall be used to determine a standard measurement of acceptable academic progress for each school and school district and a school and school district classification pursuant to subsection H of this section.  Any disclosure of educational records compiled by the department of education pursuant to this section shall comply with the family educational rights and privacy act of 1974 (20 United States Code section 1232g).

D.  The achievement profile for schools and school districts that offer instruction in kindergarten programs and grades one through eight, or any combination of those programs or grades, shall include the following school academic performance indicators:

1.  The Arizona measure of academic progress.  The department shall compute the extent of academic progress made by the pupils in each school and school district during the course of each year.

2.  The Arizona instrument to measure standards test.  The department shall compute the percentage of pupils who meet or exceed the standard on the Arizona instrument to measure standards test, as prescribed by the state board of education.  The superintendent of public instruction and the department may calculate academic gain on the Arizona instrument to measure standards test according to each of the school classifications prescribed in subsection G of this section on a statewide basis, for each school district in this state and for each school by determining the average scale scores for students in the current academic year as compared to the average scale scores for the previous academic year for the same students.

3.  The results of English language learners tests administered pursuant to section 15‑756, subsection B, section 15‑756.05 and section 15‑756.06.

E.  The achievement profile for schools and school districts that offer instruction in grades nine through twelve, or any combination of those grades, shall include the following school academic performance indicators:

1.  The Arizona measure of academic progress.  The department shall compute the extent of academic progress made by the pupils at each school.

2.  The Arizona instrument to measure standards test.  The department shall compute the percentage of pupils pursuant to subsection G of this section who meet or exceed the standard on the Arizona instrument to measure standards test, as prescribed by the state board of education.  The superintendent of public instruction and the department may calculate academic gain on the Arizona instrument to measure standards test according to each of the school classifications prescribed in subsection G of this section on a statewide basis, for each school district in this state and for each school by determining the average scale scores for students in the current academic year as compared to the average scale scores for the previous academic year for the same students.

3.  The annual dropout rate.

4.  The annual graduation rate.

5.  The results of English language learners tests administered pursuant to section 15‑756, subsection B, section 15‑756.05 and section 15‑756.06.

F.  Schools and school districts that offer instruction in all or a combination of the grades specified in subsections D and E of this section shall include a single achievement profile for that school and school district that includes the school academic performance indicators specified in subsections D and E of this section.

G.  Subject to final adoption by the state board of education, the department shall determine the criteria for each school and school district classification using a research based methodology.  The methodology shall include the performance of pupils at all achievement levels, account for pupil mobility, account for the distribution of pupil achievement at each school and school district and include longitudinal indicators of academic performance.  Fifty per cent of the school and school district classification determination shall consist of academic performance measurements.  Fifty per cent of the academic performance measurement shall consist of a measurement of academic gain for all pupils enrolled at the school or school district and fifty per cent of the academic performance measurements shall consist of a measurement of the twenty-five per cent of pupils with the lowest academic performance measurement enrolled at the school or school district.  For the purposes of this subsection, "research based methodology" means the systematic and objective application of statistical and quantitative research principles to determine a standard measurement of acceptable academic progress for each school and school district.

H.  Except as provided in subsection EE of this section, the achievement profile shall be used to determine a school and school district classification that uses a letter grade system as follows:

1.  A school or school district assigned a letter grade of A shall demonstrate an excellent level of performance.

2.  A school or school district assigned a letter grade of B shall demonstrate an above average level of performance.

3.  A school or school district assigned a letter grade of C shall demonstrate an average level of performance.

4.  A school or school district assigned a letter grade of D shall demonstrate a below average level of performance.

5.  A school or school district assigned a letter grade of F shall demonstrate a failing level of performance.  The state board of education may also assign a school a letter grade of F if the state board of education determines that the school is among the "persistently lowest-achieving schools" in the state under the federal school accountability requirements pursuant to section 1003(g) of the elementary and secondary education act (20 United States Code section 6303).

I.  The classification for each school and the criteria used to determine classification pursuant to subsection G of this section shall be included on the school report card prescribed in section 15‑746.

J.  Subject to final adoption by the state board of education, the department of education shall develop a parallel achievement profile for accommodation schools, alternative schools as defined by the state board of education and extremely small schools as defined by the state board of education for the purposes of this section.

K.  If a school is assigned a letter grade of D, within ninety days after receiving notice of the designation, the governing board shall develop an improvement plan for the school, submit a copy of the plan to the superintendent of public instruction and the county educational service agency and supervise the implementation of the plan.  The plan shall include necessary components as identified by the state board of education.  Within thirty days after submitting the improvement plan to the superintendent of public instruction and the county educational service agency, the governing board shall hold a special public meeting in each school that has been assigned a letter grade of D and shall present the respective improvement plans that have been developed for each school.  The school district governing board, within thirty days of receiving notice of the designation, shall provide written notification of the classification to each residence within the attendance area of the school.  The notice shall explain the improvement plan process and provide information regarding the public meeting required by this subsection.

L.  A school that has not submitted an improvement plan pursuant to subsection K of this section is not eligible to receive monies from the classroom site fund established by section 15‑977 for every day that a plan has not been received by the superintendent of public instruction within the time specified in subsection K of this section plus an additional ninety days.  The state board of education shall require the superintendent of the school district to testify before the board and explain the reasons that an improvement plan for that school has not been submitted.

M.  If a charter school is assigned a letter grade of D, within thirty days the school shall notify the parents of the students attending the school of the classification.  The notice shall explain the improvement plan process and provide information regarding the public meeting required by this subsection.  Within ninety days of receiving the classification, the charter holder shall present an improvement plan to the charter sponsor at a public meeting and submit a copy of the plan to the superintendent of public instruction.  The improvement plan shall include necessary components as identified by the state board of education.  For every day that an improvement plan is not received by the superintendent of public instruction and the county educational service agency, the school is not eligible to receive monies from the classroom site fund established by section 15‑977 for every day that a plan has not been received by the superintendent of public instruction within the time specified in subsection K of this section plus an additional ninety days.  The charter holder shall appear before the sponsoring board and explain why the improvement plan has not been submitted.

N.  The department of education shall establish an appeals process, to be approved by the state board of education, for a school to appeal data used to determine the achievement profile of the school.  The criteria established shall be based on mitigating factors and may include a visit to the school site by the department of education.

O.  If a school is assigned a letter grade of D for a third consecutive year, the department of education shall visit the school site to confirm the classification data and to review the implementation of the school's improvement plan.  The school shall be assigned a letter grade of F unless an alternate letter grade is assigned after an appeal pursuant to subsection N of this section.  A school that is assigned a letter grade of D for less than three consecutive years may also be assigned a letter grade of F if the state board of education determines that there is no reasonable likelihood that the school will achieve an average level of performance within the next two years.

P.  The school district governing board, within thirty days of receiving notice of the school being assigned a letter grade of F, shall provide written notification of the classification to each residence in the attendance area of the school.  The notice shall explain the improvement plan process and provide information regarding the public meeting required by subsection S of this section.

Q.  The superintendent of public instruction in collaboration with the county educational service agency, based on need, shall assign a solutions team to a school assigned a letter grade of D, a school assigned a letter grade of F or any other school pursuant to a mutual agreement between the department of education and the school comprised composed of master teachers, fiscal analysts and curriculum assessment experts who are certified by the state board of education as Arizona academic standards technicians.  The department of education or the county educational service agency may hire or contract with administrators, principals and teachers who have demonstrated experience with the characteristics and situations in a school assigned a letter grade of D or F and may use these personnel as part of the solutions team.  The department of education shall work with staff at the school to assist in curricula alignment and shall instruct teachers on how to increase pupil academic progress, considering the school's achievement profile.  The solutions team shall consider the existing improvement plan to assess the need for changes to curriculum, professional development and resource allocation and shall present a statement of its findings to the school administrator and district superintendent.  Within forty‑five days after the presentation of the solutions team's statement of findings, the school district governing board, in cooperation with each school within the school district that is assigned a letter grade of D and its assigned solutions team representative, shall develop and submit to the department of education and the county educational service agency an action plan that details the manner in which the school district will assist the school as the school incorporates the findings of the solutions team into the improvement plan.  The department of education shall review the action plan and shall either accept the action plan or return the action plan to the school district for modification.  If the school district does not submit an approved action plan within forty‑five days, the state board of education may direct the superintendent of public instruction to withhold up to ten per cent of state monies that the school district would otherwise be entitled to receive each month until the plan is submitted to the department of education and the county educational service agency, at which time those monies shall be returned to the school district.

R.  The parent or the guardian of the pupil may apply to the department of education, in a manner determined by the department of education, for a certificate of supplemental instruction from the failing schools tutoring fund established by this section.  Pupils attending a school assigned a letter grade of D or F or a pupil who has failed to pass one or more portions of the Arizona instrument to measure standards test in grades eight through twelve in order to graduate from high school may select an alternative tutoring program in academic standards from a provider that is certified by the state board of education.  To qualify, the provider must state in writing a level of academic improvement for the pupil that includes a timeline for improvement that is agreed to by the parent or guardian of the pupil.  The state board of education shall annually review academic performance levels for providers certified pursuant to this subsection and may remove a provider at a public hearing from an approved list of providers if that provider fails to meet its stated level of academic improvement.  The state board of education shall determine the application guidelines and the maximum value for each certificate of supplemental instruction.  The state board of education shall annually complete a market survey in order to determine the maximum value for each certificate of supplemental instruction.  This subsection shall not be construed to require the state to provide additional monies beyond the monies provided pursuant to section 42‑5029, subsection E, paragraph 7.

S.  Within sixty days of receiving notification of a school being assigned a letter grade of F, the school district governing board shall evaluate needed changes to the existing improvement plan for the school, consider recommendations from the solutions team, submit a copy of the plan to the superintendent of public instruction and the county educational service agency and supervise the implementation of the plan.  Within thirty days after submitting the improvement plan to the superintendent of public instruction, the governing board shall hold a public meeting in each school that has been assigned a letter grade of F and shall present the respective improvement plans that have been developed for each school.

T.  A school that has not submitted an improvement plan pursuant to subsection S of this section is not eligible to receive monies from the classroom site fund established by section 15‑977 for every day that a plan has not been received by the superintendent of public instruction within the time specified in subsection S of this section plus an additional ninety days.  The state board of education shall require the superintendent of the school district to testify before the board and explain the reasons that an improvement plan for that school has not been submitted.

U.  If a charter school is assigned a letter grade of F, the department of education shall immediately notify the charter school's sponsor.  The charter school's sponsor shall either take action to restore the charter school to acceptable performance or revoke the charter school's charter.  Within thirty days the school shall notify the parents of the students attending the school of the classification and of any pending public meetings to review the issue.

V.  A school that has been assigned a letter grade of F shall be evaluated by the department of education to determine if the school failed to properly implement its school improvement plan, align the curriculum with academic standards, provide teacher training, prioritize the budget or implement other proven strategies to improve academic performance.  After visiting the school site pursuant to subsection O of this section, the department of education shall submit to the state board of education a recommendation to proceed pursuant to subsections Q, R and S of this section or that the school be subject to a public hearing to determine if the school failed to properly implement its improvement plan and the reasons for the department's recommendation.

W.  If the department does recommend a public hearing, the state board of education shall meet and may provide by a majority vote at the public hearing for the continued operation of the school as allowed by this subsection.  The state board of education shall determine whether governmental, nonprofit and private organizations may submit applications to the state board to fully or partially manage the school.  The state board's determination shall include:

1.  If and to what extent the local governing board may participate in the operation of the school including personnel matters.

2.  If and to what extent the state board of education shall participate in the operation of the school.

3.  Resource allocation pursuant to subsection Y of this section.

4.  Provisions for the development and submittal of a school improvement plan to be presented in a public meeting at the school.

5.  A suggested time frame for the alternative operation of the school.

X.  The state board shall periodically review the status of a school that is operated by an organization other than the school district governing board to determine whether the operation of the school should be returned to the school district governing board.  Before the state board makes a determination, the state board or its designee shall meet with the school district governing board or its designee to determine the time frame, operational considerations and the appropriate continuation of existing improvements that are necessary to assure a smooth transition of authority from the other organization back to the school district governing board.

Y.  If an alternative operation plan is provided pursuant to subsection W of this section, the state board of education shall pay for the operation of the school and shall adjust the school district's soft capital allocation pursuant to section 15‑962, capital outlay revenue limit district additional assistance pursuant to section 15‑961, base support level pursuant to section 15‑943, monies distributed from the classroom site fund established by section 15‑977 and transportation support level pursuant to section 15‑945 to accurately reflect any reduction in district services that are no longer provided to that school by the district.  The state board of education may modify the school district's revenue control limit, the district support level and the general budget limit calculated pursuant to section 15‑947 by an amount that corresponds to this reduction in services.  The state board of education shall retain the portion of state aid that would otherwise be due the school district for the school and shall distribute that portion of state aid directly to the organization that contracts with the state board of education to operate the school.

Z.  If the state board of education determines that a charter school failed to properly implement its improvement plan, the sponsor of the charter school shall revoke the charter school's charter.

AA.  If there are more than two schools in a district and more than one‑half, or in any case more than five, of the schools in the district are assigned a letter grade of F for more than two consecutive years, in the next election of members of the governing board the election ballot shall contain the following statement immediately above the listing of governing board candidates:

Within the last five years, (number of schools) schools in the ________ school district have been assigned a letter grade of F or designated as "schools failing to meet academic standards" by the superintendent of public instruction.

BB.  At least twice each year the department of education shall publish in a newspaper of general circulation in each county of this state a list of schools that are assigned a letter grade of F.

CC.  The failing schools tutoring fund is established consisting of monies collected pursuant to section 42‑5029, subsection E as designated for this purpose.  The department of education shall administer the fund.  The department of education may use monies from the fund to purchase materials designed to assist students to meet the Arizona academic standards and to achieve a passing score on the Arizona instrument to measure standards test in order to graduate from high school.

DD.  The department of education may develop a classification label for school districts and charter school operators.  If the department of education develops a classification label for school districts and charter school operators, the classification label may be developed from the following components:

1.  Measures of academic progress.

2.  Pupil assessment data.

3.  The attendance rates and graduation rates of pupils who are educated in that charter school operator's charter schools or in that school district's schools.

4.  The percentage of the parents of pupils enrolled in that charter school operator's charter schools or in that school district's schools that categorizes the quality of their child's education as excellent on a parental rating of school quality.

EE.  The state board of education shall determine appropriate modifications to the criteria used to calculate achievement profiles for schools that participate in the board examination system prescribed in chapter 7, article 6 of this title.

FF.  The state board of education shall adopt guidelines to include supplementary training in reading instruction for teachers who provide instruction to pupils in a kindergarten program or grade one, two or three in an improvement plan pursuant to subsection K of this section.

GG.  In addition to any other corrective procedures prescribed in this section and section 15‑241.01, a school that has been assigned a letter grade of D or F for two consecutive years shall implement a science, technology, engineering and mathematics intervention strategy under the supervision of the state board of education.

HH.  In addition to any other corrective procedures prescribed in this section a school district that has been assigned a letter grade of D or F for two consecutive years shall implement a parent involvement strategy.  The parent involvement strategy shall be included in the school improvement plans plan for each applicable school within the district, as prescribed in subsection K of this section. END_STATUTE

Sec. 5.  Title 15, chapter 2, article 2, Arizona Revised Statutes, is amended by adding section 15-249.04, to read:

START_STATUTE15-249.04.  Report; school district overrides

On or before November 30 of each year, The department of education shall electronically submit to the joint legislative budget committee and the governor's office of strategic planning and budgeting a report that lists the amount budgeted by individual school districts for the current fiscal year for each type of override conducted pursuant to section 15‑481 or 15‑482. END_STATUTE

Sec. 6.  Section 15-341, Arizona Revised Statutes, is amended to read:

START_STATUTE15-341.  General powers and duties; immunity; delegation

A.  The governing board shall:

1.  Prescribe and enforce policies and procedures for the governance of the schools, not inconsistent with law or rules prescribed by the state board of education.

2.  Exclude from schools all books, publications, papers or audiovisual materials of a sectarian, partisan or denominational character.  This paragraph shall not be construed to prohibit the elective course permitted by section 15‑717.01.

3.  Manage and control the school property within its district.

4.  Acquire school furniture, apparatus, equipment, library books and supplies for the use of the schools.

5.  Prescribe the curricula and criteria for the promotion and graduation of pupils as provided in sections 15‑701 and 15‑701.01.

6.  Furnish, repair and insure, at full insurable value, the school property of the district.

7.  Construct school buildings on approval by a vote of the district electors.

8.  Make in the name of the district conveyances of property belonging to the district and sold by the board.

9.  Purchase school sites when authorized by a vote of the district at an election conducted as nearly as practicable in the same manner as the election provided in section 15‑481 and held on a date prescribed in section 15‑491, subsection E, but such authorization shall not necessarily specify the site to be purchased and such authorization shall not be necessary to exchange unimproved property as provided in section 15‑342, paragraph 23.

10.  Construct, improve and furnish buildings used for school purposes when such buildings or premises are leased from the national park service.

11.  Purchase school sites or construct, improve and furnish school buildings from the proceeds of the sale of school property only on approval by a vote of the district electors.

12.  Hold pupils to strict account for disorderly conduct on school property.

13.  Discipline students for disorderly conduct on the way to and from school.

14.  Except as provided in section 15‑1224, deposit all monies received by the district as gifts, grants and devises with the county treasurer who shall credit the deposits as designated in the uniform system of financial records.  If not inconsistent with the terms of the gifts, grants and devises given, any balance remaining after expenditures for the intended purpose of the monies have been made shall be used for reduction of school district taxes for the budget year, except that in the case of accommodation schools the county treasurer shall carry the balance forward for use by the county school superintendent for accommodation schools for the budget year.

15.  Provide that, if a parent or legal guardian chooses not to accept a decision of the teacher as provided in section 15‑521, paragraph 4, the parent or legal guardian may request in writing that the governing board review the teacher's decision.  This paragraph shall not be construed to release school districts from any liability relating to a child's promotion or retention.

16.  Provide for adequate supervision over pupils in instructional and noninstructional activities by certificated or noncertificated personnel.

17.  Use school monies received from the state and county school apportionment exclusively for payment of salaries of teachers and other employees and contingent expenses of the district.

18.  Make an annual report to the county school superintendent on or before October 1 in the manner and form and on the blanks prescribed by the superintendent of public instruction or county school superintendent.  The board shall also make reports directly to the county school superintendent or the superintendent of public instruction whenever required.

19.  Deposit all monies received by school districts other than student activities monies or monies from auxiliary operations as provided in sections 15‑1125 and 15‑1126 with the county treasurer to the credit of the school district except as provided in paragraph 20 of this subsection and sections 15‑1223 and 15‑1224, and the board shall expend the monies as provided by law for other school funds.

20.  Establish bank accounts in which the board during a month may deposit miscellaneous monies received directly by the district.  The board shall remit monies deposited in the bank accounts at least monthly to the county treasurer for deposit as provided in paragraph 19 of this subsection and in accordance with the uniform system of financial records.

21.  Prescribe and enforce policies and procedures for disciplinary action against a teacher who engages in conduct that is a violation of the policies of the governing board but that is not cause for dismissal of the teacher or for revocation of the certificate of the teacher.  Disciplinary action may include suspension without pay for a period of time not to exceed ten school days.  Disciplinary action shall not include suspension with pay or suspension without pay for a period of time longer than ten school days. The procedures shall include notice, hearing and appeal provisions for violations that are cause for disciplinary action.  The governing board may designate a person or persons to act on behalf of the board on these matters.

22.  Prescribe and enforce policies and procedures for disciplinary action against an administrator who engages in conduct that is a violation of the policies of the governing board regarding duties of administrators but that is not cause for dismissal of the administrator or for revocation of the certificate of the administrator.  Disciplinary action may include suspension without pay for a period of time not to exceed ten school days.  Disciplinary action shall not include suspension with pay or suspension without pay for a period of time longer than ten school days.  The procedures shall include notice, hearing and appeal provisions for violations that are cause for disciplinary action.  The governing board may designate a person or persons to act on behalf of the board on these matters.  For violations that are cause for dismissal, the provisions of notice, hearing and appeal in chapter 5, article 3 of this title shall apply.  The filing of a timely request for a hearing suspends the imposition of a suspension without pay or a dismissal pending completion of the hearing.

23.  Notwithstanding sections 13‑3108 and 13‑3120, prescribe and enforce policies and procedures that prohibit a person from carrying or possessing a weapon on school grounds unless the person is a peace officer or has obtained specific authorization from the school administrator.

24.  Prescribe and enforce policies and procedures relating to the health and safety of all pupils participating in district sponsored practice sessions or games or other interscholastic athletic activities, including:

(a)  The provision of water.

(b)  Guidelines, information and forms, developed in consultation with a statewide private entity that supervises interscholastic activities, to inform and educate coaches, pupils and parents of the dangers of concussions and head injuries and the risks of continued participation in athletic activity after a concussion.  The policies and procedures shall require that, before a pupil participates in an athletic activity, the pupil and the pupil's parent must sign an information form at least once each school year that states that the parent is aware of the nature and risk of concussion.  The policies and procedures shall require that a pupil who is suspected of sustaining a concussion in a practice session, game or other interscholastic athletic activity be immediately removed from the athletic activity.  A coach from the pupil's team or an official or a licensed health care provider may remove a pupil from play.  A team parent may also remove the parent's own child from play.  A pupil may return to play on the same day if a health care provider rules out a suspected concussion at the time the pupil is removed from play.  On a subsequent day, the pupil may return to play if the pupil has been evaluated by and received written clearance to resume participation in athletic activity from a health care provider who has been trained in the evaluation and management of concussions and head injuries.  A health care provider who is a volunteer and who provides clearance to participate in athletic activity on the day of the suspected injury or on a subsequent day is immune from civil liability with respect to all decisions made and actions taken that are based on good faith implementation of the requirements of this subdivision, except in cases of gross negligence or wanton or wilful neglect. A school district, school district employee, team coach, official or team volunteer or a parent or guardian of a team member is not subject to civil liability for any act, omission or policy undertaken in good faith to comply with the requirements of this subdivision or for a decision made or an action taken by a health care provider.  A group or organization that uses property or facilities owned or operated by a school district for athletic activities shall comply with the requirements of this subdivision.  A school district and its employees and volunteers are not subject to civil liability for any other person or organization's failure or alleged failure to comply with the requirements of this subdivision.  This subdivision does not apply to teams that are based in another state and that participate in an athletic activity in this state.  For the purposes of this subdivision, athletic activity does not include dance, rhythmic gymnastics, competitions or exhibitions of academic skills or knowledge or other similar forms of physical noncontact activities, civic activities or academic activities, whether engaged in for the purposes of competition or recreation. For the purposes of this subdivision, "health care provider" means a physician who is licensed pursuant to title 32, chapter 13 or 17, an athletic trainer who is licensed pursuant to title 32, chapter 41, a nurse practitioner who is licensed pursuant to title 32, chapter 15, and a physician assistant who is licensed pursuant to title 32, chapter 25.

25.  Prescribe and enforce policies and procedures regarding the smoking of tobacco within school buildings.  The policies and procedures shall be adopted in consultation with school district personnel and members of the community and shall state whether smoking is prohibited in school buildings. If smoking in school buildings is not prohibited, the policies and procedures shall clearly state the conditions and circumstances under which smoking is permitted, those areas in a school building that may be designated as smoking areas and those areas in a school building that may not be designated as smoking areas.

26.  Establish an assessment, data gathering and reporting system as prescribed in chapter 7, article 3 of this title.

27.  Provide special education programs and related services pursuant to section 15‑764, subsection A to all children with disabilities as defined in section 15‑761.

28.  Administer competency tests prescribed by the state board of education for the graduation of pupils from high school.

29.  Ensure that insurance coverage is secured for all construction projects for purposes of general liability, property damage and workers' compensation and secure performance and payment bonds for all construction projects.

30.  Keep on file the resumes of all current and former employees who provide instruction to pupils at a school.  Resumes shall include an individual's educational and teaching background and experience in a particular academic content subject area.  A school district shall inform parents and guardians of the availability of the resume information and shall make the resume information available for inspection on request of parents and guardians of pupils enrolled at a school.  This paragraph shall not be construed to require any school to release personally identifiable information in relation to any teacher or employee, including the teacher's or employee's address, salary, social security number or telephone number.

31.  Report to local law enforcement agencies any suspected crime against a person or property that is a serious offense as defined in section 13-706 or that involves a deadly weapon or dangerous instrument or serious physical injury and any conduct that poses a threat of death or serious physical injury to employees, students or anyone on the property of the school.  This paragraph does not limit or preclude the reporting by a school district or an employee of a school district of suspected crimes other than those required to be reported by this paragraph.  For the purposes of this paragraph, "dangerous instrument", "deadly weapon" and "serious physical injury" have the same meanings prescribed in section 13‑105.

32.  In conjunction with local law enforcement agencies and local medical facilities, develop an emergency response plan for each school in the school district in accordance with minimum standards developed jointly by the department of education and the division of emergency management within the department of emergency and military affairs.

33.  Provide written notice to the parents or guardians of all students affected in the school district at least ten days prior to a public meeting to discuss closing a school within the school district.  The notice shall include the reasons for the proposed closure and the time and place of the meeting.  The governing board shall fix a time for a public meeting on the proposed closure no less than ten days before voting in a public meeting to close the school.  The school district governing board shall give notice of the time and place of the meeting.  At the time and place designated in the notice, the school district governing board shall hear reasons for or against closing the school.  The school district governing board is exempt from this paragraph if it is determined by the governing board that the school shall be closed because it poses a danger to the health or safety of the pupils or employees of the school.  A governing board may consult with the school facilities board for technical assistance and for information on the impact of closing a school.  The information provided from the school facilities board shall not require the governing board to take or not take any action.

34.  Incorporate instruction on Native American history into appropriate existing curricula.

35.  Prescribe and enforce policies and procedures allowing pupils who have been diagnosed with anaphylaxis by a health care provider licensed pursuant to title 32, chapter 13, 14, 17 or 25 or by a registered nurse practitioner licensed and certified pursuant to title 32, chapter 15 to carry and self-administer emergency medications, including auto‑injectable epinephrine, while at school and at school sponsored activities.  The pupil's name on the prescription label on the medication container or on the medication device and annual written documentation from the pupil's parent or guardian to the school that authorizes possession and self-administration is sufficient proof that the pupil is entitled to the possession and self‑administration of the medication.  The policies shall require a pupil who uses auto-injectable epinephrine while at school and at school sponsored activities to notify the nurse or the designated school staff person of the use of the medication as soon as practicable.  A school district and its employees are immune from civil liability with respect to all decisions made and actions taken that are based on good faith implementation of the requirements of this paragraph, except in cases of wanton or wilful neglect.

36.  Allow the possession and self-administration of prescription medication for breathing disorders in handheld inhaler devices by pupils who have been prescribed that medication by a health care professional licensed pursuant to title 32.  The pupil's name on the prescription label on the medication container or on the handheld inhaler device and annual written documentation from the pupil's parent or guardian to the school that authorizes possession and self-administration shall be sufficient proof that the pupil is entitled to the possession and self‑administration of the medication.  A school district and its employees are immune from civil liability with respect to all decisions made and actions taken that are based on a good faith implementation of the requirements of this paragraph.

37.  Prescribe and enforce policies and procedures to prohibit pupils from harassing, intimidating and bullying other pupils on school grounds, on school property, on school buses, at school bus stops, at school sponsored events and activities and through the use of electronic technology or electronic communication on school computers, networks, forums and mailing lists that include the following components:

(a)  A procedure for pupils, parents and school district employees to confidentially report to school officials incidents of harassment, intimidation or bullying.  The school shall make available written forms designed to provide a full and detailed description of the incident and any other relevant information about the incident.

(b)  A requirement that school district employees report in writing suspected incidents of harassment, intimidation or bullying to the appropriate school official and a description of appropriate disciplinary procedures for employees who fail to report suspected incidents that are known to the employee.

(c)  A requirement that, at the beginning of each school year, school officials provide all pupils with a written copy of the rights, protections and support services available to a pupil who is an alleged victim of an incident reported pursuant to this paragraph.

(d)  If an incident is reported pursuant to this paragraph, a requirement that school officials provide a pupil who is an alleged victim of the incident with a written copy of the rights, protections and support services available to that pupil.

(e)  A formal process for the documentation of reported incidents of harassment, intimidation or bullying and for the confidentiality, maintenance and disposition of this documentation.  School districts shall maintain documentation of all incidents reported pursuant to this paragraph for at least six years.  The school shall not use that documentation to impose disciplinary action unless the appropriate school official has investigated and determined that the reported incidents of harassment, intimidation or bullying occurred. If a school provides documentation of reported incidents to persons other than school officials or law enforcement, all individually identifiable information shall be redacted.

(f)  A formal process for the investigation by the appropriate school officials of suspected incidents of harassment, intimidation or bullying, including procedures for notifying the alleged victim on completion and disposition of the investigation.

(g)  Disciplinary procedures for pupils who have admitted or been found to have committed incidents of harassment, intimidation or bullying.

(h)  A procedure that sets forth consequences for submitting false reports of incidents of harassment, intimidation or bullying.

(i)  Procedures designed to protect the health and safety of pupils who are physically harmed as the result of incidents of harassment, intimidation and bullying, including, if appropriate, procedures to contact emergency medical services or law enforcement agencies, or both.

(j)  Definitions of harassment, intimidation and bullying.

38.  Prescribe and enforce policies and procedures regarding changing or adopting attendance boundaries that include the following components:

(a)  A procedure for holding public meetings to discuss attendance boundary changes or adoptions that allows public comments.

(b)  A procedure to notify the parents or guardians of the students affected.

(c)  A procedure to notify the residents of the households affected by the attendance boundary changes.

(d)  A process for placing public meeting notices and proposed maps on the school district's website for public review, if the school district maintains a website.

(e)  A formal process for presenting the attendance boundaries of the affected area in public meetings that allows public comments.

(f)  A formal process for notifying the residents and parents or guardians of the affected area as to the decision of the governing board on the school district's website, if the school district maintains a website.

(g)  A formal process for updating attendance boundaries on the school district's website within ninety days of an adopted boundary change.  The school district shall send a direct link to the school district's attendance boundaries website to the department of real estate.

(h)  If the land that a school was built on was donated within the past five years, a formal process to notify the entity that donated the land affected by the decision of the governing board.

39.  If the state board of education determines that the school district has committed an overexpenditure as defined in section 15-107, provide a copy of the fiscal management report submitted pursuant to section 15-107, subsection H on its website and make copies available to the public on request.  The school district shall comply with a request within five business days after receipt.

40.  Ensure that the contract for the superintendent is structured in a manner in which up to twenty per cent of the total annual salary included for the superintendent in the contract is classified as performance pay.  This paragraph shall not be construed to require school districts to increase total compensation for superintendents.  Unless the school district governing board votes to implement an alternative procedure at a public meeting called for this purpose, the performance pay portion of the superintendent's total annual compensation shall be determined as follows:

(a)  Twenty‑five per cent of the performance pay shall be determined based on the percentage of academic gain determined by the department of education of pupils who are enrolled in the school district compared to the academic gain achieved by the highest ranking of the fifty largest school districts in this state.  For the purposes of this subdivision, the department of education shall determine academic gain by the academic growth achieved by each pupil who has been enrolled at the same school in a school district for at least five consecutive months measured against that pupil's academic results in the 2008‑2009 school year.  For the purposes of this subdivision, of the fifty largest school districts in this state, the school district with pupils who demonstrate the highest statewide percentage of overall academic gain measured against academic results for the 2008‑2009 school year shall be assigned a score of 100 and the school district with pupils who demonstrate the lowest statewide percentage of overall academic gain measured against academic results for the 2008‑2009 school year shall be assigned a score of 0.

(b)  Twenty‑five per cent of the performance pay shall be determined by the percentage of parents of pupils who are enrolled at the school district who assign a letter grade of "A" to the school on a survey of parental satisfaction with the school district.  The parental satisfaction survey shall be administered and scored by an independent entity that is selected by the governing board and that demonstrates sufficient expertise and experience to accurately measure the results of the survey.  The parental satisfaction survey shall use standard random sampling procedures and provide anonymity and confidentiality to each parent who participates in the survey.  The letter grade scale used on the parental satisfaction survey shall direct parents to assign one of the following letter grades:

(i)  A letter grade of "A" if the school district is excellent.

(ii)  A letter grade of "B" if the school district is above average.

(iii)  A letter grade of "C" if the school district is average.

(iv)  A letter grade of "D" if the school district is below average.

(v)  A letter grade of "F" if the school district is a failure.

(c)  Twenty‑five per cent of the performance pay shall be determined by the percentage of teachers who are employed at the school district and who assign a letter grade of "A" to the school on a survey of teacher satisfaction with the school.  The teacher satisfaction survey shall be administered and scored by an independent entity that is selected by the governing board and that demonstrates sufficient expertise and experience to accurately measure the results of the survey.  The teacher satisfaction survey shall use standard random sampling procedures and provide anonymity and confidentiality to each teacher who participates in the survey.  The letter grade scale used on the teacher satisfaction survey shall direct teachers to assign one of the following letter grades:

(i)  A letter grade of "A" if the school district is excellent.

(ii)  A letter grade of "B" if the school district is above average.

(iii)  A letter grade of "C" if the school district is average.

(iv)  A letter grade of "D" if the school district is below average.

(v)  A letter grade of "F" if the school district is a failure.

(d)  Twenty‑five per cent of the performance pay shall be determined by other criteria selected by the governing board.

41.  Maintain and store permanent public records of the school district as required by law.  Notwithstanding section 39‑101, the standards adopted by the Arizona state library, archives and public records for the maintenance and storage of school district public records shall allow school districts to elect to satisfy the requirements of this paragraph by maintaining and storing these records either on paper or in an electronic format, or a combination of a paper and electronic format.

42.  Adopt in a public meeting and implement by school year 2013‑2014 policies for principal evaluations.  Before the adoption of principal evaluation policies, the school district governing board shall provide opportunities for public discussion on the proposed policies.  The policies shall describe:

(a)  The principal evaluation instrument, including the four performance classifications adopted by the governing board pursuant to section 15‑203, subsection A, paragraph 38.

(b)  Alignment of professional development opportunities to the principal evaluations.

(c)  Incentives for principals in one of the two highest performance classifications pursuant to section 15‑203, subsection A, paragraph 38, which may include:

(i)  Multiyear contracts pursuant to section 15‑503.

(ii)  Incentives to work at schools that are assigned a letter grade of D or F pursuant to section 15‑241.

(d)  Transfer and contract processes for principals designated in the lowest performance classification pursuant to section 15‑203, subsection A, paragraph 38.

B.  Notwithstanding subsection A, paragraphs 7, 9 and 11 of this section, the county school superintendent may construct, improve and furnish school buildings or purchase or sell school sites in the conduct of an accommodation school.

C.  If any school district acquires real or personal property, whether by purchase, exchange, condemnation, gift or otherwise, the governing board shall pay to the county treasurer any taxes on the property that were unpaid as of the date of acquisition, including penalties and interest.  The lien for unpaid delinquent taxes, penalties and interest on property acquired by a school district:

1.  Is not abated, extinguished, discharged or merged in the title to the property.

2.  Is enforceable in the same manner as other delinquent tax liens.

D.  The governing board may not locate a school on property that is less than one‑fourth mile from agricultural land regulated pursuant to section 3‑365, except that the owner of the agricultural land may agree to comply with the buffer zone requirements of section 3‑365.  If the owner agrees in writing to comply with the buffer zone requirements and records the agreement in the office of the county recorder as a restrictive covenant running with the title to the land, the school district may locate a school within the affected buffer zone.  The agreement may include any stipulations regarding the school, including conditions for future expansion of the school and changes in the operational status of the school that will result in a breach of the agreement.

E.  A school district, its governing board members, its school council members and its employees are immune from civil liability for the consequences of adoption and implementation of policies and procedures pursuant to subsection A of this section and section 15‑342.  This waiver does not apply if the school district, its governing board members, its school council members or its employees are guilty of gross negligence or intentional misconduct.

F.  A governing board may delegate in writing to a superintendent, principal or head teacher the authority to prescribe procedures that are consistent with the governing board's policies.

G.  Notwithstanding any other provision of this title, a school district governing board shall not take any action that would result in a reduction of pupil square footage unless the governing board notifies the school facilities board established by section 15‑2001 of the proposed action and receives written approval from the school facilities board to take the action.  A reduction includes an increase in administrative space that results in a reduction of pupil square footage or sale of school sites or buildings, or both.  A reduction includes a reconfiguration of grades that results in a reduction of pupil square footage of any grade level.  This subsection does not apply to temporary reconfiguration of grades to accommodate new school construction if the temporary reconfiguration does not exceed one year.  The sale of equipment that results in a reduction that falls below the equipment requirements prescribed in section 15‑2011, subsection B is subject to commensurate withholding of school district capital outlay revenue limit district additional assistance monies pursuant to the direction of the school facilities board.  Except as provided in section 15‑342, paragraph 10, proceeds from the sale of school sites, buildings or other equipment shall be deposited in the school plant fund as provided in section 15‑1102.

H.  Subsections C through G of this section apply to a county board of supervisors and a county school superintendent when operating and administering an accommodation school. END_STATUTE

Sec. 7.  Section 15-393, Arizona Revised Statutes, is amended to read:

START_STATUTE15-393.  Joint technical education district governing board; report; definition

A.  The management and control of the joint district are vested in the joint technical education district governing board, including the content and quality of the courses offered by the district, the quality of teachers who provide instruction on behalf of the district, the salaries of teachers who provide instruction on behalf of the district and the reimbursement of other entities for the facilities used by the district.  Unless the governing boards of the school districts participating in the formation of the joint district vote to implement an alternative election system as provided in subsection B of this section, the joint board shall consist of five members elected from five single member districts formed within the joint district.  The single member district election system shall be submitted as part of the plan for the joint district pursuant to section 15‑392 and shall be established in the plan as follows:

1.  The governing boards of the school districts participating in the formation of the joint district shall define the boundaries of the single member districts so that the single member districts are as nearly equal in population as is practicable, except that if the joint district lies in part in each of two or more counties, at least one single member district may be entirely within each of the counties comprising the joint district if this district design is consistent with the obligation to equalize the population among single member districts.

2.  The boundaries of each single member district shall follow election precinct boundary lines, as far as practicable, in order to avoid further segmentation of the precincts.

3.  A person who is a registered voter of this state and who is a resident of the single member district is eligible for election to the office of joint board member from the single member district.  The terms of office of the members of the joint board shall be as prescribed in section 15‑427, subsection B.  An employee of a joint technical education district or the spouse of an employee shall not hold membership on a governing board of a joint technical education district by which the employee is employed.  A member of one school district governing board or joint technical education district governing board is ineligible to be a candidate for nomination or election to or serve simultaneously as a member of any other governing board, except that a member of a governing board may be a candidate for nomination or election for any other governing board if the member is serving in the last year of a term of office.  A member of a governing board shall resign the member's seat on the governing board before becoming a candidate for nomination or election to the governing board of any other school district or joint technical education district, unless the member of the governing board is serving in the last year of a term of office.

4.  Nominating petitions shall be signed by the number of qualified electors of the single member district as provided in section 16‑322.

B.  The governing boards of the school districts participating in the formation of the joint district may vote to implement any other alternative election system for the election of joint district board members.  If an alternative election system is selected, it shall be submitted as part of the plan for the joint district pursuant to section 15‑392, and the implementation of the system shall be as approved by the United States justice department.

C.  The joint technical education district shall be subject to the following provisions of this title:

1.  Chapter 1, articles 1 through 6.

2.  Sections 15‑208, 15‑210, 15‑213 and 15‑234.

3.  Articles 2, 3 and 5 of this chapter.

4.  Section 15‑361.

5.  Chapter 4, articles 1, 2 and 5.

6.  Chapter 5, articles 1, 2 and 3.

7.  Sections 15‑701.01, 15‑722, 15‑723, 15‑724, 15‑727, 15‑728, 15‑729 and 15‑730.

8.  Chapter 7, article 5.

9.  Chapter 8, articles 1, 3 and 4.

10.  Sections 15‑828 and 15‑829.

11.  Chapter 9, article 1, article 6, except for section 15‑995, and article 7.

12.  Sections 15‑941, 15‑943.01, 15‑948, 15‑952, 15‑953 and 15‑973.

13.  Sections 15‑1101 and 15‑1104.

14.  Chapter 10, articles 2, 3, 4 and 8.

D.  Notwithstanding subsection C of this section, the following apply to a joint technical education district:

1.  A joint district may issue bonds for the purposes specified in section 15‑1021 and in chapter 4, article 5 of this title to an amount in the aggregate, including the existing indebtedness, not exceeding one per cent of the taxable property used for secondary tax purposes, as determined pursuant to title 42, chapter 15, article 1, within the joint technical education district as ascertained by the last property tax assessment previous to issuing the bonds.

2.  The number of governing board members for a joint district shall be as prescribed in subsection A of this section.

3.  If a career and technical education course or program provided pursuant to this article is provided in a facility owned or operated by a school district in which a pupil is enrolled, including satellite courses, the sum of the average daily membership, as provided in section 15‑901, subsection A, paragraph 1, for that pupil in both the school district and joint technical education district shall not exceed 1.25.  The sum of the average daily membership, as provided in section 15‑901, subsection A, paragraph 1, shall not exceed 1.25 for the courses taken in the school district and the facility, including satellite courses.  The school district and the joint district shall determine the apportionment of the average daily membership for that pupil between the school district and the joint district.

4.  The student count for the first year of operation of a joint technical education district as provided in this article shall be determined as follows:

(a)  Determine the estimated student count for joint district classes that will operate in the first year of operation.  This estimate shall be based on actual registration of pupils as of March 30 scheduled to attend classes that will be operated by the joint district.  The student count for the district of residence of the pupils registered at the joint district shall be adjusted.  The adjustment shall cause the district of residence to reduce the student count for the pupil to reflect the courses to be taken at the joint district.  The district of residence shall review and approve the adjustment of its own student count as provided in this subdivision before the pupils from the school district can be added to the student count of the joint district.

(b)  The student count for the new joint district shall be the student count as determined in subdivision (a) of this paragraph.

(c)  For the first year of operation, the joint district shall revise the student count to the actual average daily membership as prescribed in section 15‑901, subsection A, paragraph 1 for students attending classes in the joint district.  A joint district shall revise its student count, the base support level as provided in section 15‑943.02, the revenue control limit as provided in section 15‑944.01, the capital outlay revenue limit and the soft capital allocation and the district additional assistance as provided in section 15‑962.01 prior to May 15. A joint district that overestimated its student count shall revise its budget prior to May 15.  A joint district that underestimated its student count may revise its budget prior to May 15.

(d)  After March 15 of the first year of operation, the district of residence shall adjust its student count by reducing it to reflect the courses actually taken at the joint district.  The district of residence shall revise its student count, the base support level as provided in section 15‑943, the revenue control limit as provided in section 15‑944, the capital outlay revenue limit as provided in section 15‑961 and the soft capital allocation and the district additional assistance as provided in section 15‑962 15‑962.01 prior to May 15.  A district that underestimated the student count for students attending the joint district shall revise its budget prior to May 15.  A district that overestimated the student count for students attending the joint district may revise its budget prior to May 15.

(e)  A joint district for the first year of operation shall not be eligible for adjustment pursuant to section 15-948.

(f)  The procedures for implementing this paragraph shall be as prescribed in the uniform system of financial records.

(g)  Pupils in an approved joint technical education district centralized program may generate an average daily membership of 1.0 during any day of the week and at any time between July 1 and June 30 of each fiscal year.

For the purposes of this paragraph, "district of residence" means the district that included the pupil in its average daily membership for the year before the first year of operation of the joint district and that would have included the pupil in its student count for the purposes of computing its base support level for the fiscal year of the first year of operation of the joint district if the pupil had not enrolled in the joint district.

5.  A student includes any person enrolled in the joint district without regard to the person's age or high school graduation status, except that:

(a)  A student in a kindergarten program or in grades one through nine who enrolls in courses offered by the joint technical education district shall not be included in the joint district's student count or average daily membership.

(b)  A student in a kindergarten program or in grades one through nine who is enrolled in career and technical education courses shall not be funded in whole or in part with monies provided by a joint technical education district, except that a pupil in grade eight or nine may be funded with monies generated by the five cent qualifying tax rate authorized in subsection F of this section.

(c)  A student who is over twenty-two years of age shall not be included in the student count of the joint district for the purposes of chapter 9, articles 3, 4 and 5 of this title.

6.  A joint district may operate for more than one hundred seventy-five days per year, with expanded hours of service.

7.  A joint district may use the excess utility costs provisions of section 15-910 in the same manner as a school district for fiscal years 1999‑2000 and 2000‑2001, except that the base year shall be the first full fiscal year of operations.

8.  A joint district may use the carryforward provisions of section 15‑943.01 retroactively to July 1, 1993.

9.  A school district that is part of a joint district shall use any monies received pursuant to this article to supplement and not supplant base year career and technical education courses, and directly related equipment and facilities, except that a school district that is part of a joint technical education district and that has used monies received pursuant to this article to supplant career and technical education courses that were offered before the first year that the school district participated in the joint district or the first year that the school district used monies received pursuant to this article or that used the monies for purposes other than for career and technical education courses shall use one hundred per cent of the monies received pursuant to this article to supplement and not supplant base year career and technical education courses.

10.  A joint technical education district shall use any monies received pursuant to this article to enhance and not supplant career and technical education courses and directly related equipment and facilities.

11.  A joint technical education district or a school district that is part of a joint district shall only include pupils in grades ten through twelve in the calculation of student count or average daily membership if the pupils are enrolled in courses that are approved jointly by the governing board of the joint technical education district and each participating school district for satellite courses taught within the participating school district, or approved solely by the joint technical education district for centrally located courses.  Student count and average daily membership from courses that are not part of an approved program for career and technical education shall not be included in student count and average daily membership of a joint technical education district.

E.  The joint board shall appoint a superintendent as the executive officer of the joint district.

F.  Taxes may be levied for the support of the joint district as prescribed in chapter 9, article 6 of this title, except that a joint technical education district shall not levy a property tax pursuant to law that exceeds five cents per one hundred dollars assessed valuation except for bond monies pursuant to subsection D, paragraph 1 of this section.  Except for the taxes levied pursuant to section 15‑994, such taxes shall be obtained from a levy of taxes on the taxable property used for secondary tax purposes.

G.  The schools in the joint district are available to all persons who reside in the joint district and to pupils whose district of residence is paying tuition on behalf of the pupils to a district of attendance that is a member of the joint technical education district, subject to the rules for admission prescribed by the joint board.

H.  The joint board may collect tuition for adult students and the attendance of pupils who are residents of school districts that are not participating in the joint district pursuant to arrangements made between the governing board of the district and the joint board.

I.  The joint board may accept gifts, grants, federal monies, tuition and other allocations of monies to erect, repair and equip buildings and for the cost of operation of the schools of the joint district.

J.  One member of the joint board shall be selected chairman.  The chairman shall be selected annually on a rotation basis from among the participating school districts.  The chairman of the joint board shall be a voting member.

K.  A joint board and a community college district may enter into agreements for the provision of administrative, operational and educational services and facilities.

L.  Any agreement between the governing board of a joint technical education district and another joint technical education district, a school district, a charter school or a community college district shall be in the form of an intergovernmental agreement or other written contract.  The auditor general shall modify the uniform system of financial records and budget forms in accordance with this subsection.  The intergovernmental agreement or other written contract shall completely and accurately specify each of the following:

1.  The financial provisions of the intergovernmental agreement or other written contract and the format for the billing of all services.

2.  The accountability provisions of the intergovernmental agreement or other written contract.

3.  The responsibilities of each joint technical education district, each school district, each charter school and each community college district that is a party to the intergovernmental agreement or other written contract.

4.  The type of instruction that will be provided under the intergovernmental agreement or other written contract, including individualized education programs pursuant to section 15‑763.

5.  The quality of the instruction that will be provided under the intergovernmental agreement or other written contract.

6.  The transportation services that will be provided under the intergovernmental agreement or other written contract and the manner in which transportation costs will be paid.

7.  The amount that the joint technical education district will contribute to a course and the amount of support required by the school district or the community college.

8.  That the services provided by the joint technical education district, the school district, the charter school or the community college district be proportionally calculated in the cost of delivering the service.

9.  That the payment for services shall not exceed the cost of the services provided.

M.  On or before December 31 of each year, each joint technical education district shall submit a detailed report to the career and technical education division of the department of education.  The career and technical education division of the department of education shall collect, summarize and analyze the data submitted by the joint districts, shall submit an annual report that summarizes the data submitted by the joint districts to the governor, the speaker of the house of representatives, the president of the senate and the state board of education and shall submit a copy of this report to the secretary of state.  The data submitted by each joint technical education district shall include the following:

1.  The average daily membership of the joint district.

2.  The program listings and program descriptions of programs offered by the joint district, including the course sequences for each program.

3.  The costs associated with each program offered by the joint district.

4.  The completion rate for each program offered by the joint district. For the purposes of this paragraph, "completion rate" means the completion rate for students who are designated as concentrators in that program by the department of education under the career and technology approved plan.

5.  The graduation rate from the school district of residence of students who have completed a program in the joint district.

6.  A detailed description of the career opportunities available to students after completion of the program offered by the joint district.

7.  A detailed description of the career placement of students who have completed the program offered by the joint district.

8.  Any other data deemed necessary by the department of education to carry out its duties under this subsection.

N.  If the career and technical education division of the department of education determines that a course does not meet the criteria for approval as a joint technical education course, the governing board of the joint technical education district may appeal this decision to the state board of education acting as the state board of vocational education.

O.  Notwithstanding any other law, the average daily membership of a pupil in grade ten, eleven or twelve who is enrolled in a course that meets for at least one hundred fifty minutes per class period at a centralized campus owned and operated by a joint technical education district shall be 0.75.  The sum of the average daily membership, as provided in section 15‑901, subsection A, paragraph 1, of a pupil who is enrolled in both the member school district and joint technical education district courses provided at a community college pursuant to subsection K of this section or at a facility owned and operated by a joint technical education district that is not located on a site of a member district shall not exceed 1.75.  The member school district and the joint district shall determine the apportionment of the average daily membership and student enrollment for that pupil between the member school district and the joint district, except the amount apportioned shall not exceed 1.0 for either entity.

P.  Notwithstanding any other law, the average daily membership for a pupil who is enrolled in a joint technical education course defined in section 15‑391 and who does not meet the criteria specified in subsection O of this section shall be 0.25 for each course, except the sum of the average daily membership shall not exceed the limits prescribed by subsection D or O of this section, as applicable.

Q.  Notwithstanding any other law, beginning in fiscal year 2011-2012, the student count for a joint technical education district shall be equivalent to the joint technical education district's average daily membership.

R.  For the purposes of this section, "base year" means the complete school year in which voters of a school district elected to join a joint technical education district. END_STATUTE

Sec. 8.  Section 15-448, Arizona Revised Statutes, is amended to read:

START_STATUTE15-448.  Formation of unified school district; board membership; budget

A.  One or more common school districts and a high school district with coterminous or overlapping boundaries may establish a unified school district pursuant to this section.  Unification of a common school district and a high school district is not authorized by this section if any of the high school facilities owned by the new unified school district would not be located within its boundaries.

B.  Formation of a unified school district shall be by resolutions approved by the governing boards of the unifying school districts and certification of approval by such governing boards to the county school superintendent of the county or counties in which such individual school districts are located.  A common school district and high school district that unify pursuant to this section shall not exclude from the same unification a common school district that has overlapping boundaries with the high school district and that wishes to unify.  The formation of a unified school district shall become effective on July 1 of the next fiscal year following the certification of the county school superintendent.  An election shall not be required to form a unified school district pursuant to this section.  At least ninety days before the governing boards vote on the resolutions prescribed in this subsection, the governing boards shall mail a pamphlet to each household with one or more qualified electors that shall list the full cash value, the assessed valuation and the estimated amount of the primary property taxes and the estimated amount of the secondary property taxes under the proposed unification for each of the following:

1.  An owner occupied residence whose assessed valuation is the average assessed valuation of property classified as class three, as prescribed by section 42‑12003 for the current year in the school district.

2.  An owner occupied residence whose assessed valuation is one-half of the assessed valuation of the residence in paragraph 1 of this subsection.

3.  An owner occupied residence whose assessed valuation is twice the assessed valuation of the residence in paragraph 1 of this subsection.

4.  A business whose assessed valuation is the average of the assessed valuation of property classified as class one, as prescribed by section 42‑12001, paragraphs 12 and 13 for the current year in the school district.

C.  The boundaries of the unified school district shall be the boundaries of the former common school district or districts that unify.  The boundaries of the common school district or districts that are not unifying remain unchanged.  The county school superintendent, immediately upon receipt of the approved resolutions prescribed by subsection B of this section, shall file with the board of supervisors, the county assessor and the superintendent of public instruction a transcript of the boundaries of the unified school district.  The boundaries shown in the transcript shall become the legal boundaries of the school districts on July 1 of the next fiscal year.

D.  On formation of the unified school district, the governing board consists of the members of the former school district governing boards and the members shall hold office until January 1 following the first general election after formation of the district.

E.  Beginning on January 1 following the first general election after formation of the unified school district, the governing board shall have five members.  At the first general election after the formation of the district, members shall be elected in the following manner:

1.  The three candidates receiving the highest, the second highest and the third highest number of votes shall be elected to four year terms.

2.  The two candidates receiving the fourth and fifth highest number of votes shall be elected to two year terms.  Thereafter all offices shall have four year terms.

F.  The new unified school district may appoint a resident of the remaining common school district to serve as a nonvoting member of the governing board to represent the interests of the high school pupils who reside in the remaining common school district and who attend school in the unified school district.

G.  For the first year of operation, the unified school district governing board shall prepare a consolidated budget based on the student counts from the school districts comprising the unified school district, except that for purposes of determining budget amounts and equalization assistance, the student count for the former high school district shall not include the prior year average daily membership attributable to high school pupils from a common school district that was part of the former high school district but is not part of the unified school district.  The unified school district shall charge the remaining common school district tuition for these pupils as provided in subsection J of this section.  The unified school district may budget for unification assistance pursuant to section 15‑912.01.

H.  The governing board of the unified school district shall prepare policies, curricula and budgets for the district.  These policies shall require that:

1.  The base compensation of each certificated teacher for the first year of operation of the new unified school district shall not be lower than the certificated teacher's base compensation for the prior year in the previously existing school districts.

2.  The certificated teacher's years of employment in the previously existing school districts shall be included in determining the teacher's certificated years of employment in the new unified school district.

I.  Upon formation of a unified school district any existing override authorization of the former high school district and the former common school district or districts shall continue until expiration based on the revenue control limit of the school district or districts that had override authorization prior to unification.  The unified school district may request new override authorization for the budget year as provided in section 15‑481 based on the combined revenue control limit of the new district after unification.  If the unified school district's request for override authorization is approved, it will replace any existing override for the budget year.

J.  The unified school district shall admit high school pupils who reside in a common school district that was located within the boundaries of the former high school district.  Tuition shall be paid to the unified school district by the common school district in which such pupils reside.  Such tuition amount shall be calculated in accordance with section 15‑824, subject to the following modifications:

1.  If the former high school district had outstanding bonded indebtedness at the time of unification, the combined tuition for the group of high school pupils who reside in each common school district shall include a debt service amount for the former high school district's outstanding bonded indebtedness that is determined as follows:

(a)  Divide the total secondary assessed valuation of the common school district in which the group of pupils resides by the total secondary assessed valuation of the former high school district.  For the purposes of this subdivision, "secondary assessed valuation" means secondary assessed valuation for the tax year prior to the year when the unification occurs and includes the values used to determine voluntary contributions collected pursuant to title 9, chapter 4, article 3 and title 48, chapter 1, article 8.

(b)  Multiply the quotient obtained in subdivision (a) by the unified school district's annual debt service expenditure.

2.  The debt service portion of such tuition payments calculated pursuant to paragraph 1 of this subsection shall be used exclusively for debt service of the outstanding bonded indebtedness of the former high school district.  When such indebtedness is fully extinguished, the debt service portion of a pupil's tuition shall be determined in accordance with paragraph 3 of this subsection.

3.  If the former high school district had no outstanding bonded indebtedness at the time of unification, the tuition calculation shall include the actual school district expenditures for the portion of any debt service of the unified school district that pertains to any construction or renovation of high school facilities divided by the school district's student count for the high school portion of the school district.

4.  The unified school district shall not include in the tuition calculation any debt service that pertains to any construction or renovation of school facilities for preschool through grade eight.

5.  Notwithstanding section 15‑951, subsection F, the revenue control limit of the common school district shall include the full amount of the debt service portion of the tuition calculated pursuant to this subsection.

K.  All assets and liabilities of the unifying school districts shall be transferred and assumed by the new unified school district.  Any existing bonded indebtedness of a common school district or a high school district unifying pursuant to this section shall be assumed by the new unified school district and shall be regarded as an indebtedness of the new unified school district for the purpose of determining the debt incurring authority of the district.  Taxes for the payment of such bonded indebtedness shall be levied on all taxable property in the new unified school district, but nothing in this subsection shall be construed to relieve from liability to taxation for the payment of all taxable property of the former high school district if necessary to prevent a default in the payment of any bonded indebtedness of the former high school district.  The residents of a common school district that does not unify shall not vote in bond or override elections of the unified school district and shall not be assessed taxes as a result of a bond or override election of the unified school district.

L.  If the remaining common school district had authorization for an override as provided in section 15‑481 or 15‑482, the override authorization continues for the remaining common school district or districts in the same manner as before the formation of the unified school district.

M.  The bonding authorization and bonding limitations continue for the remaining common school district or districts in the same manner as before the formation of the unified school district.

N.  Nothing in this section shall be construed to relieve a school district formed pursuant to section 15‑457 or 15‑458 of its liability for any outstanding bonded indebtedness.

O.  For school districts that become unified after July 1, 2004 and where all of the common schools were eligible for the small school district weight pursuant to section 15‑943, paragraph 1, subdivision (a) when computing their base support level and base revenue control limit before unification, the unified school district may continue to use the small school district weight as follows:

1.  Annually determine the common school student count and the weighted student count pursuant to section 15‑943, paragraph 1, subdivision (a) for each common school district before unification.

2.  Calculate the sum of the common school districts' student counts and weighted student counts determined in paragraph 1 of this subsection.

3.  Divide the sum of the weighted student counts by the sum of the student counts determined in paragraph 2 of this subsection.

4.  The amount determined in paragraph 3 of this subsection shall be the weight for the common schools in the unified school district.

P.  A unified school district may calculate its revenue control limit and district support level by using subsection O of this section as follows:

1.  Determine the number of individual school districts that existed before unification into a single school district.

2.  Multiply the amount determined in paragraph 1 of this subsection by six hundred.

3.  Multiply the amount determined in paragraph 2 of this subsection by 0.80.

4.  If the amount determined in paragraph 3 of this subsection exceeds the student count of the unified school district, the unified school district is eligible to use subsection O of this section.

Q.  Subsections O and P of this section shall remain in effect until the aggregate student count of the common school districts before unification exceeds the aggregate number of students of the common school districts before unification authorized to utilize section 15‑943, paragraph 1, subdivision (a). END_STATUTE

Sec. 9.  Section 15-481, Arizona Revised Statutes, is amended to read:

START_STATUTE15-481.  Override election; budget increases; notice; ballot; effect

A.  If a proposed budget of a school district exceeds the aggregate budget limit for the budget year, at least ninety days before the proposed election the governing board shall order an override election to be held on the first Tuesday following the first Monday in November as prescribed by section 16‑204, subsection B, paragraph 1, subdivision (d) for the purpose of presenting the proposed budget to the qualified electors of the school district who by a majority of those voting either shall affirm or reject the budget.  At the same time as the order of the election, the governing board shall publicly declare the deadline for submitting arguments, as set by the county school superintendent pursuant to subsection B, paragraph 9 of this section, to be submitted in the informational report and shall immediately post the deadline in a prominent location on the district's website.  In addition, the governing board shall prepare an alternate budget which does not include an increase in the budget of more than the amount permitted as provided in section 15‑905.  If the qualified electors approve the proposed budget, the governing board of the school district shall follow the procedures prescribed in section 15‑905 for adopting a budget that includes the authorized increase.  If the qualified electors disapprove the proposed budget, the governing board shall follow the procedures prescribed in section 15‑905 for adopting a budget that does not include the proposed increase or the portion of the proposed increase that exceeds the amount authorized by a previously approved budget increase as prescribed in subsection P of this section.

B.  The county school superintendent shall prepare an informational report on the proposed increase in the budget and a sample ballot and, at least forty days prior to the election, shall transmit the report and the sample ballot to the governing board of the school district.  The governing board, upon receipt of the report and the ballot, shall mail or distribute the report and the ballot to the households in which qualified electors reside within the school district at least thirty‑five days prior to the election.  Any distribution of material concerning the proposed increase in the budget shall not be conducted by children enrolled in the school district.  The report shall contain the following information:

1.  The date of the election.

2.  The voter's polling place and the times it is open.

3.  The proposed total increase in the budget which exceeds the amount permitted pursuant to section 15‑905.

4.  The total amount of the current year's budget, the total amount of the proposed budget and the total amount of the alternate budget.

5.  If the override is for a period of more than one year, a statement indicating the number of years the proposed increase in the budget would be in effect and the percentage of the school district's revenue control limit that the district is requesting for the future years.

6.  The proposed total amount of revenues which will fund the increase in the budget and the amount which will be obtained from a levy of taxes upon the taxable property within the school district for the first year for which the budget increase was adopted.

7.  The proposed amount of revenues which will fund the increase in the budget and which will be obtained from other than a levy of taxes upon the taxable property within the school district for the first year for which the budget increase was adopted.

8.  The dollar amount and the purpose for which the proposed increase in the budget is to be expended for the first year for which the budget increase was adopted.

9.  At least two arguments, if submitted, but no more than ten arguments for and two arguments, if submitted, but no more than ten arguments against the proposed increase in the budget.  The arguments shall be in a form prescribed by the county school superintendent, and each argument shall not exceed two hundred words.  Arguments for the proposed increase in the budget shall be provided in writing and signed by the governing board.  If submitted, additional arguments in favor of the proposed increase in the budget shall be provided in writing and signed by those in favor.  Arguments against the proposed increase in the budget shall be provided in writing and signed by those in opposition.  The names of persons and entities submitting written arguments shall be included in the report.  The county school superintendent shall review all factual statements contained in the written arguments and correct any inaccurate statements of fact.  The superintendent shall not review and correct any portion of the written arguments which are identified as statements of the author's opinion.  The county school superintendent shall make the written arguments available to the public as provided in title 39, chapter 1, article 2.  A deadline for submitting arguments to be included in the informational report shall be set by the county school superintendent.

10.  A statement that the alternate budget shall be adopted by the governing board if the proposed budget is not adopted by the qualified electors of the school district.

11.  The current full cash value and the assessed valuation provided by the department of revenue, the first year tax rate for the proposed override and the estimated amount of the secondary property taxes if the proposed budget is adopted for each of the following:

(a)  An owner‑occupied residence whose assessed valuation is the average assessed valuation of property classified as class three, as prescribed by section 42‑12003 for the current year in the school district.

(b)  An owner‑occupied residence whose assessed valuation is one‑half of the assessed valuation of the residence in subdivision (a) of this paragraph.

(c)  An owner‑occupied residence whose assessed valuation is twice the assessed valuation of the residence in subdivision (a) of this paragraph.

(d)  A business whose assessed valuation is the average of the assessed valuation of property classified as class one, as prescribed by section 42‑12001, paragraphs 12 and 13 for the current year in the school district.

12.  If the election is conducted pursuant to subsection L or M of this section, the following information:

(a)  An executive summary of the school district's most recent capital improvement plan submitted to the school facilities board.

(b)  A complete list of each proposed capital improvement that will be funded with the budget increase and a description of the proposed cost of each improvement, including a separate aggregation of capital improvements for administrative purposes as defined by the school facilities board.

(c)  The tax rate associated with each of the proposed capital improvements and the estimated cost of each capital improvement for the owner of a single family home that is valued at eighty thousand dollars.

C.  For the purpose of this section, the school district may use its staff, equipment, materials, buildings or other resources only to distribute the informational report at the school district office or at public hearings and to produce such information as required in subsection B of this section, provided that nothing in this subsection shall preclude school districts from holding or participating in any public hearings at which testimony is given by at least one person for the proposed increase and one person against the proposed increase.  Any written information provided by the district pertaining to the override election shall include financial information showing the estimated first year tax rate for the proposed budget override amount.

D.  If any amount of the proposed increase will be funded by a levy of taxes in the district, the election prescribed in subsection A of this section shall be held on the first Tuesday following the first Monday in November as prescribed by section 16‑204, subsection B, paragraph 1, subdivision (d).  If the proposed increase will be fully funded by revenues from other than a levy of taxes, the elections prescribed in subsection A of this section shall be held on any date prescribed by section 16‑204.  The elections shall be conducted as nearly as practicable in the manner prescribed in article 1 of this chapter, sections 15‑422 through 15‑424 and section 15‑426, relating to special elections, except that:

1.  The notices required pursuant to section 15‑403 shall be posted not less than twenty‑five days before the election.

2.  Ballots shall be counted pursuant to title 16, chapter 4, article 10.

E.  If the election is to exceed the revenue control limit and if the proposed increase will be fully funded by a levy of taxes upon the taxable property within the school district, the ballot shall contain the words "budget increase, yes" and "budget increase, no", and the voter shall signify his desired choice.  The ballot shall also contain the amount of the proposed increase of the proposed budget over the alternate budget, a statement that the amount of the proposed increase will be based on a percentage of the school district's revenue control limit in future years, if applicable, as provided in subsection P of this section and the following statement:

Any budget increase authorized by this election shall be entirely funded by a levy of taxes upon the taxable property within this school district for the year for which adopted and for ____ subsequent years, shall not be realized from monies furnished by the state and shall not be subject to the limitation on taxes specified in article IX, section 18, Constitution of Arizona.  Based on the current assessed valuation used for secondary property tax purposes, to fund the proposed increase in the school district's budget would require an estimated tax rate of _______________ dollar per one hundred dollars of assessed valuation used for secondary property tax purposes and is in addition to the school district's tax rate which will be levied to fund the school district's revenue control limit allowed by law.

F.  If the election is to exceed the revenue control limit and if the proposed increase will be fully funded by revenues from other than a levy of taxes upon the taxable property within the school district, the ballot shall contain the words "budget increase, yes" and "budget increase, no", and the voter shall signify the voter's desired choice.  The ballot shall also contain:

1.  The amount of the proposed increase of the proposed budget over the alternate budget.

2.  A statement that the amount of the proposed increase will be based on a percentage of the school district's revenue control limit in future years, if applicable, as provided in subsection P of this section.

3.  The following statement:

Any budget increase authorized by this election shall be entirely funded by this school district with revenues from other than a levy of taxes on the taxable property within the school district for the year for which adopted and for ______ subsequent years and shall not be realized from monies furnished by the state.

G.  Except as provided in subsection H of this section, the maximum budget increase which may be requested and authorized as provided in subsection E or F of this section or the combination of subsections E and F of this section is fifteen per cent of the revenue control limit as provided in section 15‑947, subsection A for the budget year.  If a school district requests an override pursuant to section 15‑482 or to continue with a budget override pursuant to section 15‑482 for pupils in kindergarten programs and grades one through three that was authorized before December 31, 2008, the maximum budget increase that may be requested and authorized as provided in subsection E or F of this section or the combination of subsections E and F of this section is ten per cent of the revenue control limit as provided in section 15‑947, subsection A for the budget year.

H.  Special budget override provisions for school districts with a student count of less than one hundred fifty‑four in kindergarten programs and grades one through eight or with a student count of less than one hundred seventy‑six in grades nine through twelve are as follows:

1.  The maximum budget increase that may be requested and authorized as provided in subsections E and F of this section is the greater of the amount prescribed in subsection G of this section or a limit computed as follows:

(a)  For common or unified districts with a student count of less than one hundred fifty‑four in kindergarten programs and grades one through eight, the limit computed as prescribed in item (i) or (ii) of this subdivision, whichever is appropriate:

(i)

           Small School   Support Level Weight                    Phase Down

Student    Student        for Small Isolated                      Reduction

Count      Count Limit    School Districts          Base Level    Factor    

         -     125     x  1.358 + (0.0005 x      x  $           = $     _  

                          (500 - Student Count))

                                                    Small Isolated

           Phase Down     Phase Down                School District

              Base        Reduction Factor          Elementary Limit

           $150,000    -  $                      =  $               

(ii)

           Small School   Support Level Weight                    Phase Down

Student    Student        for Small                               Reduction

Count      Count Limit    School Districts          Base Level_   Factor    

         - 125         x  1.278 + (0.0003 x      x  $         _ = $       _

                          (500 - Student Count))

                                                    Small

           Phase Down     Phase Down                School District

              Base        Reduction Factor          Elementary Limit

           $150,000    -  $                      =  $               

(b)  For unified or union high school districts with a student count of less than one hundred seventy-six in grades nine through twelve, the limit computed as prescribed in item (i) or (ii) of this subdivision, whichever is appropriate:

(i)

           Small School   Support Level Weight                    Phase Down

Student    Student        for Small Isolated                      Reduction

Count      Count Limit    School Districts          Base Level    Factor    

         -     100     x  1.468 + (0.0005 x      x  $           = $       _

                          (500 - Student Count))

                                                    Small Isolated

           Phase Down     Phase Down                District

              Base        Reduction Factor          Secondary Limit

           $350,000    -  $                      =  $              

(ii)

           Small School   Support Level Weight                    Phase Down

Student    Student        for Small                               Reduction

Count      Count Limit    School Districts          Base Level_   Factor    

         -     100     x  1.398 + (0.0004 x      x  $           = $         

                          (500 - Student Count))

                                                    Small

           Phase Down     Phase Down                School District

              Base        Reduction Factor          Secondary Limit

           $350,000    -  $                      =  $              

(c)  If both subdivisions (a) and (b) of this paragraph apply to a unified school district, its limit for the purposes of this paragraph is the combination of its elementary limit and its secondary limit.

(d)  If only subdivision (a) or (b) of this paragraph applies to a unified school district, the district's limit for the purposes of this paragraph is the sum of the limit computed as provided in subdivision (a) or (b) of this paragraph plus ten per cent of the revenue control limit attributable to those grade levels that do not meet the eligibility requirements of this subsection.  If a school district budgets monies outside the revenue control limit pursuant to section 15‑949, subsection E, the district's limit for the purposes of this paragraph is only the ten per cent of the revenue control limit attributable to those grade levels that are not included under section 15‑949, subsection E.  For the purposes of this subdivision, the revenue control limit is separated into elementary and secondary components based on the weighted student count as provided in section 15‑971, subsection B, paragraph 2, subdivision (a).

2.  If a school district utilizes this subsection to request an override of more than one year, the ballot shall include an estimate of the amount of the proposed increase in the future years in place of the statement that the amount of the proposed increase will be based on a percentage of the school district's revenue control limit in future years, as prescribed in subsections E and F of this section.

3.  Notwithstanding subsection P of this section, the maximum period of an override authorized pursuant to this subsection is five years.

4.  Subsection P, paragraphs 1 and 2 of this section do not apply to overrides authorized pursuant to this subsection.

I.  If the election is to exceed the revenue control limit as provided in section 15‑482 and if the proposed increase will be fully funded by a levy of taxes on the taxable property within the school district, the ballot shall contain the words "budget increase, yes" and "budget increase, no", and the voter shall signify the voter's desired choice.  The ballot shall also contain the amount of the proposed increase of the budget over the alternate budget, a statement that the amount of the proposed increase will be based on a percentage of the school district's revenue control limit in future years, if applicable, as provided in subsection Q of this section, and the following statement:

Any budget increase authorized by this election shall be entirely funded by a levy of taxes on the taxable property within this school district for the year for which adopted and for _____ subsequent years, shall not be realized from monies furnished by the state and shall not be subject to the limitation on taxes specified in article IX, section 18, Constitution of Arizona.  Based on the current assessed valuation used for secondary property tax purposes, to fund the proposed increase in the school district's budget which will be funded by a levy of taxes upon the taxable property within this school district would require an estimated tax rate of __________ dollar per one hundred dollars of assessed valuation used for secondary property tax purposes and is in addition to the school district's tax rate that will be levied to fund the school district's revenue control limit allowed by law.

J.  If the election is to exceed the revenue control limit as provided in section 15‑482 and if the proposed increase will be fully funded by revenues other than a levy of taxes on the taxable property within the school district, the ballot shall contain the words "budget increase, yes" and "budget increase, no", and the voter shall signify the voter's desired choice.  The ballot shall also contain the amount of the proposed increase of the proposed budget over the alternate budget, a statement that the amount of the proposed increase will be based on a percentage of the school district's revenue control limit in future years, if applicable, as provided in subsection Q of this section and the following statement:

Any budget increase authorized by this election shall be entirely funded by this school district with revenues from other than a levy of taxes on the taxable property within the school district for the year for which adopted and for _____ subsequent years and shall not be realized from monies furnished by the state.

K.  The maximum budget increase that may be requested and authorized as provided in subsection I or J of this section, or a combination of both of these subsections, is five per cent of the revenue control limit as provided in section 15‑947, subsection A for the budget year.  For a common school district not within a high school district or a common school district within a high school district that offers instruction in high school subjects as provided in section 15‑447, five per cent of the revenue control limit means five per cent of the revenue control limit attributable to the weighted student count in preschool programs for children with disabilities, kindergarten programs and grades one through eight as provided in section 15‑971, subsection B.  For a unified school district, five per cent of the revenue control limit means five per cent of the revenue control limit attributable to the weighted student count in preschool programs for children with disabilities, kindergarten programs and grades one through twelve.  For a union high school district, five per cent of the revenue control limit means five per cent of the revenue control limit attributable to the weighted student count in grades nine through twelve.

L.  If the election is to exceed the capital outlay revenue limit district additional assistance and if the proposed increase will be fully funded by a levy of taxes upon the taxable property within the school district, the ballot shall contain the words "budget increase, yes" and "budget increase, no", and the voter shall signify the voter's desired choice.  An election held pursuant to this subsection shall be held on the first Tuesday after the first Monday of November.  The ballot shall also contain the amount of the proposed increase of the proposed budget over the alternate budget and the following statement:

Any budget increase authorized by this election shall be entirely funded by a levy of taxes upon the taxable property within this school district for the year in which adopted and for _____ subsequent years, shall not be realized from monies furnished by the state and shall not be subject to the limitation on taxes specified in article IX, section 18, Constitution of Arizona.  Based on the current assessed valuation used for secondary property tax purposes, to fund the proposed increase in the school district's budget would require an estimated tax rate of _______________ dollar per one hundred dollars of assessed valuation used for secondary property tax purposes and is in addition to the school district's tax rate which will be levied to fund the school district's capital outlay revenue limit district additional assistance allowed by law.

M.  If the election is to exceed the capital outlay revenue limit district additional assistance and if the proposed increase will be fully funded by revenues from other than a levy of taxes upon the taxable property within the school district, the ballot shall contain the words "budget increase, yes" and "budget increase, no", and the voter shall signify the voter's desired choice.  An election held pursuant to this subsection shall be held on the first Tuesday after the first Monday of November.  The ballot shall also contain the amount of the proposed increase of the proposed budget over the alternate budget and the following statement:

Any budget increase authorized by this election shall be entirely funded by this school district with revenues from other than a levy of taxes on the taxable property within the school district for the year in which adopted and for ______ subsequent years and shall not be realized from monies furnished by the state.

N.  If the election is to exceed a combination of the revenue control limit as provided in subsection E or F of this section, the revenue control limit as provided in subsection I or J of this section or the capital outlay revenue limit district additional assistance as provided in subsection L or M of this section, the ballot shall be prepared so that the voters may vote on each proposed increase separately and shall contain statements required in the same manner as if each proposed increase were submitted separately.

O.  If the election provides for a levy of taxes on the taxable property within the school district, at least thirty days prior to the election, the department of revenue shall provide the school district governing board and the county school superintendent with the current secondary assessed valuation of the school district.  The governing board and the county school superintendent shall use the current secondary assessed valuation of the school district to translate the amount of the proposed dollar increase in the budget of the school district over that allowed by law into a tax rate figure.

P.  If the voters in a school district vote to adopt a budget in excess of the revenue control limit as provided in subsection E or F of this section, any additional increase shall be included in the aggregate budget limit for each of the years authorized.  Any additional increase shall be excluded from the determination of equalization assistance.  The school district governing board, however, may levy on the assessed valuation used for secondary property tax purposes of the property in the school district the additional increase if adopted under subsection E of this section for the period of one year, two years or five through seven years as authorized.  If an additional increase is approved as provided in subsection F of this section, the school district governing board may only use revenues derived from the school district's prior year's maintenance and operation fund ending cash balance to fund the additional increase.  If a budget increase was previously authorized and will be in effect for the budget year or budget year and subsequent years, as provided in subsection E or F of this section, the governing board may request a new budget increase as provided in the same subsection under which the prior budget increase was adopted, which shall not exceed the maximum amount permitted under subsection G of this section.  If the voters in the school district authorize the new budget increase amount, the existing budget increase no longer is in effect.  If the voters in the school district do not authorize the budget increase amount, the existing budget increase remains in effect for the time period for which it was authorized.  The maximum additional increase authorized as provided in subsection E or F of this section and the additional increase which is included in the aggregate budget limit is based on a percentage of a school district's revenue control limit in future years, if the budget increase is authorized for more than one year.  If the additional increase:

1.  Is for two years, the proposed increase in the second year is equal to the initial proposed percentage increase.

2.  Is for five years or more, the proposed increase is equal to the initial proposed percentage increase in the following years of the proposed increase, except that in the next to last year it is two‑thirds of the initial proposed percentage increase and it is one‑third of the initial proposed percentage increase in the last year of the proposed increase.

Q.  If the voters in a school district vote to adopt a budget in excess of the revenue control limit as provided in subsection I or J of this section, any additional increase shall be included in the aggregate budget limit for each of the years authorized.  Any additional increase shall be excluded from the determination of equalization assistance.  The school district governing board, however, may levy on the assessed valuation used for secondary property tax purposes of the property in the school district the additional increase if adopted under subsection I of this section for the period of one year, two years or five through seven years as authorized.  If an additional increase is approved as provided in subsection J of this section, the increase may only be budgeted and expended if sufficient monies are available in the maintenance and operation fund of the school district. If a budget increase was previously authorized and will be in effect for the budget year or budget year and subsequent years, as provided in subsection I or J of this section, the governing board may request a new budget increase as provided in the same subsection under which the prior budget increase was adopted that does not exceed the maximum amount permitted under subsection K of this section.  If the voters in the school district authorize the new budget increase amount, the existing budget increase no longer is in effect. If the voters in the school district do not authorize the budget increase amount, the existing budget increase remains in effect for the time period for which it was authorized.  The maximum additional increase authorized as provided in subsection I or J of this section and the additional increase that is included in the aggregate budget limit is based on a percentage of a school district's revenue control limit in future years, if the budget increase is authorized for more than one year.  If the additional increase:

1.  Is for two years, the proposed increase in the second year is equal to the initial proposed percentage increase.

2.  Is for five years or more, the proposed increase is equal to the initial proposed percentage increase in the following years of the proposed increase, except that in the next to last year it is two‑thirds of the initial proposed percentage increase and it is one‑third of the initial proposed percentage increase in the last year of the proposed increase.

R.  If the voters in a school district vote to adopt a budget in excess of the capital outlay revenue limit district additional assistance as provided in subsection L of this section, any additional increase shall be included in the aggregate budget limit for each of the years authorized.  The additional increase shall be excluded from the determination of equalization assistance.  The school district governing board, however, may levy on the assessed valuation used for secondary property tax purposes of the property in the school district the additional increase for the period authorized but not to exceed ten years.  For overrides approved by a vote of the qualified electors of the school district at an election held from and after October 31, 1998, the period of the additional increase prescribed in this subsection shall not exceed seven years for any capital override election.

S.  If the voters in a school district vote to adopt a budget in excess of the capital outlay revenue limit district additional assistance as provided in subsection M of this section, any additional increase shall be included in the aggregate budget limit for each of the years authorized.  The additional increase shall be excluded from the determination of equalization assistance.  The school district governing board may only use revenues derived from the school district's prior year's maintenance and operation fund ending cash balance and capital outlay fund ending cash balance to fund the additional increase for the period authorized but not to exceed ten years.  For overrides approved by a vote of the qualified electors of the school district at an election held from and after October 31, 1998, the period of the additional increase prescribed in this subsection shall not exceed seven years for any capital override election.

T.  In addition to subsections P and S of this section, from the maintenance and operation fund and capital outlay fund ending cash balances, the school district governing board shall first use any available revenues to reduce its primary tax rate to zero and shall use any remaining revenues to fund the additional increase authorized as provided in subsections F and M of this section.

U.  If the voters in a school district disapprove the proposed budget, the alternate budget which, except for any budget increase authorized by a prior election, does not include an increase in the budget in excess of the amount provided in section 15‑905 shall be adopted by the governing board as provided in section 15‑905.

V.  The governing board may request that any override election be cancelled if any change in chapter 9 of this title changes the amount of the aggregate budget limit as provided in section 15‑905.  The request to cancel the override election shall be made to the county school superintendent at least eighty days prior to the date of the scheduled override election.

W.  For any election conducted pursuant to subsection L or M of this section:

1.  The ballot shall include the following statement in addition to any other statement required by this section:

The capital improvements that are proposed to be funded through this override election are to exceed the state standards and are in addition to monies provided by the state.

___________ school district is proposing to increase its budget by $__________ to fund capital improvements over and above those funded by the state.  Under the students first capital funding system, _________ school district is entitled to state monies for building renewal, new construction and renovation of school buildings in accordance with state law.

2.  The ballot shall contain the words "budget increase, yes" and "budget increase, no", and the voter shall signify the voter's desired choice.

3.  At least eighty‑five days before the election, the school district shall submit proposed ballot language to the director of the Arizona legislative council.  The director of the Arizona legislative council shall review the proposed ballot language to determine whether the proposed ballot language complies with this section.  If the director of the Arizona legislative council determines that the proposed ballot language does not comply with this section, the director, within ten calendar days of the receipt of the proposed ballot language, shall notify the school district of the director's objections and the school district shall resubmit revised ballot language to the director for approval.

X.  If the voters approve the budget increase pursuant to subsection L or M of this section, the school district shall not use the override proceeds for any purposes other than the proposed capital improvements listed in the publicity pamphlet, except that up to ten per cent of the override proceeds may be used for general capital expenses, including cost overruns of proposed capital improvements.

Y.  Each school district that currently increases its budget pursuant to this section is required to hold a public meeting each year between September 1 and October 31 at which an update of the programs or capital improvements financed through the override is discussed and at which the public is permitted an opportunity to comment and:

1.  If the increase is pursuant to subsection L or M of this section, at a minimum, the update shall include the progress of capital improvements financed through the override, a comparison of the current status and the original projections on the construction of capital improvements, the costs of capital improvements and the costs of capital improvements in progress or completed since the prior meeting and the future capital plans of the school district.  The school district shall include in the public meeting a discussion of the school district's use of state capital aid and voter‑approved bonding in funding capital improvements, if any.

2.  If the increase is pursuant to subsection E, F, I or J of this section, the update shall include at a minimum the amount expended in the previous fiscal year and the amount included in the current budget for each of the purposes listed in the informational report prescribed by subsection B of this section.

Z.  If a budget in excess of the capital outlay revenue limit district additional assistance was previously adopted by the voters in a school district and will be in effect for the budget year or budget year and subsequent years, as provided in subsection L or M of this section, the governing board may request an additional budget in excess of the capital outlay revenue limit district additional assistance.  If the voters in a school district authorize the additional budget in excess of the capital outlay revenue limit district additional assistance, the existing capital outlay revenue limit district additional assistance budget increase remains in effect.

AA.  Notwithstanding any other law, the maximum budget increase that may be authorized pursuant to subsection L or M of this section is ten per cent of the school district's revenue control limit.

BB.  If the election is to continue to exceed the revenue control limit and if the proposed override will be fully funded by a continuation of a levy of taxes on the taxable property in the school district, the ballot shall contain the words "budget override continuation, yes" and "budget override continuation, no", and the voter shall signify the voter's desired choice.  The ballot shall also contain the amount of the proposed continuation of the budget increase of the proposed budget over the alternate budget, a statement that the amount of the proposed increase will be based on a percentage of the school district's revenue control limit in future years, if applicable, as provided in subsection P of this section and the following statement:

Any budget increase continuation authorized by this election shall be entirely funded by a levy of taxes on the taxable property in this school district for the year for which adopted and for ____ subsequent years, shall not be realized from monies furnished by the state and shall not be subject to the limitation on taxes specified in article IX, section 18, Constitution of Arizona.  Based on the current assessed valuation used for secondary property tax purposes, to fund the proposed continuation of the increase in the school district's budget would require an estimated continuation of a tax rate of _______________ dollar per one hundred dollars of assessed valuation used for secondary property tax purposes and is in addition to the school district's tax rate that will be levied to fund the school district's revenue control limit allowed by law.

CC.  If the election is to continue to exceed the revenue control limit as provided in section 15-482 and if the proposed override will be fully funded by a continuation of a levy of taxes on the taxable property in the school district, the ballot shall contain the words "budget override continuation, yes" and "budget override continuation, no", and the voter shall signify the voter's desired choice.  The ballot shall also contain the amount of the proposed continuation of the budget increase of the proposed budget over the alternate budget, a statement that the amount of the proposed increase will be based on a percentage of the school district's revenue control limit in future years, if applicable, as provided in subsection P of this section and the following statement:

Any budget increase continuation authorized by this election shall be entirely funded by a levy of taxes on the taxable property in this school district for the year for which adopted and for ____ subsequent years, shall not be realized from monies furnished by the state and shall not be subject to the limitation on taxes specified in article IX, section 18, Constitution of Arizona.  Based on the current assessed valuation used for secondary property tax purposes, to fund the proposed continuation of the increase in the school district's budget would require an estimated continuation of a tax rate of _______________ dollar per one hundred dollars of assessed valuation used for secondary property tax purposes and is in addition to the school district's tax rate that will be levied to fund the school district's revenue control limit allowed by law. END_STATUTE

Sec. 10.  Section 15-491, Arizona Revised Statutes, is amended to read:

START_STATUTE15-491.  Elections on school property; exceptions

A.  The governing board of a school district may, and on petition of fifteen per cent of the school electors as shown by the poll list at the last preceding annual school election shall, call an election for the following purposes:

1.  To locate or change the location of school buildings.

2.  To purchase or sell school sites or buildings or sell school sites pursuant to section 15‑342 or to build school buildings, but the authorization by vote of the school district shall not necessarily specify the site to be purchased.

3.  To decide whether the bonds of the school district shall be issued and sold for the purpose of raising money for purchasing or leasing school lots, for building or renovating school buildings, for supplying school buildings with furniture, equipment and technology, for improving school grounds, for purchasing pupil transportation vehicles or for liquidating any indebtedness already incurred for such purposes.  Bonds issued for furniture, equipment and technology, other than fixtures, shall mature no later than the July 1 that follows the fifth year after the bonds were issued.  A school district shall not issue class B bonds until the school district has obligated in contract the entire proceeds of any class A bonds issued by the school district.  The total amount of class A and class B bonds issued by a school district shall not exceed the debt limitations prescribed in article IX, sections 8 and 8.1, Constitution of Arizona.

4.  To lease for five or more years, as lessor or as lessee, school buildings or grounds.  Approval by a majority of the school district electors voting authorizes the governing board to negotiate for and enter into a lease.  The ballot shall list the school buildings or grounds for which a lease is sought.  If the governing board does not enter into a lease of five or more years of the school buildings or grounds listed on the ballot within five years of the date of the election and the board continues to seek such a lease, the governing board shall call a special election to reauthorize the board to negotiate for and to enter into a lease of five or more years.

5.  To change the list of capital projects or the purposes authorized by prior voter approval to issue bonds.

6.  To extend from six to ten years the time period to issue class B bonds authorized in 2009 or earlier.  Elections pursuant to this paragraph may not be held later than the sixth November after the election approving the issuance of the bonds.

B.  No petition shall be required for the holding of the first election to be held in a joint common school district for any of the purposes specified in subsection A of this section.  The notice of election required by section 15‑492 shall be published in each of the counties that comprise the joint common school district.  The certification of election results required by section 15‑493 shall be made to the board of supervisors of the jurisdictional county.

C.  When the election is called to determine whether or not bonds of the school district shall be issued and sold for the purposes enumerated in the call for the election, the question shall be submitted to the vote of the qualified electors of the school district as defined in section 15‑401 and subject to section 15‑402.

D.  The governing board shall order the election to be held in the manner prescribed in title 35, chapter 3, article 3.  If a petition for an election has been filed with the governing board as provided in subsection A of this section, the board shall act on the petition within sixty days by ordering the election to be held as provided in this subsection.  If a school district bond election is scheduled for the same date a school district will hold an override election, the governing body shall deliver a copy of the notice of election and ballot to the county school superintendent who shall include the notice of election and ballot with the information report and ballot prepared for the override election.  Mailing of the information required for both the override and bond elections shall constitute compliance with the notice provisions of this section.

E.  The elections to be held pursuant to this section shall only be held on dates prescribed by section 16‑204, except that elections held pursuant to this section to decide whether class B bonds shall be issued, or any other obligation incurred that will require the assessment of secondary property taxes, shall only be held on the first Tuesday after the first Monday of November.

F.  Subsection A, paragraph 2 of this section does not apply to the sale of school property if the market value of the school property is less than fifty thousand dollars.

G.  Bond counsel fees, financial advisory fees, printing costs and paying agent and registrar fees for bonds issued pursuant to an election under this section shall be paid from either the amount authorized by the qualified electors of the school district or current operating funds.  Bond election expenses shall be paid from current operating funds only.

H.  For any election conducted to decide whether class B bonds will be issued pursuant to this section:

1.  Except as provided in paragraph 2 of this subsection, the ballot shall include the following statement:

The capital improvements that are proposed to be funded through this bond issuance are to exceed the state standards and are in addition to monies provided by the state.

___________ school district is proposing to issue class B general obligation bonds totaling $__________ to fund capital improvements over and above those funded by the state.  Under the students first capital funding system, _________ school district is entitled to state monies for building renewal, new construction and renovation of school buildings in accordance with state law.

2.  For a school district that is a joint technical education district, the ballot shall include the following statement:

___________, a joint technical education district, is proposing to issue class B general obligation bonds totaling $___________ to fund capital improvements at a campus owned or operated and maintained by the joint technical education district.

3.  The ballot shall contain the words "bond approval, yes" and "bond approval, no", and the voter shall signify the voter's desired choice.

4.  The ballot shall also contain the phrase "the issuance of these bonds will result in an annual levy of property taxes sufficient to pay the debt on the bonds".

5.  At least eighty‑five days before the election, the school district shall submit proposed ballot language to the director of the Arizona legislative council.  The director of the Arizona legislative council shall review the proposed ballot language to determine whether the proposed ballot language complies with this section.  If the director of the Arizona legislative council determines that the proposed ballot language does not comply with this section, the director, within ten calendar days of the receipt of the proposed ballot language, shall notify the school district of the director's objections and the school district shall resubmit revised ballot language to the director for approval.

6.  No later than thirty-five days before a class B bond election conducted pursuant to this section, the school district shall mail a publicity pamphlet to each household that contains a qualified elector in the school district.  The publicity pamphlet shall contain, at a minimum, the following information:

(a)  An executive summary of the school district's most recent capital plan submitted to the school facilities board.

(b)  A complete list of each proposed capital improvement that will be funded with the proceeds of the bonds and a description of the proposed cost of each improvement, including a separate aggregation of capital improvements for administrative purposes as defined by the school facilities board.

(c)  The tax rate associated with each of the proposed capital improvements and the estimated cost of each capital improvement for the owner of a single family home that is valued at one hundred thousand dollars.

I.  For any election conducted to decide whether impact aid revenue bonds shall be issued pursuant to this section:

1.  The ballot shall include the following statement:

The capital improvements that are proposed to be funded through this bond issuance are to exceed the state standards and are in addition to monies provided by the state.

__________ school district is proposing to issue impact aid revenue bonds totaling $__________ to fund capital improvements over and above those funded by the state.  Under the students first capital funding system, _________ school district is entitled to state monies for building renewal, new construction and renovation of school buildings in accordance with state law.

2.  The ballot shall contain the words "bond approval, yes" and "bond approval, no", and the voter shall signify the voter's desired choice.

3.  At least eighty‑five days before the election, the school district shall submit proposed ballot language to the director of the legislative council.  The director of the legislative council shall review the proposed ballot language to determine whether the proposed ballot language complies with this section.  If the director of the legislative council determines that the proposed ballot language does not comply with this section, the director, within ten calendar days of the receipt of the proposed ballot language, shall notify the school district of the director's objections and the school district shall resubmit revised ballot language to the director for approval.

4.  No later than thirty-five days before an impact aid revenue bond election conducted pursuant to this section, the school district shall mail a publicity pamphlet to each household that contains a qualified elector in the school district.  The publicity pamphlet shall contain, at a minimum, the following information:

(a)  The date of the election.

(b)  The voter's polling place and the times it is open.

(c)  An executive summary of the school district's most recent capital plan submitted to the school facilities board.

(d)  A complete list of each proposed capital improvement that will be funded with the proceeds of the bonds and a description of the proposed cost of each improvement, including a separate aggregation of capital improvements for administrative purposes as defined by the school facilities board.

(e)  A statement that impact aid revenue bonds will be fully funded by aid that the school district receives from the federal government and do not require a levy of taxes in the district.

(f)  A statement that if the bonds are approved, the first priority for the impact aid will be to pay the debt service for the bonds and that other uses of the monies are prohibited until the debt service obligation is met.

(g)  A statement that if the impact aid revenue bonds are approved, the school district shall not issue or sell class B bonds while the district has existing indebtedness from impact aid revenue bonds, except for bonds issued to refund any bonds issued by the board.

J.  If the voters approve the issuance of school district class B bonds or impact aid revenue bonds, the school district shall not use the bond proceeds for any purposes other than the proposed capital improvements listed in the publicity pamphlet, except that up to ten per cent of the bond proceeds may be used for general capital expenses, including cost overruns of proposed capital improvements.  The proposed capital improvements may be changed by a subsequent election as provided by this section.

K.  Each school district that issues bonds under this section is required to hold a public meeting each year between September 1 and October 31, until the bond proceeds are spent, at which an update of the progress of capital improvements financed through bonding is discussed and at which the public is permitted an opportunity to comment.  At a minimum, the update shall include a comparison of the current status and the original projections on the construction of capital improvements, the costs of capital improvements and the costs of capital improvements in progress or completed since the prior meeting and the future capital bonding plans of the school district.  The school district shall include in the public meeting a discussion of the school district's use of state capital aid and voter‑approved capital overrides in funding capital improvements, if any.

L.  If an election is held to change the purpose or list of capital projects authorized by prior voter approval to issue bonds pursuant to subsection A, paragraph 5 of this section, the following requirements apply:

1.  The election may be held only on the first Tuesday after the first Monday in November.

2.  No later than thirty-five days before the election, the school district shall mail a publicity pamphlet to each household in the school district that contains a qualified elector.  The publicity pamphlet shall contain, at a minimum, the following information:

(a)  The date of the election.

(b)  The voter's polling place and the times it is open.

(c)  A statement as to why the election was called.

(d)  A complete list of each proposed capital improvement that is in addition to the initial capital improvements presented in the publicity pamphlet when the bonds were approved and the proposed cost of each improvement, including a separate aggregation of capital improvements for administrative purposes as defined by the school facilities board.

(e)  A complete list of each capital improvement that was presented in the publicity pamphlet when the bonds were initially approved and that is proposed to be eliminated or to have its cost reduced, and the proposed cost of each improvement, including a separate aggregation of capital improvements for administrative purposes as defined by the school facilities board.

(f)  Arguments for and against the proposed change, if submitted, as provided by section 15-481, subsection B, paragraph 9.

3.  The ballot shall contain the words "change capital improvements, yes" and "change capital improvements, no", and the voter shall signify the voter's desired choice.

4.  If the election is to add a purpose that was not on the initial ballot, the ballot shall list the purpose that is proposed to be added. 

M.  If an election is held to extend the time to issue bonds pursuant to subsection A, paragraph 6 of this section, the following requirements apply:

1.  The election may be held only on the first Tuesday after the first Monday in November.

2.  No later than thirty-five days before the election, the school district shall mail a publicity pamphlet to each household in the school district that contains a qualified elector.  The publicity pamphlet shall contain, at a minimum, the following information:

(a)  The date of the election.

(b)  The voter's polling place and the times it is open.

(c)  A statement as to why the election was called.

(d)  Arguments for and against the proposed change, if submitted, as provided in section 15‑481, subsection B, paragraph 9.

3.  The ballot shall contain the words "extend time to issue bonds, yes" and "extend time to issue bonds, no", and the voter shall signify the voter's desired choice. END_STATUTE

Sec. 11.  Section 15-792.03, Arizona Revised Statutes, is amended to read:

START_STATUTE15-792.03.  Grand Canyon diploma

A.  The private organization selected pursuant to section 15‑792.02 shall develop the Grand Canyon diploma to be approved and adopted by the state board of education.  School districts and charter schools in this state may choose to offer a Grand Canyon diploma beginning in the 2012‑2013 school year.  A high school student who is enrolled in a school district or charter school that offers a Grand Canyon diploma may choose to pursue a Grand Canyon diploma.

B.  Students are eligible for the Grand Canyon diploma and may be awarded the Grand Canyon diploma at the end of grade ten or during or at the end of grade eleven or twelve if the students meet the criteria.  Students who elect to pursue a Grand Canyon diploma shall participate in a board examination system that consists of internationally benchmarked instructional programs of study chosen by an interstate compact on board examination systems.

C.  Students who are eligible for a Grand Canyon diploma shall have multiple pathways available to them and may:

1.  Enroll the following fall semester in a community college under the jurisdiction of a community college district in this state.  Community colleges under the jurisdiction of a community college district in this state shall admit students who obtain a Grand Canyon diploma and who otherwise meet the qualifications for admission.  The school district or charter school from which the student earned the Grand Canyon diploma shall include that student in the school district's or charter school's student count and shall continue to receive per pupil funding for a student who earns a Grand Canyon diploma until that student would otherwise have graduated at the end of grade twelve, as long as that student is enrolled as a full‑time student in a community college under the jurisdiction of a community college district in this state.  The school district or charter school shall subtract twenty per cent of its average daily membership amount and reimburse the community college if the student has earned a Grand Canyon diploma and is attending a community college as a full‑time student.  If the student attends community college on a community college campus, the school district or charter school shall reimburse the community college district for the amount of operating and capital outlay full-time student equivalency monies.  For the purposes of this paragraph, the amount of operating full‑time student equivalency monies shall be equivalent to the average appropriation per full‑time student equivalent for all community college districts as calculated pursuant to section 15‑1466, subsection C, paragraph 2.  Fifty per cent of the remaining balance of the per pupil funding shall be used for teacher and pupil incentives, including scholarship programs, to offset the costs of board examinations and to provide customized programs of assistance for students who do not pass the board examinations.  The other fifty per cent shall be used for maintenance and operations, including capital.  Under this paragraph, a student who earns a Grand Canyon diploma is responsible for tuition.  A student who earns a Grand Canyon diploma may enroll in community college courses offered on a community college campus or a high school campus, or both.  Notwithstanding any other law, community college districts shall not classify a student who remains in high school pursuant to this paragraph as a full‑time equivalent student. Students who take courses on high school campuses pursuant to this paragraph shall be eligible to participate in extracurricular activities, including interscholastic sports, through the end of grade twelve.  The expenditure by community college districts of payments from the school district or charter school to the community colleges under this section shall not be included under the district expenditure limitation prescribed pursuant to article IX, section 21, Constitution of Arizona.  If the instruction provided under this paragraph is offered on a community college campus, the funding and implementation mechanics between the school district or charter school and the community college shall be determined by agreement between the school district or charter school and the community college.

2.  Remain in high school and enroll in additional advanced preparation board examination programs that are designed to prepare those students for admission to selective postsecondary institutions that offer baccalaureate degree programs.  These board examination programs shall be selected from a list approved by an interstate compact for board examination systems.  The school district or charter school from which the student became eligible for the Grand Canyon diploma shall include that student in the school district's or charter school's student count and shall continue to receive per pupil funding for a student who is eligible for a Grand Canyon diploma until that student would otherwise have graduated at the end of grade twelve, as long as that student is enrolled in approved advanced preparation board examination programs at that school district or charter school.  Students who elect to remain in high school pursuant to this paragraph shall not be prevented from enrolling at a high school after the pupil becomes eligible for a Grand Canyon diploma and shall be eligible to participate in extracurricular activities, including interscholastic sports, through the end of grade twelve.

3.  Enroll in a full‑time career and technical education program offered on a high school campus or a joint technical education district campus, or any combination of these campuses.  Students who elect to remain in high school pursuant to this paragraph shall not be prevented from enrolling at a high school after the pupil becomes eligible for a Grand Canyon diploma and shall be eligible to participate in extracurricular activities, including interscholastic sports, through the end of grade twelve.  The school district or charter school from which the student became eligible for the Grand Canyon diploma shall include that student in the school district's or charter school's student count and shall continue to receive per pupil funding for a student who is eligible for a Grand Canyon diploma until that student would otherwise have graduated at the end of grade twelve, as long as that student is enrolled in an approved full‑time career and technical education program.  Notwithstanding any other law, if the instruction provided under this paragraph is provided by a joint technical education district in a full‑time career and technical education program that is designed to lead to a certificate that is awarded by an industry or recognized as meeting industry standards, the sum of the average daily membership for that pupil shall not exceed 1.25, and the average daily membership shall be apportioned at 1.0 for the joint technical education district and 0.25 for the school district.

4.  Remain in high school without completing the next level of board examination systems and participate in programs of study available to the students through the school district or charter school.  The school district or charter school will continue to include the students in the school district's or charter school's count and shall continue to receive per pupil funding for the students until those students would have otherwise graduated at the end of grade twelve, as long as those students are enrolled in approved programs of study at that school district or charter school.  Students who elect to remain in high school pursuant to this paragraph shall be eligible to participate in extracurricular activities, including interscholastic sports.

5.  If accepted for admission to a university under the jurisdiction of the Arizona board of regents, enroll in the university after completion of additional high school coursework designed to prepare students for admission to selective postsecondary institutions that offer baccalaureate degrees.  The school district or charter school from which the student earned the grand canyon diploma shall include that student in the school district's or charter school's student count and shall continue to receive per pupil funding for a student who earns a grand canyon diploma until that student would otherwise have graduated at the end of grade twelve for as long as that student is enrolled as a full‑time student in the university.  One‑third of the school district's or charter school's average daily membership amount shall be retained by the school district or the operator of the charter school.  One‑third of the school district's or charter school's average daily membership amount shall be retained for use at the school site.  One‑third of the school district's or charter school's average daily membership amount shall be distributed as follows:

(a)  One‑half shall be deposited in a scholarship account established and managed by the school district from which the student graduated specifically for a student who qualifies for the grand canyon diploma and who attends a university under the jurisdiction of the Arizona board of regents as a full‑time student.

(b)  One‑half shall be retained by the university where the student is enrolled.

D.  Students who pursue but do not meet the eligibility requirements for a Grand Canyon diploma at the end of grade ten or eleven shall receive a customized program of assistance during the next school year that addresses areas in which the student demonstrated deficiencies in the approved board examinations.  These students may retake the board examinations at the next available examination administration.  Students may choose to return to a traditional academic program without completing the board examination system curriculum.

E.  The private organization selected pursuant to section 15‑792.02 shall develop detailed requirements for students to become eligible for the Grand Canyon diploma, as approved and adopted by the state board of education, that include at least the following:

1.  Demonstrated skills and knowledge in English and mathematical literacy to be successful in college level courses offered by the community colleges in this state that count toward a degree or certificate without taking remedial or developmental coursework as determined by an interstate compact on board examination systems.

2.  Satisfactory grades on approved board examinations in subjects determined to be necessary to prepare a student to enter community college without remedial or developmental coursework and that do not include coursework required exclusively for entry into an institution that awards baccalaureate degrees.

F.  A student who obtains a Grand Canyon diploma pursuant to this section is not eligible to participate in the early graduation scholarship program established by section 15‑105 if the student elects to pursue one of the pathways prescribed in subsection C, paragraph 1, 2 or 3 of this section. The department of education shall not transmit any monies to the commission for postsecondary education pursuant to section 15‑105, subsection F on behalf of any student who obtains a Grand Canyon diploma pursuant to this section if the student elects to pursue one of the pathways prescribed in subsection C, paragraph 1, 2 or 3 of this section. END_STATUTE

Sec. 12.  Section 15-795.01, Arizona Revised Statutes, is amended to read:

START_STATUTE15-795.01.  Competency-based college-ready educational pathways

A.  In accordance with the rules adopted by the state board of education pursuant to section 15‑203, subsection A, paragraph 39, students who are eligible for a high school diploma through the fulfillment of a defined competency-based college-ready educational pathway shall have multiple pathways available to them and may:

1.  Enroll the following fall semester in a community college under the jurisdiction of a community college district in this state.  Community colleges under the jurisdiction of a community college district in this state shall admit students who obtain a high school diploma through the fulfillment of a defined competency-based educational pathway and who otherwise meet the qualifications for admission.  The school district or charter school from which the student earned the high school diploma shall include that student in the school district's or charter school's student count and shall continue to receive per pupil funding for a student who earns a high school diploma until that student would otherwise have graduated at the end of grade twelve, as long as that student is enrolled as a full-time student in a community college under the jurisdiction of a community college district in this state. The school district or charter school shall subtract twenty per cent of its average daily membership amount and reimburse the community college if the student has earned a high school diploma and is attending a community college as a full-time student.  If the student attends community college on a community college campus, the school district or charter school shall reimburse the community college district for the amount of operating and capital outlay full-time student equivalency monies.  For the purposes of this paragraph, the amount of operating full-time student equivalency monies shall be equivalent to the average appropriation per full-time student equivalent for all community college districts as calculated pursuant to section 15‑1466, subsection C, paragraph 2.  Fifty per cent of the remaining balance of the per pupil funding shall be used for teacher and pupil incentives, including scholarship programs, to offset the costs of competency-based pathways and to provide customized programs of assistance for students who do not demonstrate mastery.  The other fifty per cent shall be used for maintenance and operations, including capital.  Under this paragraph, a student who earns a high school diploma is responsible for tuition.  A student who earns a high school diploma may enroll in community college courses offered on a community college campus or a high school campus, or both.  Notwithstanding any other law, community college districts shall not classify a student who remains in high school pursuant to this paragraph as a full‑time equivalent student.  Students who take courses on high school campuses pursuant to this paragraph shall be eligible to participate in extracurricular activities, including interscholastic sports, through the end of grade twelve.  The expenditure by community college districts of payments from the school district or charter school to the community colleges under this section shall not be included under the district expenditure limitation prescribed pursuant to article IX, section 21, Constitution of Arizona.  If the instruction provided under this paragraph is offered on a community college campus, the funding and implementation mechanics between the school district or charter school and the community college shall be determined by agreement between the school district or charter school and the community college.

2.  Remain in high school and participate in programs of study available to students through the school district or charter school.  The school district or charter school shall continue to include that student in the school district's or charter school's student count and shall continue to receive per pupil funding for a student who is eligible for a high school diploma until that student would otherwise have graduated at the end of grade twelve, as long as that student is enrolled in approved advanced preparation programs of study at that school district or charter school.  Students who elect to remain in high school pursuant to this paragraph shall not be prevented from enrolling at a high school after the student becomes eligible for a high school diploma and shall be eligible to participate in extracurricular activities, including interscholastic sports, through the end of grade twelve.

3.  Enroll in a full-time career and technical education program offered on a high school campus or a joint technical education district campus, or any combination of these campuses.  A student who elects to remain in high school pursuant to this paragraph shall not be prevented from enrolling at a high school after the pupil becomes eligible for a high school diploma and shall be eligible to participate in extracurricular activities, including interscholastic sports, through the end of grade twelve.  The school district or charter school from which the student became eligible for the high school diploma shall include that student in the school district's or charter school's student count and shall continue to receive per pupil funding for a student who is eligible for a high school diploma until that student would otherwise have graduated at the end of grade twelve, as long as that student is enrolled in an approved full-time career and technical education program.  Notwithstanding any other law, if the instruction provided under this paragraph is provided by a joint technical education district in a full-time career and technical education program that is designed to lead to a certificate that is awarded by an industry or recognized as meeting industry standards, the sum of the average daily membership for that pupil shall not exceed 1.25, and the average daily membership shall be apportioned at 1.0 for the joint technical education district and 0.25 for the school district.

4.  If accepted for admission to a university under the jurisdiction of the Arizona board of regents, enroll in the university after completion of additional high school coursework designed to prepare students for admission to selective postsecondary institutions that offer baccalaureate degrees.  The school district or charter school from which the student earned the high school diploma shall include that student in the school district's or charter school's student count and shall continue to receive per pupil funding for a student who earns a high school diploma until that student would otherwise have graduated at the end of grade twelve for as long as that student is enrolled as a full-time student in the university.  One-third of the school district's or charter school's average daily membership amount shall be retained by the school district or the operator of the charter school.  One‑third of the school district's or charter school's average daily membership amount shall be retained for use at the school site.  One-third of the school district's or charter school's average daily membership amount shall be distributed as follows:

(a)  Fifty per cent of this amount shall be deposited in a scholarship account established and managed by the school district or charter school from which the student graduated specifically for a student who qualifies for a diploma and who attends a university under the jurisdiction of the Arizona board of regents as a full-time student.

(b)  Fifty per cent of this amount shall be retained by the university where the student is enrolled.

B.  A student who obtains a high school diploma through the fulfillment of a defined competency-based educational pathway pursuant to this section is not eligible to participate in the early graduation scholarship program established by section 15‑105 if the student elects to pursue one of the pathways prescribed in subsection a of this section.  The department of education shall not transmit any monies to the commission for postsecondary education pursuant to section 15‑105, subsection F on behalf of any student who obtains a high school diploma pursuant to this section if the student elects to pursue one of the pathways prescribed in subsection A of this section.  END_STATUTE

Sec. 13.  Section 15-808, Arizona Revised Statutes, is amended to read:

START_STATUTE15-808.  Arizona online instruction; reports; definitions

A.  Arizona online instruction shall be instituted to meet the needs of pupils in the information age.  The state board of education shall select traditional public schools and the state board for charter schools shall sponsor charter schools to be online course providers or online schools.  The state board of education and the state board for charter schools shall jointly develop standards for the approval of online course providers and online schools based on the following criteria:

1.  The depth and breadth of curriculum choices.

2.  The variety of educational methodologies employed by the school and the means of addressing the unique needs and learning styles of targeted pupil populations, including computer assisted learning systems, virtual classrooms, virtual laboratories, electronic field trips, electronic mail, virtual tutoring, online help desk, group chat sessions and noncomputer based activities performed under the direction of a certificated teacher.

3.  The availability of an intranet or private network to safeguard pupils against predatory and pornographic elements of the internet.

4.  The availability of filtered research access to the internet.

5.  The availability of private individual electronic mail between pupils, teachers, administrators and parents in order to protect the confidentiality of pupil records and information.

6.  The availability of faculty members who are experienced with computer networks, the internet and computer animation.

7.  The extent to which the school intends to develop partnerships with universities, community colleges and private businesses.

8.  The services offered to developmentally disabled populations.

9.  The grade levels that will be served.

B.  Each new school that provides online instruction shall provide online instruction on a probationary status.  After a new school that provides online instruction has clearly demonstrated the academic integrity of its instruction through the actual improvement of the academic performance of its students, the school may apply to be removed from probationary status. The state board of education or the state board for charter schools shall remove from Arizona online instruction any probationary school that fails to clearly demonstrate improvement in academic performance within three years measured against goals in the approved application and the state's accountability system.  The state board of education and the state board for charter schools shall review the effectiveness of each participating school and other information that is contained in the annual report prescribed in subsection D of this section.  All pupils who participate in Arizona online instruction shall reside in this state.  Pupils who participate in Arizona online instruction are subject to the testing requirements prescribed in chapter 7, article 3 of this title.  Upon On enrollment, the school shall notify the parents or guardians of the pupil of the state testing requirements.  If a pupil fails to comply with the testing requirements and the school administers the tests pursuant to this subsection to less than ninety‑five per cent of the pupils in Arizona online instruction, the pupil shall not be allowed to participate in Arizona online instruction.

C.  Beginning July 1, 2010,  The state board of education and the state board for charter schools shall develop annual reporting mechanisms for schools that participate in Arizona online instruction.

D.  The department of education shall compile the information submitted in the annual reports by schools participating in Arizona online instruction. The department of education shall submit the compiled report to the governor, the speaker of the house of representatives and the president of the senate by November 15 of each year.

E.  Each school selected for Arizona online instruction shall ensure that a daily log is maintained for each pupil who participates in Arizona online instruction.  The daily log shall describe the amount of time spent by each pupil participating in Arizona online instruction pursuant to this section on academic tasks.  The daily log shall be used by the school district or charter school to qualify the pupils who participate in Arizona online instruction in the school's average daily attendance calculations pursuant to subsection F of this section.

F.  If a pupil is enrolled in a school district or charter school and also participates in Arizona online instruction, the sum of the average daily membership, which includes enrollment as prescribed in section 15‑901, subsection A, paragraph  1, subdivisions (a) and (b) and daily attendance as prescribed in section 15‑901, subsection A, paragraph  5, for that pupil in the school district or charter school and in Arizona online instruction shall not exceed 1.0.  If the pupil is enrolled in a school district or a charter school and also participates in Arizona online instruction and the sum of the daily membership or daily attendance for that pupil is greater than 1.0, the sum shall be reduced to 1.0 and shall be apportioned between the school district, unless the school district is a joint technical education district subject to the apportionment requirements of section 15‑393, or charter school and Arizona online instruction based on the percentage of total time that the pupil is enrolled or in attendance in the school district or charter school and Arizona online instruction.  The uniform system of financial records shall include guidelines for the apportionment of the pupil enrollment and attendance as provided in this subsection.  Pupils in Arizona online instruction do not incur absences for purposes of this subsection and may generate an average daily attendance of 1.0 for attendance hours during any hour of the day, during any day of the week and at any time between July 1 and June 30 of each fiscal year.  For kindergarten programs and grades one through eight, average daily membership shall be calculated by dividing the instructional hours as reported in the daily log required in subsection E of this section by the applicable hourly requirements prescribed in section 15‑901.  For grades nine through twelve, average daily membership shall be calculated by dividing the instructional hours as reported in the daily log required in subsection E of this section by nine hundred.  The average daily membership of a pupil who participates in online instruction shall not exceed 1.0.  Average daily membership shall not be calculated on the one hundredth day of instruction for the purposes of this section.  Funding shall be determined as follows:

1.  A pupil who is enrolled full-time in Arizona online instruction shall be funded for online instruction at ninety‑five per cent of the base support level that would be calculated for that pupil if that pupil were enrolled as a full‑time student in a school district or charter school that does not participate in Arizona online instruction.  Charter additional assistance, capital outlay revenue limit and soft capital allocation limit district additional assistance shall be calculated in the same manner they would be calculated if the student were enrolled in a district or charter school that does not participate in Arizona online instruction.

2.  A pupil who is enrolled part-time in Arizona online instruction shall be funded for online instruction at eighty‑five per cent of the base support level that would be calculated for that pupil if that pupil were enrolled as a part‑time student in a school district or charter school that does not participate in Arizona online instruction.  Charter additional assistance, capital outlay revenue limit and soft capital allocation limit district additional assistance shall be calculated in the same manner they would be calculated if the student were enrolled in a district or charter school that does not participate in Arizona online instruction.

G.  If the academic achievement of a pupil declines while the pupil is participating in Arizona online instruction, the pupil's parents, the pupil's teachers and the principal or head teacher of the school shall confer to evaluate whether the pupil should be allowed to continue to participate in Arizona online instruction.

H.  To ensure the academic integrity of pupils who participate in online instruction, Arizona online instruction shall include multiple diverse assessment measures and the proctored administration of required state standardized tests.

I.  For the purposes of this section:

1.  "Full-time student" means:

(a)  A student who is at least five years of age before September 1 of a school year and who is enrolled in a school kindergarten program that meets at least three hundred fortysix hours during the school year.

(b)  A student who is at least six years of age before September 1 of a school year, who has not graduated from the highest grade taught in the school and who is regularly enrolled in a course of study required by the state board of education.  For first, second and third grade students, the instructional program shall meet at least seven hundred twelve hours.  For fourth, fifth and sixth grade students, the instructional program shall meet at least eight hundred ninety hours during the school year.

(c)  Seventh and eighth grade students or ungraded students who are at least twelve, but under fourteen, years of age on or before September 1 and who are enrolled in an instructional program of courses that meets at least one thousand sixty‑eight hours during the school year.

(d)  For high schools, except as provided in section 15-105, a student not graduated from the highest grade taught in the school district, or an ungraded student at least fourteen years of age on or before September 1, and who is enrolled in at least four courses throughout the year that meet at least nine hundred hours during the school year.  A full-time student shall not be counted more than once for computation of average daily membership.

2.  "Online course provider" means a school other than an online school that is selected by the state board of education or the state board for charter schools to participate in Arizona online instruction pursuant to this section and that provides at least one online academic course that is approved by the state board of education.

3.  "Online school" means a school that provides at least four online academic courses or one or more online courses for the equivalent of at least five hours each day for one hundred eighty school days and that is a charter school that is sponsored by the state board for charter schools or a traditional public school that is selected by the state board of education to participate in Arizona online instruction.

4.  "Part-time student" means:

(a)  Any student who is enrolled in a program that does not meet the definition in paragraph 1 of this subsection shall be funded at eighty-five per cent of the base support level that would be calculated for that pupil if that pupil were enrolled as a part-time student in a school district or charter school that does not participate in Arizona online instruction.

(b)  A part-time student of seventy‑five per cent average daily membership shall be enrolled in at least three subjects throughout the year that offer for first, second and third grade students at least five hundred thirty-four instructional hours in a school year and for fourth, fifth and sixth grade students at least six hundred sixty‑eight instructional hours in a school year.  A part-time student of fifty per cent average daily membership shall be enrolled in at least two subjects throughout the year that offer for first, second and third grade students at least three hundred fifty-six instructional hours in a school year and for fourth, fifth and sixth grade students at least four hundred forty-five instructional hours in a school year.  A part-time student of twenty‑five per cent average daily membership shall be enrolled in at least one subject throughout the year that offers for first, second and third grade students at least one hundred seventy-eight instructional hours in a school year and for fourth, fifth and sixth grade students at least two hundred twenty-three instructional hours in a school year.

(c)  For seventh and eighth grade students, a part-time student of seventy‑five per cent average daily membership shall be enrolled in at least three subjects throughout the year that offer at least eight hundred one instructional hours in a school year.  A part-time student of fifty per cent average daily membership shall be enrolled in at least two subjects throughout the year that offer at least five hundred thirty-four instructional hours in a school year.  A part-time student of twenty‑five per cent average daily membership shall be enrolled in at least one subject throughout the year that offers at least two hundred sixty-seven instructional hours in a school year.

(d)  For high school students, a part-time student of seventy‑five per cent average daily membership shall be enrolled in at least three subjects throughout the year that offer at least six hundred seventy-five instructional hours in a school year.  A part-time student of fifty per cent average daily membership shall be enrolled in at least two subjects throughout the year that offer at least four hundred fifty instructional hours in a school year.  A part-time student of twenty‑five per cent average daily membership shall be enrolled in at least one subject throughout the year that offers at least two hundred twenty-five instructional hours in a school year. END_STATUTE

Sec. 14.  Section 15-901, Arizona Revised Statutes, is amended to read:

START_STATUTE15-901.  Definitions

A.  In this title, unless the context otherwise requires:

1.  "Average daily membership" means the total enrollment of fractional students and full‑time students, minus withdrawals, of each school day through the first one hundred days or two hundred days in session, as applicable, for the current year.  Withdrawals include students formally withdrawn from schools and students absent for ten consecutive school days, except for excused absences identified by the department of education.  For the purposes of this section, school districts and charter schools shall report student absence data to the department of education at least once every sixty days in session.  For computation purposes, the effective date of withdrawal shall be retroactive to the last day of actual attendance of the student or excused absence.

(a)  "Fractional student" means:

(i)  For common schools, a preschool child who is enrolled in a program for preschool children with disabilities of at least three hundred sixty minutes each week or a kindergarten student at least five years of age before January 1 of the school year and enrolled in a school kindergarten program that meets at least three hundred fifty‑six hours for a one hundred eighty day school year, or the instructional hours prescribed in this section.  Lunch periods and recess periods may not be included as part of the instructional hours unless the child's individualized education program requires instruction during those periods and the specific reasons for such instruction are fully documented.  In computing the average daily membership, preschool children with disabilities and kindergarten students shall be counted as one‑half of a full‑time student.  For common schools, a part‑time student is a student enrolled for less than the total time for a full‑time student as defined in this section.  A part‑time common school student shall be counted as one‑fourth, one‑half or three‑fourths of a full‑time student if the student is enrolled in an instructional program that is at least one‑fourth, one‑half or three‑fourths of the time a full‑time student is enrolled as defined in subdivision (b) of this paragraph.

(ii)  For high schools, a part‑time student who is enrolled in less than four subjects that count toward graduation as defined by the state board of education, each of which, if taught each school day for the minimum number of days required in a school year, would meet a minimum of one hundred twenty‑three hours a year, or the equivalent, in a recognized high school.  The average daily membership of a part‑time high school student shall be 0.75 if the student is enrolled in an instructional program of three subjects that meet at least five hundred forty hours for a one hundred eighty day school year, or the instructional hours prescribed in this section.  The average daily membership of a part‑time high school student shall be 0.5 if the student is enrolled in an instructional program of two subjects that meet at least three hundred sixty hours for a one hundred eighty day school year, or the instructional hours prescribed in this section.  The average daily membership of a part‑time high school student shall be 0.25 if the student is enrolled in an instructional program of one subject that meets at least one hundred eighty hours for a one hundred eighty day school year, or the instructional hours prescribed in this section.

(b)  "Full‑time student" means:

(i)  For common schools, a student who is at least six years of age before January 1 of a school year, who has not graduated from the highest grade taught in the school district and who is regularly enrolled in a course of study required by the state board of education.  First, second and third grade students, ungraded students at least six, but under nine, years of age by September 1 or ungraded group B children with disabilities who are at least five, but under six, years of age by September 1 must be enrolled in an instructional program that meets for a total of at least seven hundred twelve hours for a one hundred eighty day school year, or the instructional hours prescribed in this section.  Fourth, fifth and sixth grade students or ungraded students at least nine, but under twelve, years of age by September 1 must be enrolled in an instructional program that meets for a total of at least eight hundred ninety hours for a one hundred eighty day school year, or the instructional hours prescribed in this section.  Seventh and eighth grade students or ungraded students at least twelve, but under fourteen, years of age by September 1 must be enrolled in an instructional program that meets for at least one thousand hours.  Lunch periods and recess periods may not be included as part of the instructional hours unless the student is a child with a disability and the child's individualized education program requires instruction during those periods and the specific reasons for such instruction are fully documented.

(ii)  For high schools, except as provided in section 15‑105, a student not graduated from the highest grade taught in the school district, or an ungraded student at least fourteen years of age by September 1, and enrolled in at least an instructional program of four or more subjects that count toward graduation as defined by the state board of education, each of which, if taught each school day for the minimum number of days required in a school year, would meet a minimum of one hundred twenty‑three hours a year, or the equivalent, that meets for a total of at least seven hundred twenty hours for a one hundred eighty day school year, or the instructional hours prescribed in this section in a recognized high school.  A full‑time student shall not be counted more than once for computation of average daily membership.  The average daily membership of a full-time high school student shall be 1.0 if the student is enrolled in at least four subjects that meet at least seven hundred twenty hours for a one hundred eighty day school year, or the equivalent instructional hours prescribed in this section.

(iii)  Except as otherwise provided by law, for a full‑time high school student who is concurrently enrolled in two school districts or two charter schools, the average daily membership shall not exceed 1.0.

(iv)  Except as otherwise provided by law, for any student who is concurrently enrolled in a school district and a charter school, the average daily membership shall be apportioned between the school district and the charter school and shall not exceed 1.0.  The apportionment shall be based on the percentage of total time that the student is enrolled in or in attendance at the school district and the charter school.

(v)  Except as otherwise provided by law, for any student who is concurrently enrolled, pursuant to section 15‑808, in a school district and Arizona online instruction or a charter school and Arizona online instruction, the average daily membership shall be apportioned between the school district and Arizona online instruction or the charter school and Arizona online instruction and shall not exceed 1.0.  The apportionment shall be based on the percentage of total time that the student is enrolled in or in attendance at the school district and Arizona online instruction or the charter school and Arizona online instruction.

(vi)  For homebound or hospitalized, a student receiving at least four hours of instruction per week.

2.  "Budget year" means the fiscal year for which the school district is budgeting and that immediately follows the current year.

3.  "Common school district" means a political subdivision of this state offering instruction to students in programs for preschool children with disabilities and kindergarten programs and either:

(a)  Grades one through eight.

(b)  Grades one through nine pursuant to section 15‑447.01.

4.  "Current year" means the fiscal year in which a school district is operating.

5.  "Daily attendance" means:

(a)  For common schools, days in which a pupil:

(i)  Of a kindergarten program or ungraded, but not group B children with disabilities, and at least five, but under six, years of age by September 1 attends at least three‑quarters of the instructional time scheduled for the day.  If the total instruction time scheduled for the year is at least three hundred forty‑six hours but is less than six hundred ninety‑two hours, such attendance shall be counted as one‑half day of attendance.  If the instructional time scheduled for the year is at least six hundred ninety‑two hours, "daily attendance" means days in which a pupil attends at least one‑half of the instructional time scheduled for the day. Such attendance shall be counted as one‑half day of attendance.

(ii)  Of the first, second or third grades, ungraded and at least six, but under nine, years of age by September 1 or ungraded group B children with disabilities and at least five, but under six, years of age by September 1 attends more than three‑quarters of the instructional time scheduled for the day.

(iii)  Of the fourth, fifth or sixth grades or ungraded and at least nine, but under twelve, years of age by September 1 attends more than three‑quarters of the instructional time scheduled for the day, except as provided in section 15‑797.

(iv)  Of the seventh or eighth grades or ungraded and at least twelve, but under fourteen, years of age by September 1 attends more than three‑quarters of the instructional time scheduled for the day, except as provided in section 15‑797.

(b)  For common schools, the attendance of a pupil at three‑quarters or less of the instructional time scheduled for the day shall be counted as follows, except as provided in section 15‑797 and except that attendance for a fractional student shall not exceed the pupil's fractional membership:

(i)  If attendance for all pupils in the school is based on quarter days, the attendance of a pupil shall be counted as one‑fourth of a day's attendance for each one‑fourth of full‑time instructional time attended.

(ii)  If attendance for all pupils in the school is based on half days, the attendance of at least three‑quarters of the instructional time scheduled for the day shall be counted as a full day's attendance and attendance at a minimum of one‑half but less than three‑quarters of the instructional time scheduled for the day equals one‑half day of attendance.

(c)  For common schools, the attendance of a preschool child with disabilities shall be counted as one‑fourth day's attendance for each thirty‑six minutes of attendance not including lunch periods and recess periods, except as provided in paragraph 1, subdivision (a), item (i) of this subsection for children with disabilities up to a maximum of three hundred sixty minutes each week.

(d)  For high schools or ungraded schools in which the pupil is at least fourteen years of age by September 1, the attendance of a pupil shall not be counted as a full day unless the pupil is actually and physically in attendance and enrolled in and carrying four subjects, each of which, if taught each school day for the minimum number of days required in a school year, would meet a minimum of one hundred twenty hours a year, or the equivalent, that count toward graduation in a recognized high school except as provided in section 15‑797 and subdivision (e) of this paragraph.  Attendance of a pupil carrying less than the load prescribed shall be prorated.

(e)  For high schools or ungraded schools in which the pupil is at least fourteen years of age by September 1, the attendance of a pupil may be counted as one‑fourth of a day's attendance for each sixty minutes of instructional time in a subject that counts toward graduation, except that attendance for a pupil shall not exceed the pupil's full or fractional membership.

(f)  For homebound or hospitalized, a full day of attendance may be counted for each day during a week in which the student receives at least four hours of instruction.

(g)  For school districts that maintain school for an approved year‑round school year operation, attendance shall be based on a computation, as prescribed by the superintendent of public instruction, of the one hundred eighty days' equivalency or two hundred days' equivalency, as applicable, of instructional time as approved by the superintendent of public instruction during which each pupil is enrolled.

6.  "Daily route mileage" means the sum of:

(a)  The total number of miles driven daily by all buses of a school district while transporting eligible students from their residence to the school of attendance and from the school of attendance to their residence on scheduled routes approved by the superintendent of public instruction.

(b)  The total number of miles driven daily on routes approved by the superintendent of public instruction for which a private party, a political subdivision or a common or a contract carrier is reimbursed for bringing an eligible student from the place of his residence to a school transportation pickup point or to the school of attendance and from the school transportation scheduled return point or from the school of attendance to his residence.  Daily route mileage includes the total number of miles necessary to drive to transport eligible students from and to their residence as provided in this paragraph.

7.  "District support level" means the base support level plus the transportation support level.

8.  "Eligible students" means:

(a)  Students who are transported by or for a school district and who qualify as full‑time students or fractional students, except students for whom transportation is paid by another school district or a county school superintendent, and:

(i)  For common school students, whose place of actual residence within the school district is more than one mile from the school facility of attendance or students who are admitted pursuant to section 15‑816.01 and who meet the economic eligibility requirements established under the national school lunch and child nutrition acts (42 United States Code sections 1751 through 1785) for free or reduced price lunches and whose actual place of residence outside the school district boundaries is more than one mile from the school facility of attendance.

(ii)  For high school students, whose place of actual residence within the school district is more than one and one‑half miles from the school facility of attendance or students who are admitted pursuant to section 15‑816.01 and who meet the economic eligibility requirements established under the national school lunch and child nutrition acts (42 United States Code sections 1751 through 1785) for free or reduced price lunches and whose actual place of residence outside the school district boundaries is more than one and one‑half miles from the school facility of attendance.

(b)  Kindergarten students, for purposes of computing the number of eligible students under subdivision (a), item (i) of this paragraph, shall be counted as full‑time students, notwithstanding any other provision of law.

(c)  Children with disabilities, as defined by section 15‑761, who are transported by or for the school district or who are admitted pursuant to chapter 8, article 1.1 of this title and who qualify as full‑time students or fractional students regardless of location or residence within the school district or children with disabilities whose transportation is required by the pupil's individualized education program.

(d)  Students whose residence is outside the school district and who are transported within the school district on the same basis as students who reside in the school district.

9.  "Enrolled" or "enrollment" means when a pupil is currently registered in the school district.

10.  "GDP price deflator" means the average of the four implicit price deflators for the gross domestic product reported by the United States department of commerce for the four quarters of the calendar year.

11.  "High school district" means a political subdivision of this state offering instruction to students for grades nine through twelve or that portion of the budget of a common school district that is allocated to teaching high school subjects with permission of the state board of education.

12.  "Revenue control limit" means the base revenue control limit plus the transportation revenue control limit.

13.  "Student count" means average daily membership as prescribed in this subsection for the fiscal year before the current year, except that for the purpose of budget preparation student count means average daily membership as prescribed in this subsection for the current year.

14.  "Submit electronically" means submitted in a format and in a manner prescribed by the department of education.

15.  "Total bus mileage" means the total number of miles driven by all buses of a school district during the school year.

16.  "Total students transported" means all eligible students transported from their place of residence to a school transportation pickup point or to the school of attendance and from the school of attendance or from the school transportation scheduled return point to their place of residence.

17.  "Unified school district" means a political subdivision of the state offering instruction to students in programs for preschool children with disabilities and kindergarten programs and grades one through twelve.

B.  In this title, unless the context otherwise requires:

1.  "Base" means the revenue level per student count specified by the legislature.

2.  "Base level" means the following amounts plus the percentage increases to the base level as provided in sections 15‑902.02, 15‑918.04, 15‑919.04 and 15-952, except that if a school district or charter school is eligible for an increase in the base level as provided in two or more of these sections, the base level amount shall be calculated by compounding rather than adding the sum of one plus the percentage of the increase from those different sections:

(a)  For fiscal year 2007‑2008, three thousand two hundred twenty‑six dollars eighty-eight cents.

(b)  For fiscal year 2008‑2009, three thousand two hundred ninety-one dollars forty-two cents.

(c)  For fiscal years 2009‑2010, 2010‑2011, 2011‑2012 and 2012‑2013, three thousand two hundred sixty‑seven dollars seventy‑two cents.

(d)  For fiscal year 2013-2014, three thousand three hundred twenty-six dollars fifty-four cents.

3.  "Base revenue control limit" means the base revenue control limit computed as provided in section 15‑944.

4.  "Base support level" means the base support level as provided in section 15‑943.

5.  "Certified teacher" means a person who is certified as a teacher pursuant to the rules adopted by the state board of education, who renders direct and personal services to school children in the form of instruction related to the school district's educational course of study and who is paid from the maintenance and operation section of the budget.

6.  "DD" means programs for children with developmental delays who are at least three years of age but under ten years of age.  A preschool child who is categorized under this paragraph is not eligible to receive funding pursuant to section 15‑943, paragraph 2, subdivision (b).

7.  "ED, MIID, SLD, SLI and OHI" means programs for children with emotional disabilities, mild intellectual disabilities, a specific learning disability, a speech/language impairment and other health impairments.  A preschool child who is categorized as SLI under this paragraph is not eligible to receive funding pursuant to section 15‑943, paragraph 2, subdivision (b).

8.  "ED‑P" means programs for children with emotional disabilities who are enrolled in private special education programs as prescribed in section 15‑765, subsection D, paragraph 1 or in an intensive school district program as provided in section 15‑765, subsection D, paragraph 2.

9.  "ELL" means English learners who do not speak English or whose native language is not English, who are not currently able to perform ordinary classroom work in English and who are enrolled in an English language education program pursuant to sections 15‑751, 15‑752 and 15‑753.

10.  "Full‑time equivalent certified teacher" or "FTE certified teacher" means for a certified teacher the following:

(a)  If employed full time as defined in section 15‑501, 1.00.

(b)  If employed less than full time, multiply 1.00 by the percentage of a full school day, or its equivalent, or a full class load, or its equivalent, for which the teacher is employed as determined by the governing board.

11.  "Group A" means educational programs for career exploration, a specific learning disability, an emotional disability, a mild intellectual disability, remedial education, a speech/language impairment, developmental delay, homebound, bilingual, other health impairments and gifted pupils.

12.  "Group B" means educational improvements for pupils in kindergarten programs and grades one through three, educational programs for autism, a hearing impairment, a moderate intellectual disability, multiple disabilities, multiple disabilities with severe sensory impairment, orthopedic impairments, preschool severe delay, a severe intellectual disability and emotional disabilities for school age pupils enrolled in private special education programs or in school district programs for children with severe disabilities or visual impairment and English learners enrolled in a program to promote English language proficiency pursuant to section 15‑752.

13.  "HI" means programs for pupils with hearing impairment.

14.  "Homebound" or "hospitalized" means a pupil who is capable of profiting from academic instruction but is unable to attend school due to illness, disease, accident or other health conditions, who has been examined by a competent medical doctor and who is certified by that doctor as being unable to attend regular classes for a period of not less than three school months or a pupil who is capable of profiting from academic instruction but is unable to attend school regularly due to chronic or acute health problems, who has been examined by a competent medical doctor and who is certified by that doctor as being unable to attend regular classes for intermittent periods of time totaling three school months during a school year.  The medical certification shall state the general medical condition, such as illness, disease or chronic health condition, that is the reason that the pupil is unable to attend school.  Homebound or hospitalized includes a student who is unable to attend school for a period of less than three months due to a pregnancy if a competent medical doctor, after an examination, certifies that the student is unable to attend regular classes due to risk to the pregnancy or to the student's health.

15.  "K‑3" means kindergarten programs and grades one through three.

16.  "K‑3 Reading" means reading programs for pupils in kindergarten programs and grades one, two and three.

17.  "MD‑R, A‑R and SID‑R" means resource programs for pupils with multiple disabilities, autism and severe intellectual disability.

18.  "MD‑SC, A‑SC and SID-SC" means self‑contained programs for pupils with multiple disabilities, autism and severe intellectual disability.

19.  "MD‑SSI" means a program for pupils with multiple disabilities with severe sensory impairment.

20.  "MOID" means programs for pupils with moderate intellectual disability.

21.  "OI‑R" means a resource program for pupils with orthopedic impairments.

22.  "OI‑SC" means a self‑contained program for pupils with orthopedic impairments.

23.  "PSD" means preschool programs for children with disabilities as provided in section 15‑771.

24.  "P‑SD" means programs for children who meet the definition of preschool severe delay as provided in section 15‑771.

25.  "Qualifying tax rate" means the qualifying tax rate specified in section 15‑971 applied to the assessed valuation used for primary property taxes.

26.  "Small isolated school district" means a school district that meets all of the following:

(a)  Has a student count of fewer than six hundred in kindergarten programs and grades one through eight or grades nine through twelve.

(b)  Contains no school that is fewer than thirty miles by the most reasonable route from another school, or, if road conditions and terrain make the driving slow or hazardous, fifteen miles from another school that teaches one or more of the same grades and is operated by another school district in this state.

(c)  Is designated as a small isolated school district by the superintendent of public instruction.

27.  "Small school district" means a school district that meets all of the following:

(a)  Has a student count of fewer than six hundred in kindergarten programs and grades one through eight or grades nine through twelve.

(b)  Contains at least one school that is fewer than thirty miles by the most reasonable route from another school that teaches one or more of the same grades and is operated by another school district in this state.

(c)  Is designated as a small school district by the superintendent of public instruction.

28.  "Transportation revenue control limit" means the transportation revenue control limit computed as prescribed in section 15‑946.

29.  "Transportation support level" means the support level for pupil transportation operating expenses as provided in section 15‑945.

30.  "VI" means programs for pupils with visual impairments.

31.  "Voc. Ed." means career and technical education and vocational education programs, as defined in section 15‑781. END_STATUTE

Sec. 15.  Section 15-901.05, Arizona Revised Statutes, is amended to read:

START_STATUTE15-901.05.  Application of school finance changes

To the extent permitted by the Constitution of Arizona, unless otherwise specified by law, the department shall apply any change to state law that occurs after the effective date of this section July 29, 2010 and that modifies or impacts the school finance formulas prescribed in this title, including the base support level, the base revenue control limit, the transportation support level, the transportation revenue control limit, the capital outlay revenue limit, the soft capital allocation district additional assistance, the general budget limit or the unrestricted budget limit or the soft capital allocation limit, on the effective date of that change to state law so that it applies to the entire fiscal year in which the change became effective. END_STATUTE

Sec. 16.  Section 15-903, Arizona Revised Statutes, is amended to read:

START_STATUTE15-903.  Budget format; prohibited expenditures

A.  The superintendent of public instruction in conjunction with the auditor general shall prepare and prescribe a budget format to be utilized by all school districts.

B.  The budget format shall be designed to allow all school districts to plan and provide in detail for the use of available funds.  The budget format shall contain distinct sections for, but need not be limited to, maintenance and operation, debt service, special projects, capital outlay, adjacent ways and classroom site fund.  The maintenance and operation section shall include, but need not be limited to, separate subsections for regular education programs, special education programs and operational expenditures for pupil transportation.  Each subsection shall clearly distinguish classroom instruction expenditures.  The special education program subsection shall include, but is not limited to, programs for each disability classification as defined in section 15‑761 and programs for gifted, vocational and technological technical education, remedial education and bilingual students.  The total expenditures for each of these programs shall be included on the budget form.  The pupil transportation subsection shall include all operational expenditures relating to the transportation of pupils, including all operational expenditures within a contract if the school district contracts for pupil transportation.

C.  The capital outlay section of the budget shall include separate subsections a subsection for unrestricted capital outlay and soft capital allocation.  The soft capital allocation subsection shall include budgeted expenditures as prescribed in section 15‑962.  The unrestricted capital outlay subsection shall include budgeted expenditures for acquisitions by purchase, lease‑purchase or lease of capital items as defined in the uniform system of financial records. These sections and subsections and shall include:

1.  Land, buildings and improvements to land and buildings, including labor and related employee benefits costs and material costs if work is performed by school district employees.

2.  Furniture, furnishings, athletic equipment and other equipment, including computer software.

3.  Pupil and nonpupil transportation vehicles and equipment, including all capital expenditures within a contract if the school district contracts for pupil transportation.

4.  Textbooks and related printed subject matter materials adopted by the governing board.

5.  Instructional aids.

6.  Library books.

7.  Payment of principal and interest on bonds.

8.  School district administration emergency needs that are directly related to pupils.

D.  The budget format shall contain distinct subsections for the following:

1.  Special programs to improve academic achievement of pupils in kindergarten programs and grades one through three as provided in section 15‑482.

2.  School plant funds.

3.  Capital outlay budget increases as provided in section 15‑481.

4.  Property taxation, including the following:

(a)  The primary tax rates for the school district for the current year and the budget year.

(b)  The secondary tax rates for maintenance and operation, K‑3 and capital overrides for the school district for the current year and the budget year.

(c)  The secondary tax rates for class A bonds for the school district for the current year and the budget year.

(d)  The secondary tax rates for class B bonds for the school district for the current year and the budget year.

5.  A description of any corrections or adjustments made to the budget pursuant to section 15‑915.

E.  The budget format shall also contain:

1.  A statement identifying proposed pupil‑teacher ratios and pupil‑staff ratios relating to the provision of special education services for the budget year.

2.  A statement identifying the number of full‑time equivalent certified employees.

F.  The special projects section shall include budgeted expenditures for state special projects, including special adult projects, career education, deficiencies correction fund projects, building renewal fund projects and new school facilities fund projects, such federal special projects as ESEA title programs, vocational education and title IV Indian education, and other special projects.

G.  A school district shall not make expenditures for campaign literature associated with school district or charter school officials.  If the superintendent of public instruction determines that a school district has violated this subsection, the superintendent of public instruction may withhold any portion of the school district's apportionment of state aid.

H.  The budget format shall include an electronic format that shall be submitted for each proposed, adopted and revised budget. END_STATUTE

Sec. 17.  Section 15-904, Arizona Revised Statutes, is amended to read:

START_STATUTE15-904.  School district annual financial report; publication; summary

A.  The governing board of each school district shall publish an annual financial report for the prior fiscal year by November 15.  The auditor general in conjunction with the department of education shall prescribe the format of the financial report to be used by school districts.  The financial report shall contain budgeted and actual expenditures for the preceding fiscal year and shall be prepared and distributed by October 15 by the school district with a copy to the county school superintendent.  A copy of the annual financial report shall be submitted electronically by the school district to the superintendent of public instruction by October 15.  The annual financial report shall be approved by the county school superintendent in an electronic procedure as prescribed by the department of education.  On or before October 15, the governing board shall submit the annual financial report for the previous fiscal year to the department of education, which shall prominently display this information about that school district on the website maintained by the department.  If the school district maintains a website, the school district shall post a link to the website of the department of education where this information about the school district is posted.  School districts that are subject to section 15‑914.01 are not required to send a copy to the county school superintendent.

B.  In addition to the information required in subsection A of this section, the annual financial report shall contain detailed information on the school district budgeted and actual expenditures from the bond building fund, the soft capital allocation unrestricted capital fund, the deficiencies correction fund, the building renewal fund and the new school facilities fund, including but not limited to information on classified salaries, employee benefits, interest and fiscal charges, capital lease agreements, land and improvements, buildings and improvements, furniture and equipment, technology and vehicles and transportation equipment for pupils.  The information shall specify whether the expenditures are for school district renovation or for new construction, the cost per square foot and land acquisition costs, as appropriate.

C.  Except as provided in subsection D of this section, the governing board shall publish, by November 15, the annual financial report for the school district either in a newspaper of general circulation within the school district, by electronic transmission of the information to the department of education for posting on the department's website or in the official newspaper of the county as defined prescribed in section 11‑255, or the governing board may mail the annual financial report for the school district to each household in the school district.  If the governing board chooses to transmit the report electronically to the department of education, the school district shall provide a link on the school district's website to the report on the department's website.  If the governing board chooses to publish the report in a newspaper, the size of the newspaper print shall be at least eight‑point type.  The cost of publication or mailing shall be a charge against the school district.  The publisher's affidavit of publication shall be filed by the governing board of the school district with the superintendent of public instruction within thirty days after publication.

D.  The governing board may publish or mail a summary of the annual financial report in the same manner as provided in subsection C of this section.  The auditor general in conjunction with the department of education shall prescribe the form of the summary of the annual financial report for use by the governing boards.

E.  The superintendent of public instruction shall compile the financial reports of the school districts, including expenditure data for federal and state projects, and shall report to the governor and the legislature on or before January 15 of each year as provided in section 15‑255. END_STATUTE

Sec. 18.  Section 15-905, Arizona Revised Statutes, is amended to read:

START_STATUTE15-905.  School district budgets; notice; adoption; aggregate budget limit; summary; adjustments; impact aid fund; definition

A.  Not later than July 5 of each year or no later than the publication of notice of the public hearing and board meeting as required by this section, the governing board of each school district shall prepare and furnish to the superintendent of public instruction and the county school superintendent, unless waived by the county school superintendent, a proposed budget in electronic format for the budget year, which shall contain the information and be in the form as provided by the department of education. The proposed budget shall include the following:

1.  The total amount of revenues from all sources that was necessary to meet the school district's budget for the current year.

2.  The total amount of revenues by source that will be necessary to meet the proposed budget of the school district, excluding property taxes. The governing board shall prepare the proposed budget and a summary of the proposed budget.  Both documents shall be kept on file at the school district office and shall be made available to the public upon request.  Not later than July 5 of each year or not later than the publication of notice of the public hearing and board meeting required by this subsection, the governing board shall submit the proposed budget to the department of education, which shall prominently display this information about that school district on the website maintained by the department.  If the school district maintains a website, the school district shall post a link to the website of the department of education where this information about the school district is posted.  The auditor general in conjunction with the department of education shall prescribe the form of the summary of the proposed budget for use by governing boards.  School district governing boards may include in the proposed budget any items or amounts which are authorized by legislation filed with the secretary of state and which will become effective during the budget year.  If subsequent events prevent the legislation from becoming effective, school district governing boards must reduce their budgets by the amounts budgeted pursuant to the legislation which did not become effective.

B.  The governing board of each school district shall prepare a notice fixing a time not later than July 15 and designating a public place within each school district at which a public hearing and board meeting shall be held.  The governing board shall present the proposed budget for consideration of the residents and the taxpayers of the school district at such hearing and meeting.

C.  The governing board of each school district shall publish or mail, prior to the hearing and meeting, a copy of the proposed budget or the summary of the proposed budget and, in addition, a notice of the public hearing and board meeting no later than ten days prior to the meeting.  The proposed budget and the summary of the proposed budget shall contain the percentage of increase or decrease in each budget category of the proposed budget as compared to each category of the budget for the current year. Notification shall be either by publication in a newspaper of general circulation within the school district in which the size of the newspaper print shall be at least eight‑point type, by electronic transmission of the information to the department of education for posting on the department's website or by mailing the information to each household in the school district.  The cost of publication, website posting or mailing shall be a charge against the school district.  The publisher's affidavit of publication shall be filed by the governing board with the superintendent of public instruction within thirty days after publication.  If the budget or proposed budget and notice are posted on a website maintained by the department of education or mailed, the board shall file an affidavit with the superintendent of public instruction within thirty days after the mailing or the date that the information is posted on the website.  If a truth in taxation notice and hearing is required under section 15‑905.01, the governing board may combine the notice and hearing under this section with the truth in taxation notice and hearing.

D.  At the time and place fixed in the notice, the governing board shall hold the public hearing and present the proposed budget to the persons attending the hearing.  Upon On request of any person, the governing board shall explain the budget, and any resident or taxpayer of the school district may protest the inclusion of any item.  A governing board member who has a substantial interest, as defined in section 38‑502, in a specific item in the school district budget shall refrain from voting on the specific item.  A governing board member may participate without creating a conflict of interest in adoption of a final budget even though the member may have substantial interest in specific items included in the budget.

E.  Immediately following the public hearing the president shall call to order the governing board meeting for the purpose of adopting the budget. The governing board shall adopt the budget, which shall not exceed the general budget limit or the unrestricted capital budget limit or the soft capital allocation limit, making such deductions as it sees fit but making no additions to the proposed budget total for maintenance and operations or capital outlay, and shall enter the budget as adopted in its minutes.  Not later than July 18, the budget as finally adopted shall be filed by the governing board with the county school superintendent who shall immediately transmit a copy to the board of supervisors.  Not later than July 18, the budget as finally adopted shall be submitted electronically to the superintendent of public instruction.  Not later than July 18, the governing board shall submit the budget as finally adopted to the department of education, which shall prominently display this information about that school district on the website maintained by the department.  If the school district maintains a website, the school district shall post a link to the website of the department of education where this information about the school district is posted.  On or before October 30, the superintendent of public instruction shall review the budget and notify the governing board if the budget is in excess of the general budget limit or the unrestricted capital budget limit or the soft capital allocation limit.  The governing board shall revise the budget as follows:

1.  If the governing board receives notification that the budget exceeds the general budget limit or the unrestricted capital budget limit or the soft capital allocation limit by one per cent of the general budget limit or one hundred thousand dollars, whichever is less, it shall adopt on or before December 15, after it gives notice and holds a public meeting in a similar manner as provided in subsections C and D of this section, a revised budget for the current year, which shall not exceed the general budget limit or the unrestricted capital budget limit or the soft capital allocation limit.

2.  If the governing board receives notification that the budget exceeds the general budget limit or the unrestricted capital budget limit or the soft capital allocation limit by less than the amount prescribed in paragraph 1 of this subsection, the governing board shall adjust the budget and expenditures so as not to exceed the general budget limit or the unrestricted capital budget limit or the soft capital allocation limit for the current year.

3.  On or before December 18, the governing board shall file the revised budget it adopts with the county school superintendent who shall immediately transmit a copy to the board of supervisors.  Not later than December 18, the budget as revised shall be submitted electronically to the superintendent of public instruction.  School districts that are subject to section 15‑914.01 are not required to send a copy of revised budgets to the county school superintendent.  Procedures for adjusting expenditures or revising the budget shall be as prescribed in the uniform system of financial records.

F.  The governing board of each school district may budget for expenditures within the school district budget as follows:

1.  Amounts within the general budget limit, as provided in section 15‑947, subsection C, may only be budgeted in the following sections of the budget:

(a)  The maintenance and operation section.

(b)  The capital outlay section.

2.  Amounts within the unrestricted capital budget limit, as provided in section 15‑947, subsection D, may only be budgeted in the unrestricted capital outlay subsection of the budget.  Monies received pursuant to the unrestricted capital budget limit shall be placed in the unrestricted capital outlay fund.  The monies in the fund are not subject to reversion.

3.  The soft capital allocation limit, as provided in section 15‑947, subsection E, may only be budgeted in the soft capital allocation subsection of the budget.

G.  The governing board may authorize the expenditure of monies budgeted within the maintenance and operation section of the budget for any subsection within the section in excess of amounts specified in the adopted budget only by action taken at a public meeting of the governing board and if the expenditures for all subsections of the section do not exceed the amount budgeted as provided in this section.

H.  The aggregate budget limit is the sum of the following:

1.  The general budget limit as determined in section 15‑947 for the budget year.

2.  The unrestricted capital budget limit as determined in section 15‑947 for the budget year.

3.  The soft capital allocation limit for the budget year as determined in section 15‑947.

4.  3.  Federal assistance, excluding title VIII of the elementary and secondary education act of 1965 monies.

I.  School districts which overestimated tuition revenues as provided in section 15‑947, subsection C, paragraph 2 shall adjust the general budget limit and expenditures based upon tuition revenues for attendance of nonresident pupils during the current fiscal year.  School districts which underestimated tuition revenues may adjust their budgets prior to May 15 based upon tuition revenues for attendance of nonresident pupils during the current fiscal year.  School districts which overestimated revenues as provided in section 15‑947, subsection C, paragraph 2, subdivision (a), items (iii), (iv) and (v) and subdivision (d) shall adjust the general budget limit and expenditures based on actual revenues during the current fiscal year. School districts which underestimated such revenues may adjust their budgets before May 15 based on actual revenues during the current fiscal year.  Procedures for completing adjustments shall be as prescribed in the uniform system of financial records.  Not later than May 18, the budget as adjusted shall be submitted electronically to the superintendent of public instruction.

J.  A common school district not within a high school district whose estimated tuition charge for high school pupils exceeds the actual tuition charge for high school pupils shall adjust the general budget limit and expenditures based on the actual tuition charge.  Not later than May 18, the budget as adjusted shall be submitted electronically to the superintendent of public instruction.  A common school district not within a high school district whose estimated tuition charge for high school pupils is less than the actual tuition charge for high school pupils may adjust its budget before May 15 based on the actual tuition charge.  Procedures for completing adjustments shall be as prescribed in the uniform system of financial records.  If the adjusted general budget limit requires an adjustment of state aid and if the adjustment to state aid is not made in the current year, the superintendent of public instruction shall adjust by August 15 of the succeeding fiscal year the apportionment of state aid to the school district to correct any overpayment or underpayment of state aid received during the current year.

K.  The governing board may include title VIII of the elementary and secondary education act of 1965 assistance allocated for children with disabilities, children with specific learning disabilities, children residing on Indian lands and children residing within the boundaries of an accommodation school that is located on a military reservation and that is classified as a heavily impacted local educational agency pursuant to 20 United States Code section 7703 which is in addition to basic assistance when determining the general budget limit as prescribed in section 15‑947, subsection C.  The increase in the general budget limit for children residing within the boundaries of an accommodation school that is located on a military reservation and that is classified as a heavily impacted local education agency shall equal the dollar amount calculated pursuant to 20 United States Code section 7703(b)(2).  The governing board may adjust before May 15 the budget for the current year based on any adjustments which result in increases over the amount estimated by the superintendent of public instruction for title VIII of the elementary and secondary education act of 1965 assistance for such pupils for the fiscal year preceding the current year.  The governing board shall adjust before May 15 the budget for the current year based on any adjustments which result in decreases in the amount estimated by the superintendent of public instruction for title VIII of the elementary and secondary education act of 1965 assistance for such pupils for the fiscal year preceding the current year.  Not later than May 18, the budget as adjusted shall be submitted electronically to the superintendent of public instruction.  Procedures for complying with this subsection shall be as prescribed in the uniform system of financial records.

L.  The department of education shall notify the state board of education if expenditures by any school district exceed the general budget limit prescribed in section 15‑947, subsection C, the unrestricted capital budget limit, the soft capital allocation limit prescribed in section 15‑947, subsection E, the school plant fund limits prescribed in section 15‑1102, subsection B, the maintenance and operation section of the budget or the capital outlay section of the budget.  If the expenditures of any school district exceed these limits or sections of the budget without authorization as provided in section 15‑907, and if the state board of education determines that the equalization assistance for education received by the school district as provided in section 15-971 does not conform with statutory requirements, the state board of education shall reduce the state aid for equalization assistance for education for the school district computed as provided in section 15‑971 during the fiscal year subsequent to the fiscal year in which the excess equalization assistance for education was received by an amount equal to the excess equalization assistance for education, except that in case of hardship to the school district, the superintendent of public instruction may approve reductions partly in the first subsequent year and partly in the second subsequent year.  If the state board of education determines that the equalization assistance for education received by the school district conforms with statutory requirements, the state board of education shall not reduce the district's equalization assistance for education pursuant to this subsection but the district shall reduce the budget limits as required in subsection M of this section.  A school district that disagrees with the department of education's determination regarding an excess expenditure under this subsection may request a hearing before the state board of education.

M.  The governing board of a school district shall reduce the general budget limit or the unrestricted capital budget limit or the soft capital allocation limit for the year subsequent to the year in which the expenditures were in excess of the applicable limit or section of the budget by the amount determined in subsection L of this section, except that in case of hardship to the school district, the superintendent of public instruction may approve reductions partly in the first subsequent year and partly in the second subsequent year.  The reduction in the limit is applicable to each school district which has exceeded the general budget limit, the unrestricted capital budget limit, the soft capital allocation limit or a section of the budget even if the reduction exceeds the state aid for equalization assistance for education for the school district.

N.  Except as provided in section 15‑916, no expenditure shall be made by any school district for a purpose not included in the budget or in excess of the aggregate budget limit prescribed in this section, except that if no budget has been adopted, from July 1 to July 15 the governing board may make expenditures if the total of the expenditures does not exceed ten per cent of the prior year's aggregate budget limit.  Any expenditures made from July 1 to July 15 and prior to the adoption of the budget shall be included in the total expenditures for the current year.  No expenditure shall be made and no debt, obligation or liability shall be incurred or created in any year for any purpose itemized in the budget in excess of the amount specified for the item irrespective of whether the school district at any time has received or has on hand funds in excess of those required to meet the expenditures, debts, obligations and liabilities provided for under the budget except expenditures from cash controlled funds as defined by the uniform system of financial records and except as provided in section 15‑907 and subsection G of this section.  This subsection does not prohibit any school district from prepaying insurance premiums or magazine subscriptions, or from prepaying any item which is normally prepaid in order to procure the service or to receive a discounted price for the service, as prescribed by the uniform system of financial records.

O.  The governing board of a school district which is classified as a heavily impacted school district having twenty per cent or more pupils pursuant to 20 United States Code section 238(d)1(A) may determine its eligibility to increase the amount that may be included in determining the general budget limit as provided in subsection K of this section and may increase the amount as follows:

1.  For fiscal year 1988‑1989:

(a)  Multiply one thousand ninety‑four dollars by the number of children with disabilities or children with specific learning disabilities, excluding children who also reside on Indian lands, reported to the division of impact aid, United States department of education in the district's application for fiscal year 1987‑1988.

(b)  Multiply five hundred forty‑seven dollars by the number of children residing on Indian lands, excluding children who have disabilities or also have specific learning disabilities, reported to the division of impact aid, United States department of education in the district's application for fiscal year 1987‑1988.

(c)  Multiply one thousand nine hundred fourteen dollars by the number of children residing on Indian lands who have disabilities or also have specific learning disabilities reported to the division of impact aid, United States department of education in the district's application for fiscal year 1987‑1988.

(d)  Add the amounts determined in subdivisions (a) through (c) of this paragraph.

(e)  If the amount of title VIII of the elementary and secondary education act of 1965 assistance as provided in subsection K of this section is less than the sum determined in subdivision (d) of this paragraph, the district is eligible to use the provisions of this subsection.

2.  For budget years after 1988‑1989, use the provisions of paragraph 1 of this subsection, but increase each dollar amount by the growth rate for that year as prescribed by law, subject to appropriation and use the number of children reported in the appropriate category for the current fiscal year.

3.  If the district is eligible to use the provisions of this subsection, subtract the amount of title VIII of the elementary and secondary education act of 1965 assistance determined in subsection K of this section from the sum determined in paragraph 1, subdivision (d) of this subsection.  The difference is the increase in the amount that may be included in determining the general budget limit as provided in subsection K of this section, if including this amount does not increase the district's primary tax rate for the budget year.  If the amount of title VIII of the elementary and secondary education act of 1965 assistance determined in subsection K of this section is adjusted for the current year, the increase determined in this paragraph shall be recomputed using the adjusted amount and the recomputed increase shall be reported to the department of education by May 15 on a form prescribed by the department of education.

4.  If a district uses the provisions of this subsection, the district is not required to adjust its budget for the current year based on adjustments in the estimated amount of title VIII of the elementary and secondary education act of 1965 assistance as provided in subsection K of this section.

P.  A school district, except for an accommodation school, which applies for title VIII of the elementary and secondary education act of 1965 assistance during the current year may budget an amount for title VIII of the elementary and secondary education act of 1965 administrative costs for the budget year.  The amount budgeted for title VIII of the elementary and secondary education act of 1965 administrative costs is exempt from the revenue control limit and may not exceed an amount determined for the budgeted year as follows:

1.  Determine the minimum cost.  The minimum cost for fiscal year 1990‑1991 is two thousand three hundred forty‑three dollars.  For fiscal year 1991‑1992 and thereafter, the minimum cost is the minimum cost for the prior year increased by the growth rate as prescribed by law, subject to appropriation.

2.  Determine the hourly rate.  The hourly rate for fiscal year 1990‑1991 is nine dollars thirty‑eight cents.  For fiscal year 1991‑1992 and thereafter, the hourly rate is the hourly rate for the prior year increased by the growth rate as prescribed by law, subject to appropriation.

3.  Determine the title VIII of the elementary and secondary education act of 1965 revenues available by subtracting the amount of title VIII of the elementary and secondary education act of 1965 assistance used to increase the general budget limit as provided in subsections K and O of this section for the current fiscal year from the total amount of title VIII of the elementary and secondary education act of 1965 revenues received in the current fiscal year.

4.  Determine the total number of administrative hours as follows:

(a)  Determine the sum of the following:

(i)  1.00 hours for each high impact pupil who is not disabled or does not have specific learning disabilities.

(ii)  1.25 hours for each high impact pupil who is disabled or has specific learning disabilities.

(iii)  0.25 hours for each low impact pupil who is not disabled or does not have specific learning disabilities.

(iv)  0.31 hours for each low impact pupil who is disabled or has specific learning disabilities.

(b)  For the purposes of this paragraph:

(i)  "High impact pupil" means a pupil who resides on Indian lands or a pupil who resides on federal property or in low rent housing and whose parent is employed on federal property or low rent housing property or is on active duty in uniformed service, as provided in title VIII of the elementary and secondary education act of 1965, section 8003(a) (20 United States Code section 7703) and as reported in the application for title VIII of the elementary and secondary education act of 1965 assistance in the current year.

(ii)  "Low impact pupil" means a pupil who resides on nonfederal property and has a parent who is employed on federal property or low rent housing property or is on active duty in a uniformed service or a pupil who resides on federal property or in low rent housing and who does not have a parent who is employed on federal property or low rent housing property or is on active duty in uniformed service, as provided in title VIII of the elementary and secondary education act of 1965, section 8003(a) (20 United States Code section 7703) and as reported in the application for title VIII of the elementary and secondary education act of 1965 assistance in the current year.

5.  Multiply the total number of administrative hours determined in paragraph 4 of this subsection by the hourly rate determined in paragraph 2 of this subsection.

6.  Determine the greater of the minimum cost determined in paragraph 1 of this subsection or the product determined in paragraph 5 of this subsection.

7.  Add to the amount determined in paragraph 6 of this subsection the amount, if any, to be expended by the school district in the budget year through an intergovernmental agreement with other school districts or the department of education to provide title VIII of the elementary and secondary education act of 1965 technical assistance to participating districts.

8.  Determine the lesser of the amount determined in paragraph 7 of this subsection or the revenues available as determined in paragraph 3 of this subsection.

9.  The amount determined in paragraph 8 of this subsection is the maximum amount which may be budgeted for title VIII of the elementary and secondary education act of 1965 administrative costs for the budget year as provided in this subsection.

10.  If the governing board underestimated the amount that may be budgeted for title VIII of the elementary and secondary education act of 1965, section 8007 administrative costs for the current year, the board may adjust the general budget limit and the budget before May 15.  If the governing board overestimated the amount that may be budgeted for title VIII of the elementary and secondary education act of 1965 administrative costs for the current year, the board shall adjust the general budget limit and the budget before May 15.

Q.  If a school district governing board has adopted a budget for a fiscal year based on forms and instructions provided by the auditor general and the department of education for that fiscal year and if, as a result of the enactment or nonenactment of proposed legislation after May 1 of the previous fiscal year, the budget is based on incorrect limits, does not include items authorized by law or does not otherwise conform with law, the governing board may revise its budget at a public hearing on or before September 15 to conform with the law.  Not later than September 18, the budget as adjusted shall be submitted electronically to the superintendent of public instruction.  If the governing board does not revise the budget on or before September 15 and if the budget includes any items not authorized by law or if the budget exceeds any limits, the governing board shall adjust or revise the budget as provided in subsection E of this section.

R.  Notwithstanding any other law, if a school district receives assistance pursuant to title VIII of the elementary and secondary education act of 1965, the school district shall establish a local level fund designated as the impact aid fund and deposit the impact aid monies received in the fund.  The school district shall separately account for monies in the fund and shall not combine monies in the fund with any other source of local, state or federal assistance.  Monies in the fund shall be expended pursuant to federal law only for the purposes allowed by this title.  The school district shall account for monies in the fund according to the uniform system of financial records as prescribed by the auditor general.  The superintendent of public instruction shall separately account for monies in each school district's impact aid fund, if an impact aid fund is established, in the annual report required by section 15‑255.  Monies in the fund are considered federal monies and are not subject to legislative appropriation.

S.  For the purposes of this section, "title VIII of the elementary and secondary education act of 1965 assistance" means, for the current year, an amount equal to the final determination of title VIII of the elementary and secondary education act of 1965 assistance for the fiscal year preceding the current year as confirmed by the division of impact aid, United States department of education or, if a final determination has not been made, the amount estimated by the superintendent of public instruction as confirmed by the division of impact aid, United States department of education and, for the budget year, an amount equal to the determination of title VIII of the elementary and secondary education act of 1965 assistance for the fiscal year preceding the budget year as estimated by the superintendent of public instruction. END_STATUTE

Sec. 19.  Section 15-906, Arizona Revised Statutes, is amended to read:

START_STATUTE15-906.  Procedure for payment of levy fund liabilities payable on June 30; lapsing of levy funds with balance for reduction of taxes

A.  Annually on or before June 30, each school district shall prepare for all levy funds a list of liabilities for goods received or services rendered on or before June 30 which will not be paid by June 30 of the current fiscal year.

B.  Each school district having levy fund liabilities payable on June 30 shall file an advice of encumbrance with the county school superintendent on or before July 18, in the manner and upon a form to be prescribed in the uniform system of financial records.  The county school superintendent shall encumber amounts that are included in year to date expenditures not to exceed the budget and that are available to pay the liabilities pursuant to section 15‑304.  Any cash balances remaining in the maintenance and operation, the unrestricted capital outlay, the soft capital allocation and the adjacent ways funds after encumbrances on June 30 of the current year except reverted monies as provided in section 15‑991.02 that will be budgeted in the unrestricted capital outlay fund in the following fiscal year pursuant to section 15‑947, subsection D, paragraphs 4 and 5 and that will be budgeted in the soft capital allocation fund in the following fiscal year pursuant to section 15‑947, subsection E, paragraphs 2 and 3 shall be used for reduction of school district taxes for the budget year.

C.  The county school superintendent may draw warrants against the obligated in contract amounts pursuant to subsection B of this section for a period of sixty days immediately following the close of the fiscal year.

D.  After expiration of the period of sixty days immediately following the close of each fiscal year, the remaining obligated in contract balance shall lapse and no further payments from the maintenance and operation, unrestricted capital outlay, soft capital allocation and adjacent ways funds shall be made on any claim for expenditures of the prior fiscal year.

E.  School districts that are subject to section 15‑914.01 shall adhere to the duties described in section 15‑304 for the purposes of this section. END_STATUTE

Sec. 20.  Section 15-909, Arizona Revised Statutes, is amended to read:

START_STATUTE15-909.  Financial provisions for accommodation schools; definition

A.  An accommodation school shall compute a revenue control limit, a district support level a capital outlay revenue limit and a soft capital district additional assistance allocation limit for each fiscal year of operation.

B.  For the purpose of computing a revenue control limit, a district support level a capital outlay revenue limit and a soft capital district additional assistance allocation limit, "accommodation school" means: has the same meaning prescribed in section 15‑101.

1.  A common school district within a high school district if the school does not offer instruction in grade nine, ten, eleven or twelve or has not received permission to offer instruction in high school subjects as provided in section 15‑447.

2.  A unified school district if the school offers instruction in grade nine, ten, eleven or twelve and has received permission to offer instruction in high school subjects as provided in section 15‑447.

C.  State aid shall be apportioned as provided in section 15‑973 to each county accommodation school. END_STATUTE

Sec. 21.  Section 15-910, Arizona Revised Statutes, is amended to read:

START_STATUTE15-910.  School district budgets; excess utility costs; desegregation costs; tuition costs for bond issues; costs for registering warrants; report

A.  The governing board may budget for the district's excess utility costs which are specifically exempt from the district's revenue control limit.  If approved by the qualified electors voting at a statewide general election, the exemption from the revenue control limit under this subsection expires at the end of the 2008‑2009 budget year.  The uniform system of financial records shall specify expenditure items allowable as excess utility costs, which are limited to direct operational costs of heating, cooling, water and electricity, telephone communications and sanitation fees.  The department of education and the auditor general shall include in the maintenance and operation section of the budget format, as provided in section 15‑903, a separate line for utility expenditures and a special excess utility cost category.  The special excess utility cost category shall contain budgeted expenditures for excess utility costs, determined as follows:

1.  Determine the lesser of the total budgeted or total actual utility expenditures for fiscal year 1984‑1985.

2.  Multiply the amount in paragraph 1 of this subsection by the total percentage increase or decrease in the revenue control limit and the capital outlay revenue limit for the budget year over the revenue control limit and the capital outlay revenue limit for fiscal year 1984‑1985 excluding monies available from a career ladder program or a teacher compensation program provided for in section 15‑952.

3.  The sum of the amounts in paragraphs 1 and 2 of this subsection is the amount budgeted in the utility expenditure line.

4.  Additional expenditures for utilities are budgeted in the excess utility cost category.

B.  The governing board shall apply the same percentage increase or decrease allowed in the revenue control limit and the capital outlay revenue limit as provided in section 15‑905, subsection E or section 15‑948 to the utility expenditure line of the budget.

C.  The governing board may expend from the excess utility cost category only after it has expended for utility purposes the full amount budgeted in the utility expenditure line of the budget.

D.  The governing board, after notice is given and a public meeting is held as provided in section 15‑905, subsection D, may revise at any time before May 15 the amount budgeted in the excess utility cost category for the current year.  Not later than May 18, the budget as revised shall be submitted electronically to the superintendent of public instruction.

E.  If the revised excess utility cost category results in an expenditure of monies in excess of school district revenues for the current year, the county school superintendent shall include within the revenue estimate for the budget year monies necessary to meet the liabilities incurred by the school district in the current year in excess of revenues received for the current year.

F.  If a school district receives a refund of utility expenditures or a rebate on energy saving devices or services, the refund or rebate shall be applied against utility expenditures for the current year as a reduction of the expenditures, except that the reduction of expenditures shall not exceed the amount of actual utility expenditures.

G.  The governing board may budget for expenses of complying with or continuing to implement activities which were required or permitted by a court order of desegregation or administrative agreement with the United States department of education office for civil rights directed toward remediating alleged or proven racial discrimination which are specifically exempt in whole or in part from the revenue control limit and the capital outlay revenue limit district additional assistance.  This exemption applies only to expenses incurred for activities which are begun before the termination of the court order or administrative agreement.  If a district is levying a primary property tax on February 23, 2006 and using those monies to administer an English language learner program to remedy alleged or proven discrimination under title VI of the civil rights act of 1964 (42 United States Code section 2000d), the district may spend those monies to remedy a violation of the equal education act of 1974 (20 United States Code section 1703(f)).  Nothing in this subsection allows a school district to levy a primary property tax for violations of the equal education act of 1974 (20 United States Code section 1703(f)) in the absence of an alleged or proven discrimination under title VI of the civil rights act of 1964 (42 United States Code section 2000d).

H.  If a governing board chooses to budget monies outside of the revenue control limit as provided in subsection G of this section, the governing board may do one of the following:

1.  Use monies from the maintenance and operation fund equal to any excess desegregation or compliance expenses beyond the revenue control limit before June 30 of the current year.

2.  Notify the county school superintendent to include the cost of the excess expenses in the county school superintendent's estimate of the additional amount needed for the school district from the primary property tax as provided in section 15‑991.

3.  Employ the provisions of both paragraphs 1 and 2 of this subsection, provided that the total amount transferred and included in the amount needed from property taxes does not exceed the total amount budgeted as prescribed in subsection J, paragraph 1 of this section.

I.  Through fiscal year 2003‑2004, the maximum amount which a governing board may budget outside of the capital outlay revenue limit as provided in subsection G of this section is twelve per cent of the maintenance and operation desegregation budget as provided in subsection J of this section or the amount that it budgeted pursuant to this subsection for fiscal year 2001‑2002, whichever is less.  If a governing board chooses to budget monies outside of the capital outlay revenue limit district additional assistance as provided in subsection G of this section, the governing board may notify the county school superintendent to include the cost of the excess expenses in the county school superintendent's estimate of the additional amount needed for the school district from the primary property tax as provided in section 15‑991.

J.  A governing board using subsections G, H and I of this section:

1.  Shall prepare and employ a separate maintenance and operation desegregation budget and capital outlay desegregation budget on a form prescribed by the superintendent of public instruction in conjunction with the auditor general.  The budget format shall be designed to allow a school district to plan and provide in detail for expenditures to be incurred solely as a result of compliance with or continuing to implement activities which were required or permitted by a court order of desegregation or administrative agreement with the United States department of education office for civil rights directed toward remediating alleged or proven racial discrimination.

2.  Shall prepare as a part of the annual financial report a detailed report of expenditures incurred solely as a result of compliance with or continuing to implement activities which were required or permitted by a court order of desegregation or administrative agreement with the United States department of education office for civil rights directed toward remediating alleged or proven racial discrimination, in a format prescribed by the auditor general in conjunction with the Arizona department of education as provided by section 15‑904.

3.  On or before July 15, 2006 and each year thereafter, shall collect and report data regarding activities related to a court order of desegregation or an administrative agreement with the United States department of education office for civil rights directed toward remediating alleged or proven racial discrimination in a format prescribed by the Arizona department of education.  The department shall compile and submit copies of the reports to the governor, the president of the senate, the speaker of the house of representatives and the chairpersons of the education committees of the senate and the house of representatives.  A school district that becomes subject to a new court order of desegregation or a party to an administrative agreement with the United States department of education office for civil rights directed toward remediating alleged or proven racial discrimination shall submit these reports on or before July 15 or within ninety days of the date of the court order or administrative agreement, whichever occurs first. The Arizona department of education, in consultation with the auditor general, shall develop reporting requirements to ensure that school districts submit at least the following information and documentation to the Arizona department of education beginning in fiscal year 2006‑2007:

(a)  A district-wide budget summary and a budget summary on a school by school basis for each school in the school district that lists the sources and uses of monies that are designated for desegregation purposes.

(b)  A detailed list of desegregation activities on a district-wide basis and on a school by school basis for each school in the school district.

(c)  The date that the school district was determined to be out of compliance with title VI of the civil rights act of 1964 (42 United States Code section 2000d) and the basis for that determination.

(d)  The initial date that the school district began to levy property taxes to provide funding for desegregation expenses and any dates that these property tax levies were increased.

(e)  If applicable, a current and accurate description of all magnet type programs that are in operation pursuant to the court order during the current school year on a district-wide basis and on a school by school basis. This information shall contain the eligibility and attendance criteria of each magnet type program, the capacity of each magnet type program, the ethnic composition goals of each magnet type program, the actual attending ethnic composition of each magnet type program and the specific activities offered in each magnet type program.

(f)  The number of pupils who participate in desegregation activities on a district-wide basis and on a school by school basis for each school in the school district.

(g)  A detailed summary of the academic achievement of pupils on a district-wide basis and on a school by school basis for each school in the school district.

(h)  The number of employees, including teachers and administrative personnel, on a district-wide basis and on a school by school basis for each school in the school district that is necessary to conduct desegregation activities.

(i)  The number of employees, including teachers and administrative personnel, on a district-wide basis and on a school by school basis for each school in the school district and the number of employees at school district administrative offices that are funded in whole or in part with desegregation monies received pursuant to this section.

(j)  The amount of monies that is not derived through a primary or secondary property tax levy and that is budgeted and spent on desegregation activities on a district-wide basis and on a school by school basis for each school in the school district.

(k)  Verification that the desegregation funding will supplement and not supplant funding for other academic and extracurricular activities.

(l)  Verification that the desegregation funding is educationally justifiable.

(m)  Any documentation that supports the proposition that the requested desegregation funding is intended to result in equal education opportunities for all pupils in the school district.

(n)  Verification that the desegregation funding will be used to promote systemic and organizational changes within the school district.

(o)  Verification that the desegregation funding will be used in accordance with the academic standards adopted by the state board of education pursuant to sections 15‑701 and 15‑701.01.

(p)  Verification that the desegregation funding will be used to accomplish specific actions to remediate proven discrimination pursuant to title VI of the civil rights act of 1964 (42 United States Code section 2000d) as specified in the court order or administrative agreement.

(q)  An evaluation by the school district of the effectiveness of the school district's desegregation measures.

(r)  An estimate of when the school district will be in compliance with the court order or administrative agreement and a detailed account of the steps that the school district will take to achieve compliance.

(s)  Any other information that the department of education deems necessary to carry out the purposes of this paragraph.

K.  If a school district governing board budgets for expenses of complying with a court order of desegregation or an administrative agreement with the United States department of education office for civil rights directed toward remediating alleged or proven racial discrimination, the governing board shall ensure that the desegregation expenses will:

1.  Be educationally justifiable.

2.  Result in equal education opportunities for all pupils in the school district.

3.  Be used to promote systemic and organizational changes within the school district.

4.  Be used in accordance with the academic standards adopted by the state board of education pursuant to sections 15‑701 and 15‑701.01.

5.  Be used to accomplish specific actions to remediate proven discrimination pursuant to title VI of the civil rights act of 1964 (42 United States Code section 2000d) as specified in the court order or administrative agreement.

6.  Be used in accordance with a plan submitted to the department of education that includes an estimate of the amount of monies that will be required to bring the school district into compliance with the court order or administrative agreement and an estimate of when the school district will be in compliance with the court order or administrative agreement.

7.  Beginning in fiscal year 2009‑2010 and continuing each fiscal year thereafter, not exceed the amount budgeted by the school district for desegregation expenses in fiscal year 2008‑2009.

L.  The governing board may budget for the bond issues portion of the cost of tuition charged the district as provided in section 15‑824 for the pupils attending school in another school district, except that if the district is a common school district not within a high school district, the district may only include that part of tuition which is excluded from the revenue control limit and district support level as provided in section 15‑951.  The bond issues portion of the cost of tuition charged is specifically exempt from the revenue control limit of the school district of residence, and the primary property tax rate set to fund this amount shall not be included in the computation of additional state aid for education as provided in section 15‑972, except as provided in section 15‑972, subsection E.  The department of education and the auditor general shall include in the maintenance and operation section of the budget format, as provided in section 15‑903, a separate category for the bond issues portion of the cost of tuition.

M.  The governing board may budget for interest expenses it incurred for registering warrants drawn against a fund of the school district or net interest expense on tax anticipation notes as prescribed in section 35‑465.05, subsection C for the fiscal year preceding the current year if the county treasurer pooled all school district monies for investment as provided in section 15‑996 for the fiscal year preceding the current year and, in those school districts that receive state aid, the school districts applied for an apportionment of state aid before the date set for the apportionment as provided in section 15‑973 for the fiscal year preceding the current year. The governing board may budget an amount for interest expenses for registering warrants or issuing tax anticipation notes equal to or less than the amount of the warrant interest expense or net interest expense on tax anticipation notes as prescribed in section 35‑465.05, subsection C for the fiscal year preceding the current year as provided in this subsection which is specifically exempt from the revenue control limit.  For the purposes of this subsection, "state aid" means state aid as determined in sections 15‑971 and 15‑972. END_STATUTE

Sec. 22.  Title 15, chapter 9, article 1, Arizona Revised Statutes, is amended by adding section 15-917, to read:

START_STATUTE15-917.  Performance incentive fund; eligibility; use of monies

A.  The performance incentive fund is established consisting of legislative appropriations for school district and charter holder performance funding.  The department of education shall administer the fund.  Monies in the fund are exempt from the provisions of section 35-190 relating to lapsing of appropriations.  Beginning in fiscal year 2014-2015, the department of education shall distribute monies in the fund to school districts and charter holders based on achievement and improvement on the assigned achievement profile pursuant to section 15-241.

B.  The performance funding amount shall be budgeted in the separate subsections of the maintenance and operations and capital outlay sections of the budget using forms prescribed by the auditor general in conjunction with the department of education.  The unexpended budget balance in the performance funding subsections of the budget may be carried forward to the following fiscal years and shall not be included in the allowable budget balance carryforward calculated pursuant to section 15-943.01.

C.  A school district or charter holder is eligible for monies from the performance incentive fund only if the school district or charter holder was assigned an achievement profile pursuant to section 15-241, subsection H, as developed in accordance with the requirements established in section 15‑241, subsection G.  School districts or charter holders that are assigned a parallel achievement profile pursuant to section 15-241, subsection J are not eligible for monies from the performance incentive fund.

Sec. 23.  Section 15-945, Arizona Revised Statutes, is amended to read:

START_STATUTE15-945.  Transportation support level

A.  The support level for to and from school for each school district for the current year shall be computed as follows:

1.  Determine the approved daily route mileage of the school district for the fiscal year prior to the current year.

2.  Multiply the figure obtained in paragraph 1 of this subsection by one hundred eighty, or for a school district that elects to provide two hundred days of instruction pursuant to section 15‑902.04, multiply the figure obtained in paragraph 1 of this subsection by two hundred.

3.  Determine the number of eligible students transported in the fiscal year prior to the current year.

4.  Divide the amount determined in paragraph 1 of this subsection by the amount determined in paragraph 3 of this subsection to determine the approved daily route mileage per eligible student transported.

5.  Determine the classification in column 1 of this paragraph for the quotient determined in paragraph 4 of this subsection.  Multiply the product obtained in paragraph 2 of this subsection by the corresponding state support level for each route mile as provided in column 2 of this paragraph.

      Column 1                                  Column 2

Approved Daily Route                      State Support Level per

Mileage per Eligible                           Route Mile for

Student Transported                       Fiscal Year 2012‑2013 2013‑2014

0.5 or less                                       2.42 2.46

More than 0.5 through 1.0                         1.97 2.01

More than 1.0                                     2.42 2.46

6.  Add the amount spent during the prior fiscal year for bus tokens and bus passes for students who qualify as eligible students as defined in section 15‑901.

B.  The support level for academic education, career and technical education, vocational education and athletic trips for each school district for the current year is computed as follows:

1.  Determine the classification in column 1 of paragraph 2 of this subsection for the quotient determined in subsection A, paragraph 4 of this section.

2.  Multiply the product obtained in subsection A, paragraph 5 of this section by the corresponding state support level for academic education, career and technical education, vocational education and athletic trips as provided in column 2, 3 or 4 of this paragraph, whichever is appropriate for the type of district.

Column 1                       Column 2         Column 3         Column 4

Approved Daily Route

Mileage per Eligible        District Type   District Type    District Type

Student Transported            02 or 03            04               05     

0.5 or less                       0.15            0.10             0.25

More than 0.5 through 1.0         0.15            0.10             0.25 

More than 1.0                     0.18            0.12             0.30 

For the purposes of this paragraph, "district type 02" means a unified school district or an accommodation school that offers instruction in grades nine through twelve, "district type 03" means a common school district not within a high school district, "district type 04" means a common school district within a high school district or an accommodation school that does not offer instruction in grades nine through twelve and "district type 05" means a high school district.

C.  The support level for extended school year services for pupils with disabilities is computed as follows:

1.  Determine the sum of the following:

(a)  The total number of miles driven by all buses of a school district while transporting eligible pupils with disabilities on scheduled routes from their residence to the school of attendance and from the school of attendance to their residence on routes for extended school year services in accordance with section 15‑881.

(b)  The total number of miles driven on routes approved by the superintendent of public instruction for which a private party, a political subdivision or a common or a contract carrier is reimbursed for bringing an eligible pupil with a disability from the place of the pupil's residence to a school transportation pickup point or to the school facility of attendance and from the school transportation scheduled return point or from the school facility to the pupil's residence for extended school year services in accordance with section 15‑881.

2.  Multiply the sum determined in paragraph 1 of this subsection by the state support level for the district determined as provided in subsection A, paragraph 5 of this section.

D.  The transportation support level for each school district for the current year is the sum of the support level for to and from school as determined in subsection A of this section, the support level for academic education, career and technical education, vocational education and athletic trips as determined in subsection B of this section and the support level for extended school year services for pupils with disabilities as determined in subsection C of this section.

E.  The state support level for each approved route mile, as provided in subsection A, paragraph 5 of this section, shall be adjusted by the growth rate prescribed by law, subject to appropriation. END_STATUTE

Sec. 24.  Section 15-947, Arizona Revised Statutes, is amended to read:

START_STATUTE15-947.  Revenue control limit; district support level; general budget limit; unrestricted total capital budget limit; district additional assistance limit

A.  The revenue control limit for a school district is equal to the sum of the base revenue control limit determined in section 15‑944 and the transportation revenue control limit determined in section 15‑946.

B.  The district support level for a school district is equal to the sum of the base support level determined in section 15‑943 and the transportation support level determined in section 15‑945.

C.  The general budget limit for each school district, for each fiscal year, is the sum of the following:

1.  The maintenance and operations portion of the revenue control limit for the budget year.

2.  The maintenance and operation portion of the following amounts:

(a)  Amounts that are fully funded by revenues other than a levy of taxes upon the taxable property within the school district, as listed below:

(i)  Amounts budgeted as the budget balance carryforward as provided in section 15‑943.01.

(ii)  Tuition revenues for attendance of nonresident pupils.

(iii)  State assistance as provided in section 15‑976.

(iv)  Special education revenues as provided in section 15‑825, subsection D and section 15‑1204.

(v)  Title VIII of the elementary and secondary education act of 1965 assistance determined for children with disabilities, children with specific learning disabilities, children residing on Indian lands and children residing within the boundaries of an accommodation school that is located on a military reservation and that is classified as a heavily impacted local educational agency pursuant to 20 United States Code section 7703 as provided in section 15‑905, subsections K and O.

(vi)  Title VIII of the elementary and secondary education act of 1965 administrative costs as provided in section 15‑905, subsection P.

(vii)  State assistance for excess tuition as provided in section 15‑825.01.

(viii)  Amounts received from the state board of education pursuant to section 15‑973.01.

(ix)  Transportation revenues for attendance of nonresident pupils.

(b)  Amounts approved pursuant to an override election as provided in section 15‑481 for the applicable fiscal year.

(c)  Expenditures for excess utility costs as provided in section 15‑910.

(d)  Amounts authorized by the county school superintendent pursuant to section 15‑974, subsection B.

(e)  Expenditures for complying with a court order of desegregation as provided in section 15‑910.

(f)  Expenditures for the bond issues portion of the cost of tuition as provided in section 15‑910.

(g)  Interest on registered warrants or tax anticipation notes as provided in section 15‑910.

(h)  Amounts budgeted for a jointly owned and operated career and technical education and vocational education center as provided in section 15‑910.01.

3.  The maintenance and operations portion of the capital outlay revenue limit district additional assistance for the budget year.

4.  Any other budget item that is budgeted in the maintenance and operation section of the budget and that is specifically exempt from the revenue control limit or the capital outlay revenue limit district additional assistance.

D.  The unrestricted capital budget limit, for each school district for each fiscal year, is the sum of the following:

1.  The federal impact adjustment as determined in section 15‑964 for the budget year.

2.  Any other budget item that is budgeted in the capital outlay section of the budget and that is specifically exempt from the capital outlay revenue limit district additional assistance.

3.  The unrestricted capital portion of the amounts contained in subsection C of this section.

4.  The unexpended budget balance in the unrestricted capital outlay fund from the previous fiscal year.

5.  The net interest earned in the unrestricted capital outlay fund the previous fiscal year.

6.  The budgeted amount as approved and determined pursuant to section 15‑962, subsection F.

E.  The soft capital allocation limit for each school district for each fiscal year is the sum of the following:

1.  The soft capital allocation for the budget year.

2.  The unexpended budget balance in the soft capital allocation fund from the previous fiscal year.

3.  The net interest earned in the soft capital allocation fund the previous fiscal year. END_STATUTE

Sec. 25.  Section 15-947.01, Arizona Revised Statutes, is amended to read:

START_STATUTE15-947.01.  Revenue control limit; general budget limit; total capital budget limit for joint technical education districts

A.  The revenue control limit for a joint technical education district is equal to the base support level determined in section 15‑943.02.

B.  The general budget limit for each joint technical education district, for each fiscal year, is the sum of the following:

1.  The revenue control limit for the budget year.

2.  The capital outlay revenue limit District additional assistance for the budget year.

3.  Tuition revenues for attendance of nonresident pupils.

4.  Title VIII of the elementary and secondary education act of 1965 assistance determined for children with disabilities, children with specific learning disabilities and children residing on Indian lands as provided in section 15‑905, subsections K and O.

5.  Expenditures for excess utility costs as provided in section 15‑910.

C.  The unrestricted capital budget limit for each joint technical education district for the budget year is as provided in section 15‑947, subsection D.

D.  The soft capital allocation limit for each joint technical education district for the budget year is as provided in section 15‑947, subsection E. END_STATUTE

Sec. 26.  Section 15-951, Arizona Revised Statutes, is amended to read:

START_STATUTE15-951.  District additional assistance, district support level and student count for a common school district not within a high school district

A.  Notwithstanding section 15‑947, the revenue control limit for a common school district not within a high school district is the sum of the following:

1.  The base revenue control limit computed as prescribed in section 15‑944 but excluding pupils admitted to another school district as provided in section 15‑824, subsection A, paragraph 2.

2.  The tuition payable for high school pupils who attend school in another school district as provided in section 15‑824, subsection A, paragraph 2, including any transportation charge, except as provided in subsection F of this section.

3.  The transportation revenue control limit for all pupils who reside in the district except those high school pupils transported by another district.

B.  Notwithstanding subsection A of this section, for the purposes of sections 15‑481, 15‑482 and 15‑1102, the revenue control limit for a common school district not within a high school district is the sum of the following:

1.  The base revenue control limit for pupils computed as prescribed in section 15‑944 but excluding pupils admitted to another school district as provided in section 15‑824, subsection A, paragraph 2.

2.  The transportation revenue control limit for all pupils who reside in the district except those high school pupils transported by another district.

C.  Notwithstanding section 15‑961, the capital outlay revenue limit district additional assistance for a common school district not within a high school district is the capital outlay revenue limit computed district additional assistance as prescribed in section 15‑961 but excluding pupils who are admitted to another school district as provided in section 15‑824, subsection A, paragraph 2, except that if the school district transports high school pupils, the district additional assistance amount prescribed in section 15‑961 shall be increased by an amount equal to fifty per cent of the district additional assistance per pupil amount prescribed for the school district pursuant to section 15‑961 multiplied by the number of high school pupils transported.

D.  Notwithstanding section 15‑962, the soft capital allocation for a common school district not within a high school district is the soft capital allocation computed as prescribed in section 15‑962 but excluding pupils who are both admitted to another school district as provided in section 15‑824, subsection A, paragraph 2 and not transported by the common school district.

E.  D.  Notwithstanding section 15‑947, the district support level for a common school district not within a high school district is the sum of the following:

1.  The base support level computed as prescribed in section 15‑943 but excluding pupils who are admitted to another school district as provided in section 15‑824, subsection A, paragraph 2.

2.  The tuition payable for high school pupils who are admitted to another school district as provided in section 15‑824, subsection A, paragraph 2, including any transportation charge, except as provided in subsection F of this section.

3.  The transportation support level for all pupils who reside in the school district except those high school pupils transported by another school district.

F.  E.  For the purpose of determining eligibility to increase the revenue control limit and district support level or recompute the revenue control limit as provided in section 15‑948, the student count for a common school district not within a high school district is the student count for pupils in kindergarten programs and grades one through twelve, including pupils enrolled in another school district as provided in section 15‑824, subsection A, paragraph 2.

G.  F.  The tuition amount in subsections A and D of this section shall not include amounts per student count for bond issues as prescribed by section 15‑824, subsection G, paragraph 1, subdivision (c) in excess of the following:

1.  One hundred fifty dollars if the pupil's school district of residence pays tuition for seven hundred fifty or fewer pupils to other school districts.

2.  Two hundred dollars if the pupil's school district of residence pays tuition for one thousand or fewer, but more than seven hundred fifty pupils to other school districts.

3.  The actual cost per student count if the pupil's school district of residence pays tuition for more than one thousand pupils to other school districts. END_STATUTE

Sec. 27.  Section 15-961, Arizona Revised Statutes, is amended to read:

START_STATUTE15-961.  District additional assistance; growth rate

A.  A capital outlay revenue limit District additional assistance per student count is established for fiscal year 2009‑2010 as follows:

1.  For school districts with a student count of less than one hundred for kindergarten programs and grades one through eight, two hundred seventy‑two dollars seventy-five cents five hundred forty‑four dollars fifty‑eight cents.  For school districts with a student count of one hundred or more and less than six hundred for kindergarten programs and grades one through eight, multiply one hundred ninety‑four dollars ninety‑five cents three hundred eighty‑nine dollars twenty‑five cents by the weight which that corresponds to the student count for kindergarten programs and grades one through eight for the school district as provided in section 15‑943, paragraph 1, subdivision (a), column 3.  For a school district with a student count of six hundred or more in kindergarten programs and grades one through eight, the limit is two hundred twenty‑five dollars seventy‑six cents four hundred fifty dollars seventy‑six cents.

2.  For school districts with a student count of less than one hundred for grades nine through twelve, three hundred twenty-nine dollars forty‑one cents six hundred one dollars twenty‑four cents.  For school districts with a student count of one hundred or more and less than six hundred for grades nine through twelve, multiply two hundred eleven dollars twenty‑nine cents four hundred five dollars fifty‑nine cents by the weight which that corresponds to the student count for grades nine through twelve for the school district as provided in section 15‑943, paragraph 1, subdivision (b), column 3.  For a school district with a student count of six hundred or more in grades nine through twelve, the limit is two hundred sixty‑seven dollars ninety‑four cents four hundred ninety-two dollars ninety‑four cents.

3.  For programs for preschool children with disabilities, two hundred twenty‑five dollars seventy‑six cents four hundred fifty dollars seventy‑six cents.

B.  For fiscal year 2009‑2010 and each year thereafter, the capital outlay revenue limit prescribed in subsection A of this section shall be adjusted by the growth rate prescribed by law, subject to appropriation.

C.  B.  For fiscal year 1985‑1986 and each year thereafter, the capital outlay revenue limit district additional assistance for a school district shall be computed as follows:

1.  Select the applicable capital outlay revenue limit or limits district additional assistance per student count for the school district.

2.  Multiply the amount or amounts selected in paragraph 1 of this subsection by the appropriate student count of the school district.  The student count of the school district shall not include any pupils in a charter school sponsored by the district pursuant to section 15‑185, subsection A, paragraph 3.

3.  If a school district's student count used for the budget year is greater than one hundred five per cent of the student count used for the current year's budget, increase the adjusted capital outlay revenue limit district additional assistance determined in paragraph 2 of this subsection by fifty per cent of the actual percentage increase in the school district's student count.

D.  C.  For fiscal year 2009‑2010 and each year thereafter, An amount for the purchase of required textbooks and related printed subject matter materials shall be used to increase the capital outlay revenue limit district additional assistance for a school district as determined in subsection B, paragraph 2 or 3 of this section, whichever is applicable.  For fiscal year 2009‑2010, multiply This amount shall equal the student count in grades nine through twelve multiplied by sixty‑nine dollars sixty‑eight cents. END_STATUTE

Sec. 28.  Repeal

Section 15-962, Arizona Revised Statutes, is repealed.

Sec. 29.  Section 15-962.01, Arizona Revised Statutes, is amended to read:

START_STATUTE15-962.01.  Additional district assistance allocation for joint technical education districts

A.  The capital outlay revenue limit district additional assistance for a joint technical education district shall be the amount for students in grades nine through twelve for districts with a student count of six hundred or more as prescribed in section 15‑961.

B.  The soft capital allocation for a joint technical education district shall be the amount for students in grades nine through twelve for districts with a student count of six hundred or more as prescribed in section 15‑962.

C.  Joint technical education districts shall establish a district soft capital allocation fund and shall use the monies only for the purposes prescribed in section 15‑962, subsection D.  The ending unexpended budget balance in the district's soft capital allocation fund may be used in following fiscal years for short‑term capital items.  Districts shall provide to the superintendent of public instruction an itemized accounting on forms provided by the department of education that details the expenditures of soft capital allocation monies at each school in the joint technical education district.  The superintendent of public instruction shall forward a copy of the report to the school facilities board established by section 15‑2001. END_STATUTE

Sec. 30.  Section 15-963, Arizona Revised Statutes, is amended to read:

START_STATUTE15-963.  Capital transportation adjustment for small school districts

A.  A school district may apply to the state board of education for  a capital transportation adjustment for the purchase of a transportation vehicle if the district meets all of the following requirements:

1.  Has a student count of fewer than six hundred in kindergarten programs and grades one through twelve.

2.  Transports as eligible students at least one‑third of the total student count of the school district.

3.  Has an approved daily route mileage per eligible student transported of more than 1.0, computed as prescribed in section 15‑945, subsection A, paragraph 4.

B.  If a school district receives a capital transportation adjustment as provided in this section, the soft capital allocation limit district additional assistance for that district shall be equal to the capital levy revenue limit or the soft capital allocation limit district additional assistance determined as prescribed in section 15‑962 15‑961 plus any additional amount approved by the state board of education.

C.  The state board of education may grant a capital transportation adjustment to a school district which meets the qualifications prescribed in subsection A of this section, except that the total amount of all additional amounts approved as capital transportation adjustments for all school districts for a fiscal year shall not exceed twenty per cent of the total amount which a county may budget for that fiscal year in all small district service program funds as provided in section 15‑365, subsection F. END_STATUTE

Sec. 31.  Section 15-964, Arizona Revised Statutes, is amended to read:

START_STATUTE15-964.  Federal impact adjustment

A.  The governing board of a school district may compute a federal impact adjustment to the unrestricted capital budget limit.  The maximum amount of the federal impact adjustment is the sum of the following:

1.  Twenty‑five per cent of the monies received from forest reserve funds by the school district in the prior fiscal year as provided in section 41‑736.

2.  For a school district that is not an accommodation school, the lesser of:

(a)  Twenty‑five per cent of the title VIII of the elementary and secondary education act of 1965 revenues received in the prior fiscal year.

(b)  The total amount of title VIII of the elementary and secondary education act of 1965 revenues received in the prior fiscal year minus the sum of the following:

(i)  The amount of title VIII of the elementary and secondary education act of 1965 assistance used to increase the general budget limit as provided in section 15‑905, subsections K and O for the prior fiscal year.

(ii)  The amount budgeted for title VIII of the elementary and secondary education act of 1965 administrative costs as provided in section 15‑905, subsection P for the current year.

(iii)  The amount budgeted for principal and interest on impact aid revenue bonds pursuant to section 15‑2104 for the current year.

B.  The federal impact adjustment shall only be budgeted and expended for new construction, major renovation of buildings or soft capital expenditures that may be budgeted in the unrestricted capital fund.

C.  The governing board may not compute a federal impact adjustment for any year in which it budgets as provided in section 15‑962, subsection F.

D.  C.  If the governing board underestimated the amount of the federal impact adjustment for the current year, the board may adjust the unrestricted capital budget limit and the budget before May 15.  If the board overestimated the amount of the federal impact adjustment for the current year, the board shall adjust the unrestricted capital budget limit and the budget before May 15.  Not later than May 18, the budget as revised shall be submitted electronically to the superintendent of public instruction. END_STATUTE

Sec. 32.  Section 15-971, Arizona Revised Statutes, is amended to read:

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

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

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

2.  The capital outlay revenue limit District additional assistance of a school district as determined in section 15‑951 or 15‑961.

3.  The soft capital allocation of a school district as determined in section 15‑951 or 15‑962.

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

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

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

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

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

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

(b)  For the purposes of the amounts determined in subsection A, paragraphs paragraph 2 and 3 of this section, determine separately the amount of the capital outlay revenue limit and the amount of the soft capital allocation district additional assistance attributable to the student count in preschool programs for children with disabilities, kindergarten programs and grades one through eight and grades nine through twelve.

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

3.  The amount that would be produced by levying a qualifying tax rate in a joint technical education district, which shall be five cents per one hundred dollars assessed valuation unless the legislature sets a lower rate by law.

C.  County aid for equalization assistance for education shall be computed as follows:

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

2.  Determine the total amount of state equalization assistance collected for all school districts in the county as provided in section 15‑994.

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

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

5.  The amount determined in paragraph 4 of this subsection shall be the county aid for equalization assistance for education for a school district.

D.  State aid for equalization assistance for education for a school district shall be computed as follows:

1.  Determine the equalization assistance for education for a school district as provided in subsections A and B of this section.

2.  For each county, determine the levy that would be produced by the state equalization assistance property tax rate prescribed in section 15‑994, subsection A.

3.  Prorate the amount determined in paragraph 2 of this subsection to each school district in the county as prescribed by subsection C of this section.

4.  Subtract the amount determined in paragraph 3 of this subsection from the amount determined in paragraph 1 of this subsection.

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

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

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

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

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

Sec. 33.  Section 15-974, Arizona Revised Statutes, is amended to read:

START_STATUTE15-974.  Equalization assistance for education for accommodation schools

A.  Equalization assistance for education for accommodation schools shall be paid from appropriations for that purpose to the school districts as provided in section 15‑973.

B.  When an accommodation school has a positive total cash balance at the end of a fiscal year in its maintenance and operation fund, the county school superintendent of the county in which the accommodation school is located may authorize an addition to the accommodation school's revenue control limit as provided in section 15‑947, subsection A for the following fiscal year.  The county school superintendent may not authorize an addition that exceeds the lesser of the ending cash balance less the amount budgeted for the budget balance carryforward as provided in section 15‑943.01 or ten per cent of the revenue control limit of the accommodation school and five per cent of the revenue control limit pursuant to section 15‑482, without the necessity of an election pursuant to section 15‑481.  If an accommodation school has a cash balance in excess of the amount needed to fund the budget balance carryforward, the addition authorized pursuant to this subsection and the items listed in section 15‑947, subsection C, paragraph 2, subdivisions (c) and (f) for the following fiscal year, the remaining cash balance may be used for capital expenditures pursuant to section 15‑962, subsection F.

C.  Subsection B of this section shall not apply to an accommodation school with a student count of one hundred twenty‑five or less in kindergarten programs and grades one through eight or to an accommodation school which offers instruction in grades nine, ten, eleven or twelve and which has a student count of one hundred or less in grades nine through twelve. END_STATUTE

Sec. 34.  Section 15-996, Arizona Revised Statutes, is amended to read:

START_STATUTE15-996.  Duties of county treasurer relating to school district's monies

The county treasurer shall:

1.  Receive and hold all school district monies and keep a separate account for each school district and for the special county school reserve fund.  The county treasurer may maintain separate accounts for each fund of a school district or the county treasurer may maintain only two accounts for each school district's monies in addition to the funds provided for in sections 15‑1024, 15‑1025, 15‑2021, 15‑2031 and 15‑2041.  If only two accounts are maintained, the first account shall consist of maintenance and operation, unrestricted capital outlay, soft capital allocation and adjacent ways monies and the classroom site fund prescribed in section 15‑977 and the second account shall consist of federal and state grant monies and all other monies.

2.  Pool school district monies for investment except as provided in sections 15‑1024 and 15‑1025.  Interest earned on the monies pooled for investment shall be apportioned at least quarterly to the appropriate school district based on an average monthly balance as prescribed in the uniform system of accounting for county treasurers as provided in section 41‑1279.21.

3.  Notwithstanding section 11‑605, register warrants only as follows:

(a)  If separate accounts are maintained for each fund, warrants may only be registered on the maintenance and operation, unrestricted capital outlay, soft capital allocation and adjacent ways accounts and the classroom site fund prescribed in section 15‑977 and only if the total cash balance of all three accounts is insufficient to pay the warrants, except that, during the period of time when a school district is under receivership pursuant to section 15-103, a warrant may be registered on the debt service account for which the cash balance in the debt service account is insufficient to cover the debt service payment if there are not sufficient monies in the debt service account to cover the debt.

(b)  If the county treasurer maintains only two accounts as provided in paragraph 1 of this section:

(i)  The county treasurer may register warrants only on the first account and only if the balance of that account is insufficient to pay the warrants.

(ii)  The county treasurer may honor warrants for any federal or state grant fund with a negative balance as long as the total balance in the second account is positive.  If the second account total balance is negative, the warrant for a federal or state grant fund shall be charged to the maintenance and operation fund.  Any interest charged to the federal or state grant fund as a result of a negative balance that is in excess of interest earned on the fund shall be transferred to the maintenance and operation fund at the end of the fiscal year or the end of the grant year.  If a federal or state grant fund has a negative balance at the end of the fiscal year or grant year, sufficient expenditures shall be transferred to the maintenance and operation fund to eliminate the negative balance.

4.  Notify the county school superintendent by the fifteenth day of each calendar month of the month end balances of each school district account.

5.  Pay warrants issued by the county school superintendent and duly endorsed by the person entitled to receive the monies.

6.  On each property tax bill and each property tax statement prepared, separately state and identify by name each school district's primary property tax rate, the secondary property tax rate that is associated with overrides, the secondary property tax rate that is associated with class A bonds and the secondary property tax rate that is associated with class B bonds.  For the purposes of this paragraph, "class A bonds" and "class B bonds" have the same meanings prescribed in section 15‑101. END_STATUTE

Sec. 35.  Section 15-1021, Arizona Revised Statutes, is amended to read:

START_STATUTE15-1021.  Limitation on bonded indebtedness; limitation on authorization and issuance of bonds

A.  Until December 31, 1999, a school district may issue class A bonds for the purposes specified in this section and chapter 4, article 5 of this title to an amount in the aggregate, including the existing indebtedness, not exceeding fifteen per cent of the taxable property used for secondary property tax purposes, as determined pursuant to title 42, chapter 15, article 1, within a school district as ascertained by the last property tax assessment previous to issuing the bonds.

B.  From and after December 31, 1998, a school district may issue class B bonds for the purposes specified in this section and chapter 4, article 5 of this title to an amount in the aggregate, including the existing class B indebtedness, not exceeding five ten per cent of the taxable property used for secondary property tax purposes, as determined pursuant to title 42, chapter 15, article 1, within a school district as ascertained by the last assessment of state and county taxes previous to issuing the bonds, or one thousand five hundred dollars per student count pursuant to section 15‑901, subsection A, paragraph 13, whichever amount is greater.  A school district shall not issue class B bonds until the proceeds of any class A bonds issued by the school district have been obligated in contract.  The total amount of class A and class B bonds issued by a school district shall not exceed the debt limitations prescribed in article IX, section 8, Constitution of Arizona.

C.  Until December 31, 1999, a unified school district, as defined under article IX, section 8.1, Constitution of Arizona, may issue class A bonds for the purposes specified in this section and chapter 4, article 5 of this title to an amount in the aggregate, including the existing indebtedness, not exceeding thirty per cent of the taxable property used for secondary property tax purposes, as determined pursuant to title 42, chapter 15, article 1, within a unified school district as ascertained by the last property tax assessment previous to issuing the bonds.

D.  From and after December 31, 1998, a unified school district, as defined under article IX, section 8.1, Constitution of Arizona, may issue class B bonds for the purposes specified in this section and chapter 4, article 5 of this title to an amount in the aggregate, including the existing class B indebtedness, not exceeding ten twenty per cent of the taxable property used for secondary tax purposes, as determined pursuant to title 42, chapter 15, article 1, within a school district as ascertained by the last assessment of state and county taxes previous to issuing the bonds, or one thousand five hundred dollars per student count pursuant to section 15‑901, subsection A, paragraph 13, whichever amount is greater.  A unified school district shall not issue class B bonds until the proceeds of any class A bonds issued by the unified school district have been obligated in contract. The total amount of class A and class B bonds issued by a unified school district shall not exceed the debt limitations prescribed in article IX, section 8.1, Constitution of Arizona.

E.  No bonds authorized to be issued by an election held after July 1, 1980 and before November 24, 2009 may be issued more than six years after the date of the election, except that the time period may be extended to ten years pursuant to an election conducted pursuant to section 15‑491, subsection A, paragraph 6 and except that class A bonds shall not be issued after December 31, 1999.  No bonds authorized to be issued by an election held after November 24, 2009 may be issued more than ten years after the date of the election.

F.  Except as provided in section 15‑491, subsection A, paragraph 3, bond proceeds shall not be expended for items whose useful life is less than the average life of the bonds issued, except that bond proceeds shall not be expended for items whose useful life is less than five years.

G.  A joint technical education district shall not spend class B bond proceeds to construct or renovate a facility located on the campus of a school in a school district that participates in the joint district unless the facility is only used to provide career and technical education and is available to all pupils who live within the joint technical education district.  If the facility is not owned by the joint technical education district, an intergovernmental agreement or a written contract shall be executed for ten years or the duration of the bonded indebtedness, whichever is greater.  The intergovernmental agreement or written contract shall include provisions:

1.  That preserve the usage of the facility renovated or constructed, or both, only for career and technology programs operated by the joint technical education district.

2.  That include the process to be used by the participating district to compensate the joint technical education district in the event that the facility is no longer used only for career and technical education programs offered by the joint technical education district during the life of the bond.

H.  A school district shall not authorize, issue or sell bonds pursuant to this section if the school district has any existing indebtedness from impact aid revenue bonds pursuant to chapter 16, article 8 of this title, except for bonds issued to refund any bonds issued by the governing board. END_STATUTE

Sec. 36.  Section 15-1371, Arizona Revised Statutes, is amended to read:

START_STATUTE15-1371.  Equalization assistance for state educational system for committed youth; state education fund for committed youth

A.  The superintendent of the state educational system for committed youth shall calculate a base support level as prescribed in section 15‑943 and a capital outlay revenue limit district additional assistance as prescribed in section 15‑961 for the educational system established pursuant to section 41‑2831, except that:

1.  Notwithstanding section 15‑901:

(a)  The student count shall be determined using the following definitions:

(i)  "Daily attendance" means days in which a pupil attends an educational program for a minimum of two hundred forty minutes not including meal and recess periods.  Attendance for one hundred twenty or more minutes but fewer than two hundred forty minutes shall be counted as one‑half day's attendance.

(ii)  "Fractional student" means a pupil enrolled in an educational program of one hundred twenty or more minutes but fewer than two hundred forty minutes a day not including meal and recess periods.  A fractional student shall be counted as one‑half of a full‑time student.

(iii)  "Full‑time student" means a pupil enrolled in an educational program for a minimum of two hundred forty minutes a day not including meal and recess periods.

(b)  "Seriously emotionally disabled pupils enrolled in a school district program as provided in section 15‑765" includes seriously emotionally disabled pupils enrolled in the department of juvenile corrections school system.

2.  All pupils shall be counted as if they were enrolled in grades nine through twelve.

3.  The teacher experience index is 1.00.

4.  The base support level shall be calculated using the base level multiplied by 1.0, except that the state educational system for committed youth is also eligible beginning with fiscal year 1992‑1993 for additional teacher compensation monies as specified in section 15‑952.

5.  Section 15‑943, paragraph 1 does not apply.

B.  The superintendent may use sections 15‑855 and 15‑948 in making the calculations prescribed in subsection A of this section, except that for the 1992‑1993 fiscal year rapid decline shall not be used.  The superintendent of the system and the department of education shall prescribe procedures for determining average daily membership.

C.  Equalization assistance for the state educational system for committed youth for the budget year is determined by adding the amount of the base support level and the capital outlay revenue limit district additional assistance for the budget year calculated as prescribed in subsection A of this section.

D.  The state educational system for committed youth shall not receive twenty‑five per cent of the equalization assistance unless it is accredited by the north central association of colleges and secondary schools.

E.  The state education fund for committed youth is established.  Fund monies shall be used for the purposes of the state educational system for committed youth, and notwithstanding section 35‑173, monies appropriated to the fund shall not be transferred to or used for any program not within the state educational system for committed youth.  State equalization assistance for the state educational system for committed youth as determined in subsection A of this section, other state and federal monies received from the department of education for the state educational system for committed youth and monies appropriated for the state educational system for committed youth, except monies appropriated pursuant to subsection F of this section, shall be deposited in the fund.  The state treasurer shall maintain separate accounts for fund monies if the separate accounts are required by statute or federal law.

F.  The department of juvenile corrections may seek appropriations for capital needs for land, buildings and improvements, including repairs and maintenance, required to maintain the state educational system for committed youth.

G.  The state board of education shall apportion state aid and deposit it, pursuant to sections 35‑146 and 35‑147, in the state education fund for committed youth in an amount as determined by subsection A of this section.  The apportionments shall be as follows:

1.  On July 1, one‑third of the total amount to be apportioned during the fiscal year.

2.  On October 15, one‑twelfth of the total amount to be apportioned during the fiscal year.

3.  On December 15, one‑twelfth of the total amount to be apportioned during the fiscal year.

4.  On January 15, one‑twelfth of the total amount to be apportioned during the fiscal year.

5.  On February 15, one‑twelfth of the total amount to be apportioned during the fiscal year.

6.  On March 15, one‑twelfth of the total amount to be apportioned during the fiscal year.

7.  On April 15, one‑twelfth of the total amount to be apportioned during the fiscal year.

8.  On May 15, one‑twelfth of the total amount to be apportioned during the fiscal year.

9.  On June 15, one‑twelfth of the total amount to be apportioned during the fiscal year.

H.  In conjunction with the department of administration, the superintendent of the state educational system for committed youth shall establish procedures to account for the receipt and expenditure of state education fund for committed youth monies by modifying the current accounting system used for state agencies as necessary. END_STATUTE

Sec. 37.  Section 15-1372, Arizona Revised Statutes, is amended to read:

START_STATUTE15-1372.  Equalization assistance for state educational system for persons in the state department of corrections; fund

A.  The state department of corrections shall provide educational services for pupils who are under the age of eighteen years and pupils with disabilities who are age twenty‑one or younger who are committed to the state department of corrections.  The department of education shall provide technical assistance to the state department of corrections on request and shall assist the state department of corrections in establishing program and personnel standards.

B.  The state education fund for correctional education is established. Subject to legislative appropriation, fund monies shall be used for the purposes of providing education to pupils as specified in subsection A of this section.  Notwithstanding section 35‑173, monies appropriated to the fund shall not be transferred to or used for any program not directly related to the educational services required by this section.  State equalization assistance, other state and federal monies received from the department of education for which the pupils in correctional education programs qualify and monies appropriated for correctional education except monies appropriated pursuant to subsection C of this section shall be deposited in the fund.  The state treasurer shall maintain separate accounts for fund monies if the separate accounts are required by statute or federal law.

C.  The state department of corrections may seek appropriations for capital needs for land, buildings and improvements, including repairs and maintenance, required to maintain the educational services required by this section.

D.  The state board of education shall apportion state aid and deposit it, pursuant to sections 35‑146 and 35‑147, in the state education fund for correctional education in an amount as determined by subsection E of this section.  The apportionments are as follows:

1.  On July 1, one‑third of the total amount to be apportioned during the fiscal year.

2.  On October 15, one‑twelfth of the total amount to be apportioned during the fiscal year.

3.  On December 15, one‑twelfth of the total amount to be apportioned during the fiscal year.

4.  On January 15, one‑twelfth of the total amount to be apportioned during the fiscal year.

5.  On February 15, one‑twelfth of the total amount to be apportioned during the fiscal year.

6.  On March 15, one‑twelfth of the total amount to be apportioned during the fiscal year.

7.  On April 15, one‑twelfth of the total amount to be apportioned during the fiscal year.

8.  On May 15, one‑twelfth of the total amount to be apportioned during the fiscal year.

9.  On June 15, one‑twelfth of the total amount to be apportioned during the fiscal year.

E.  The director of the state department of corrections shall calculate a base support level as prescribed in section 15‑943 and a capital outlay revenue limit district additional assistance as prescribed in section 15‑961 for the educational services required by this section, except that:

1.  Notwithstanding section 15‑901, the student count shall be determined using the following definitions:

(a)  "Daily attendance" means days in which a pupil attends an educational program for a minimum of one hundred eighty minutes not including meal and recess periods.  Attendance for ninety or more minutes but fewer than one hundred eighty minutes shall be counted as one‑half day's attendance.

(b)  "Fractional student" means a pupil enrolled in an educational program of ninety or more minutes but fewer than one hundred eighty minutes per day not including meal and recess periods.  A fractional student shall be counted as one‑half of a full‑time student.

(c)  "Full‑time student" means a pupil enrolled in an educational program for a minimum of one hundred eighty minutes per day not including meal and recess periods.

(d)  "Pupil with a disability" has the same meaning as child with a disability prescribed in section 15‑761.

2.  All pupils shall be counted as if they were enrolled in grades nine through twelve.

3.  The teacher experience index is 1.00.

4.  The calculation for additional teacher compensation monies as prescribed in section 15‑952 is available.

5.  Section 15‑943, paragraph 1 does not apply.

6.  The base support level and capital outlay amounts calculated pursuant to this section shall be multiplied by 0.67.

7.  The school year shall consist of a period of not less than two hundred eight days.

F.  The director of the state department of corrections may use sections 15‑855 and 15‑948 in making the calculations prescribed in subsection E of this section.  The director of the state department of corrections and the department of education shall prescribe procedures for calculating average daily membership.

G.  Equalization assistance for correctional education programs provided for those pupils specified in subsection A of this section is determined by adding the amount of the base support level and the capital outlay revenue limit district additional assistance for the budget year calculated as prescribed in subsection E of this section.

H.  The director of the state department of corrections shall keep records and provide information as the department of education requires to determine the appropriate amount of equalization assistance.  Equalization assistance shall be used to provide educational services in this section.

I.  The department of education and the state department of corrections shall enter into an intergovernmental agreement that establishes the necessary accountability between the two departments regarding the administrative and funding requirements contained in subsections A and B of this section.  The agreement shall:

1.  Provide for appropriate education to all committed youths as required by state and federal law.

2.  Provide financial information to meet requirements for equalization assistance.

3.  Provide for appropriate pupil intake and assessment procedures.

4.  Require pupil performance assessment and the reporting of results. END_STATUTE

Sec. 38.  Section 15-2002, Arizona Revised Statutes, is amended to read:

START_STATUTE15-2002.  Powers and duties; executive director; staffing; report

A.  The school facilities board shall:

1.  Make assessments of school facilities and equipment deficiencies and approve the distribution of grants as appropriate.

2.  Develop a database for administering the building renewal formula prescribed in section 15‑2031 and administer the distribution of monies to school districts for building renewal.

2.  Inventory and inspect all school buildings in this state in order to develop a database to administer the building renewal grant fund and new school facilities formula.  The school facilities board shall maintain the database and ensure that the database is updated on at least an annual basis. Each school district shall report to the school facilities board no later than September 1 of each year information as required by the school facilities board for the administration of the building renewal grant fund and computation of new school facilities formula distributions. The school facilities board may review or audit the information, or both, to confirm the information submitted by a school district.

3.  Inspect school buildings at least once every five years to ensure compliance with the building adequacy standards prescribed in section 15‑2011 and routine preventative maintenance guidelines as prescribed in this section with respect to construction of new buildings and maintenance of existing buildings.  The school facilities board shall randomly select twenty school districts every thirty months and inspect them pursuant to this paragraph.

4.  Review and approve student population projections submitted by school districts to determine to what extent school districts are entitled to monies to construct new facilities pursuant to section 15‑2041.  The board shall make a final determination within six months of the receipt of an application by a school district for monies from the new school facilities fund.

5.  Certify that plans for new school facilities meet the building adequacy standards prescribed in section 15‑2011.

6.  Develop prototypical elementary and high school designs.  The board shall review the design differences between the schools with the highest academic productivity scores and the schools with the lowest academic productivity scores.  The board shall also review the results of a valid and reliable survey of parent quality rating in the highest performing schools and the lowest performing schools in this state.  The survey of parent quality rating shall be administered by the department of education.  The board shall consider the design elements of the schools with the highest academic productivity scores and parent quality ratings in the development of elementary and high school designs.  The board shall develop separate school designs for elementary, middle and high schools with varying pupil capacities.

7.  Develop application forms, reporting forms and procedures to carry out the requirements of this article.

8.  Review and approve or reject requests submitted by school districts to take actions pursuant to section 15‑341, subsection G.

9.  Submit electronically an annual report by on or before December 15 to the speaker of the house of representatives, the president of the senate, the superintendent of public instruction, the director of the Arizona state library, archives and public records secretary of state and the governor that includes the following information:

(a)  A detailed description of the amount of monies distributed by the school facilities board in the previous fiscal year.

(b)  A list of each capital project that received monies from the school facilities board during the previous fiscal year, a brief description of each project that was funded and a summary of the board's reasons for the distribution of monies for the project.

(c)  A summary of the findings and conclusions of the building maintenance inspections conducted pursuant to this article during the previous fiscal year.

(d)  A summary of the findings of common design elements and characteristics of the highest performing schools and the lowest performing schools based on academic productivity, including the results of the parent quality rating survey.  For the purposes of this subdivision, "academic productivity" means academic year advancement per calendar year as measured with student‑level data using the statewide nationally standardized norm‑referenced achievement test.

10.  By On or before December 1 of each year, report electronically to the joint committee on capital review the amounts necessary to fulfill the requirements of sections 15‑2022, 15‑2031 and 15‑2041 for the following fiscal year and the estimated amounts necessary to fulfill the requirements of sections 15‑2022, 15‑2031 and 15‑2041 for the fiscal year following the next fiscal year.  The board shall provide copies of the report to the president of the senate, the speaker of the house of representatives and the governor.

11.  Adopt minimum school facility adequacy guidelines to provide the minimum quality and quantity of school buildings and the facilities and equipment necessary and appropriate to enable pupils to achieve the educational goals of the Arizona state schools for the deaf and the blind. The school facilities board shall establish minimum school facility adequacy guidelines applicable to the Arizona state schools for the deaf and the blind.

12.  In each even‑numbered year, report electronically to the joint committee on capital review the amounts necessary to fulfill the requirements of sections 15‑2031 and section 15‑2041 for the Arizona state schools for the deaf and the blind for the following two fiscal years.  The Arizona state schools for the deaf and the blind shall incorporate the findings of the report in any request for building renewal monies and new school facilities monies.  Any monies provided to the Arizona state schools for the deaf and the blind for building renewal and for new school facilities are subject to legislative appropriation.

13.  By On or before June 15 of each year, submit electronically detailed information regarding demographic assumptions, a proposed construction schedule and new school construction cost estimates for individual projects approved in the current fiscal year and expected project approvals for the upcoming fiscal year to the joint committee on capital review for its review.  A copy of the report shall also be submitted electronically to the governor's office of strategic planning and budgeting. The joint legislative budget committee staff, the governor's office of strategic planning and budgeting staff and the school facilities board staff shall agree on the format of the report.

14.  Every two years, provide school districts with information on improving and maintaining the indoor environmental quality in school buildings.

B.  The school facilities board may contract for the following services in compliance with the procurement practices prescribed in title 41, chapter 23:

1.  Private services.

2.  Construction project management services.

3.  Assessments for school buildings to determine if the buildings have outlived their useful life pursuant to section 15‑2041, subsection G.

4.  Services related to land acquisition and development of a school site.

C.  The governor shall appoint an executive director of the school facilities board pursuant to section 38‑211.  The executive director is eligible to receive compensation as determined pursuant to section 38‑611 and may hire and fire necessary staff subject to title 41, chapter 4, article 4 and as approved by the legislature in the budget.  The executive director shall have demonstrated competency in school finance, facilities design or facilities management, either in private business or government service.  The executive director serves at the pleasure of the governor.  The staff of the school facilities board is exempt from title 41, chapter 4, articles 5 and 6. The executive director:

1.  Shall analyze applications for monies submitted to the board by school districts.

2.  Shall assist the board in developing forms and procedures for the distribution and review of applications and the distribution of monies to school districts.

3.  May review or audit, or both, the expenditure of monies by a school district for deficiencies corrections, building renewal and new school facilities.

4.  Shall assist the board in the preparation of the board's annual report.

5.  Shall research and provide reports on issues of general interest to the board.

6.  May aid school districts in the development of reasonable and cost‑effective school designs in order to avoid statewide duplicated efforts and unwarranted expenditures in the area of school design.

7.  May assist school districts in facilitating the development of multijurisdictional facilities.

8.  Shall assist the board in any other appropriate matter or method as directed by the members of the board.

9.  Shall establish procedures to ensure compliance with the notice and hearing requirements prescribed in section 15‑905.  The notice and hearing procedures adopted by the board shall include the requirement, with respect to the board's consideration of any application filed after July 1, 2001 or after December 31 of the year in which the property becomes territory in the vicinity of a military airport or ancillary military facility as defined in section 28‑8461 for monies to fund the construction of new school facilities proposed to be located in territory in the vicinity of a military airport or ancillary military facility, that the military airport receive notification of the application by first class mail at least thirty days before any hearing concerning the application.

10.  May expedite any request for monies in which the local match was not obtained for a project that received preliminary approval by the state board for school capital facilities.

11.  Shall expedite any request for monies in which the school district governing board submits an application that shows an immediate need for a new school facility.

12.  Shall make a determination as to administrative completion within one month after the receipt of an application by a school district for monies from the new school facilities fund.

13.  Shall provide technical support to school districts as requested by school districts in connection with the construction of new school facilities and the maintenance of existing school facilities and may contract directly with construction project managers pursuant to subsection B of this section. This paragraph does not restrict a school district from contracting with a construction project manager using district or state resources.

D.  When appropriate, the school facilities board shall review and use the statewide school facilities inventory and needs assessment conducted by the joint committee on capital review and issued in July, 1995.

E.  The school facilities board shall contract with one or more private building inspectors to complete an initial assessment of school facilities and equipment and shall inspect each school building in this state at least once every five years to ensure compliance with section 15‑2011.  A copy of the inspection report, together with any recommendations for building maintenance, shall be provided to the school facilities board and the governing board of the school district.

F.  The school facilities board may consider appropriate combinations of facilities or uses in making assessments of and curing deficiencies pursuant to subsection A, paragraph 1 of this section and in certifying plans for new school facilities pursuant to subsection A, paragraph 5 of this section.

G.  The board shall not award any monies to fund new facilities that are financed by class A bonds that are issued by the school district.

H.  The board shall not distribute monies to a school district for replacement or repair of facilities if the costs associated with the replacement or repair are covered by insurance or a performance or payment bond.

I.  The board may contract for construction services and materials that are necessary to correct existing deficiencies in school district facilities. The board may procure the construction services necessary pursuant to this subsection by any method, including construction‑manager‑at‑risk, design‑build, design‑bid‑build or job‑order‑contracting as provided by title 41, chapter 23.  The construction planning and services performed pursuant to this subsection are exempt from section 41‑791.01.

J.  The school facilities board may enter into agreements with school districts to allow school facilities board staff and contractors access to school property for the purposes of performing the construction services necessary pursuant to subsection I of this section.

K.  Each school district shall develop routine preventative maintenance guidelines for its facilities.  The guidelines shall include plumbing systems, electrical systems, heating, ventilation and air conditioning systems, special equipment and other systems and for roofing systems shall recommend visual inspections performed by district staff for signs of structural stress and weakness.  The guidelines shall be submitted to the school facilities board for review and approval.  If on inspection by the school facilities board it is determined that a school district facility was inadequately maintained pursuant to the school district's routine preventative maintenance guidelines, the school district shall use building renewal monies pursuant to section 15‑2031, subsection L to return the building to compliance with the school district's routine preventative maintenance guidelines.  Once the district is in compliance, it no longer is required to use building renewal monies for preventative maintenance.

L.  The school facilities board may temporarily transfer monies between the capital reserve fund established by section 15‑2003, the emergency deficiencies correction fund established by section 15‑2022, the building renewal fund established by section 15‑2031 and the new school facilities fund established by section 15‑2041 if all of the following conditions are met:

1.  The transfer is necessary to avoid a temporary shortfall in the fund into which the monies are transferred.

2.  The transferred monies are restored to the fund where the monies originated as soon as practicable after the temporary shortfall in the other fund has been addressed.

3.  The school facilities board reports to the joint committee on capital review the amount of and the reason for any monies transferred.

M.  After notifying each school district, and if a written objection from the school district is not received by the school facilities board within thirty days of the notification, the school facilities board may access public utility company records of power, water, natural gas, telephone and broadband usage to assemble consistent and accurate data on utility consumption at school facilities to determine the effectiveness of facility design, operation and maintenance measures intended to reduce energy and water consumption and costs.  Any public utility that provides service to a school district in this state shall provide the data requested by the school facilities board pursuant to this subsection.

N.  The school facilities board shall not require a common school district that provides instruction to pupils in grade nine to obtain approval from the school facilities board to reconfigure its school facilities.  A common school district that provides instruction to pupils in grade nine is not entitled to additional monies from the school facilities board for facilities to educate pupils in grade nine. END_STATUTE

Sec. 39.  Section 15-2004, Arizona Revised Statutes, is amended to read:

START_STATUTE15-2004.  School facilities board lease‑to‑own; fund; expiration

A.  In order to fulfill the requirements of section 15‑2041, the school facilities board may acquire school facilities for the use of one or more school districts by entering into one or more lease‑to‑own transactions in accordance with this section.  For purposes of this section, providing school facilities includes land acquisition, related infrastructure, fixtures, furnishings, equipment and costs of the lease‑to‑own transaction.  The school facilities board may provide monies to provide school facilities in part pursuant to section 15‑2041 and in part through a lease‑to‑own transaction.

B.  A lease‑to‑own transaction may provide for:

1.  The ground lease of the land for the facilities to a private entity for the term of the lease‑to‑own transaction or for a term of up to one and one‑half times the term of the lease‑to‑own transaction, subject to earlier termination on completion of performance of the lease‑to‑own agreement.  The ground lessor may either be the school district or the school facilities board, whichever holds title to the land.

2.  The lease of the completed school facilities by a private entity to the school facilities board for an extended term of years pursuant to a lease‑to‑own agreement.

3.  The sublease of the completed school facilities by the school facilities board to the school district during the term of the lease‑to‑own agreement.  The sublease shall provide for the use, maintenance and operation of the school facilities by the school district and for the transfer of ownership of the school facilities to the school district on completion of performance of the lease‑to‑own agreement.

4.  The option for the school facilities board’s purchase of the school facilities and transfer of ownership of the school facilities to the school district before the expiration of the lease‑to‑own agreement.

5.  The services of trustees, financial advisors, paying agents, transfer agents, underwriters, lawyers and other professional service providers, credit enhancements or liquidity facilities and all other services considered necessary by the school facilities board in connection with the lease‑to‑own transaction, and related agreements and arrangements including arrangements for the creation and sale of certificates of participation evidencing proportionate interests in the lease payments to be made by the school facilities board pursuant to the lease‑to‑own agreement.

C.  The sublease of the school facilities to the school district is subject to this section and to the provisions of the lease‑to‑own agreement. Neither a ground lease by the school district as lessor nor a sublease of the school facilities to the school district is required to be authorized by a vote of the school district electors.  A ground lease is not subject to any limitations or requirements applicable to leases or lease‑purchase agreements pursuant to section 15‑342 or any other section of this title.

D.  Any school facility that is constructed through a lease‑to‑own agreement shall meet the minimum building adequacy standards set forth in section 15‑2011.

E.  School districts may use local monies to exceed the minimum adequacy standards and to build athletic fields and any other capital project for leased‑to‑own facilities.

F.  The school facilities board shall include any square footage of new school facilities constructed through lease‑to‑own agreements in the computations prescribed in section 15‑2011.

G.  Pursuant to section 15‑2031, a school district is eligible to receive building renewal monies for any facility constructed through a lease‑to‑own agreement.  If a facility's building maintenance renewal is included in the lease‑to‑own agreement, the facility shall not be included in the district's building renewal calculation.

H.  G.  A lease‑to‑own fund is established consisting of monies appropriated by the legislature.  The school facilities board shall administer the fund and distribute monies in the fund to make payments pursuant to lease‑to‑own agreements entered into by the school facilities board pursuant to this section, to make payments to or for the benefit of school districts pursuant to local lease‑to‑own agreements entered into by school districts pursuant to section 15‑2005 and to pay costs considered necessary by the school facilities board in connection with lease‑to‑own transactions and local lease‑to‑own transactions.  Payments by the school facilities board pursuant to a lease‑to‑own agreement or local lease‑to‑own agreement shall be made only from the lease‑to‑own fund.  On notice from the school facilities board, the state treasurer shall invest and divest monies in the fund as provided by section 35‑313, and monies earned from investment shall be credited to the lease‑to‑own fund.

I.  H.  A lease‑to‑own agreement entered into by the school facilities board pursuant to this section shall provide that:

1.  At the completion of the lease‑to‑own agreement, ownership of the school facilities and land associated with the lease‑to‑own agreement shall be transferred to the school district as specified in the agreement.

2.  The obligation of the school facilities board to make any payment under the lease‑to‑own agreement is a current expense, payable exclusively from appropriated monies, and is not a general obligation indebtedness of this state or the school facilities board.  The obligation of a school district to make expenditures under a sublease pursuant to subsection B, paragraph 3 of this section is a current expense, payable exclusively from budgeted monies, and is not a general obligation indebtedness of the school district.

3.  If the legislature fails to appropriate monies or the school facilities board fails to allocate such monies for any periodic payment or renewal term of the lease‑to‑own agreement, the lease‑to‑own agreement terminates at the end of the current term and this state and the school facilities board are relieved of any subsequent obligation under the agreement and the school district is relieved of any subsequent obligation under the sublease.

4.  The lease‑to‑own agreement shall be reviewed and approved by the attorney general before the agreement may take effect.

5.  Before the agreement takes effect and after review by the attorney general, the project or projects related to the agreement shall be submitted for review by the joint committee on capital review.

J.  I.  The school facilities board may covenant to use its best efforts to budget, obtain, allocate and maintain sufficient appropriated monies to make payments under a lease‑to‑own agreement, but the lease‑to‑own agreement shall acknowledge that appropriating state monies is a legislative act and is beyond the control of the school facilities board or of any other party to the lease‑to‑own agreement.

K.  J.  The land and the school facilities on the land are exempt from taxation during the term of the lease‑to‑own agreement and during construction and subsequent occupancy by the school district pursuant to the sublease.

L.  K.  The powers prescribed in this section are in addition to the powers conferred by any other law.  Without reference to any other provision of this title or to any other law, this section is authority for the completion of the purposes prescribed in this section for the school facilities board to provide school facilities for use by school districts through lease‑to‑own transactions pursuant to this section without regard to the procedure required by any other law.  Except as otherwise provided in this section, the provisions of this title that relate to the matters contained in this section are superseded because this section is the exclusive law on these matters.

M.  L.  The school facilities board shall not enter into lease‑to‑own transactions, including any refinancings or refundings, pursuant to this section from and after May 15, 2006. END_STATUTE

Sec. 40.  Section 15-2005, Arizona Revised Statutes, is amended to read:

START_STATUTE15-2005.  Local lease‑to‑own by school districts; expiration

A.  In order to fulfill the requirements of section 15‑2041, with the approval of the school facilities board, a school district may acquire school facilities by entering into a local lease‑to‑own transaction in accordance with this section.  For purposes of this section, providing school facilities includes land acquisition, related infrastructure, fixtures, furnishings, equipment and costs of the local lease‑to‑own transaction.  The school facilities board may provide monies to provide school facilities in part pursuant to section 15‑2041 and in part through payments to or for the benefit of a school district for a local lease‑to‑own transaction.

B.  A local lease‑to‑own transaction may provide for:

1.  The ground lease of the land for the facilities to a private entity for the term of the local lease‑to‑own transaction or for a term of up to one and one‑half times the term of the local lease‑to‑own transaction, subject to earlier termination on completion of performance of the local lease‑to‑own agreement.  The ground lessor may either be the school district or the school facilities board, whichever holds title to the land.

2.  The lease of the completed school facilities by a private entity to the school district for an extended term of years pursuant to a local lease‑to‑own agreement.  The local lease‑to‑own agreement shall provide for the use, maintenance and operation of the school facilities by the school district and for the transfer of ownership of the school facilities to the school district on completion of performance of the local lease‑to‑own agreement.

3.  The option for the school district's purchase of the school facilities and transfer of ownership of the school facilities to the school district before the expiration of the local lease‑to‑own agreement.

4.  The services of trustees, financial advisors, paying agents, transfer agents, underwriters, lawyers and other professional service providers, credit enhancements or liquidity facilities and all other services considered necessary by the school district or the school facilities board in connection with the local lease‑to‑own transaction, and related agreements and arrangements including arrangements for the creation and sale of certificates of participation evidencing proportionate interests in the lease payments to be made by the school district pursuant to the local lease‑to‑own agreement.

C.  Neither a ground lease by the school district as lessor nor a local lease‑to‑own agreement is required to be authorized by a vote of the school district electors.  A ground lease is not subject to any limitations or requirements applicable to leases or lease‑purchase agreements pursuant to section 15‑342 or any other section of this title.

D.  The school facilities board may make payments to or for the benefit of the school district from the lease‑to‑own fund established by section 15‑2004 for the payment of amounts payable under the local lease‑to‑own agreement.

E.  Any school facility that is constructed through a lease‑to‑own agreement shall meet the minimum building adequacy standards set forth in section 15‑2011.

F.  School districts may use local monies to exceed the minimum adequacy standards and to build athletic fields and any other capital project for leased‑to‑own facilities.

G.  The school facilities board shall include any square footage of new school facilities constructed through lease‑to‑own agreements in the computations prescribed in section 15‑2011.

H.  Pursuant to section 15‑2031, a school district is eligible to receive building renewal monies for any facility constructed through a lease‑to‑own agreement.  If a facility's building maintenance renewal is included in the lease‑to‑own agreement, the facility shall not be included in the district's building renewal calculation.

I.  H.  A local lease‑to‑own agreement entered into by a school district pursuant to this section shall provide that:

1.  At the completion of the lease‑to‑own agreement, ownership of the school facilities and land associated with the lease‑to‑own agreement shall be transferred to the school district as specified in the agreement.

2.  The obligation of the school district to make any payment or expenditure under the local lease‑to‑own agreement is a current expense, payable exclusively from properly budgeted monies, and is not a general obligation indebtedness of this state, the school facilities board or the school district, and that any payment by the school facilities board to or for the benefit of the school district from the lease‑to‑own fund established by section 15‑2004 for payments of amounts payable under the local lease‑to‑own agreement is a current expense, payable exclusively from appropriated monies, and is not a general obligation indebtedness of this state or the school facilities board.

3.  If the school district fails to properly budget for payments under the local lease‑to‑own agreement or if the legislature fails to appropriate monies or the school facilities board fails to allocate monies for periodic payment to or for the benefit of the school district for payments under the local lease‑to‑own agreement, the local lease‑to‑own agreement terminates at the end of the current term and the school district, the school facilities board and this state are relieved of any subsequent obligation under the local lease‑to‑own agreement.

4.  The local lease‑to‑own agreement shall be reviewed and approved by the attorney general before the agreement may take effect.

5.  Before the agreement takes effect and after review by the attorney general, the project or projects related to the agreement shall be submitted for review by the joint committee on capital review.

J.  I.  The school district may covenant to use its best efforts to budget, obtain, allocate and maintain sufficient monies to make payments under a local lease‑to‑own agreement, but the local lease‑to‑own agreement shall acknowledge that budgeting school district monies is a governmental act of the school district governing board that may not be contracted away.  The school facilities board is not required to covenant to budget, obtain, allocate or maintain sufficient monies in the lease‑to‑own fund to make payments to or for the benefit of a school district for payments under a local lease‑to‑own agreement.

K.  J.  The land and the school facilities on the land are exempt from taxation during the term of the local lease‑to‑own agreement and during construction and subsequent occupancy by the school district pursuant to the local lease‑to‑own agreement.

L.  K.  The powers prescribed in this section are in addition to the powers conferred by any other law.  Without reference to any other provision of this title or to any other law, this section is authority for the completion of the purposes prescribed in this section for school districts to provide school facilities through local lease‑to‑own transactions pursuant to this section without regard to the procedure required by any other law.  Except as otherwise provided in this section, the provisions of this title that relate to the matters contained in this section are superseded because this section is the exclusive law on these matters.

M.  L.  School districts shall not enter into lease-to-own transactions, including any refinancings or refundings, pursuant to this section from and after May 15, 2006. END_STATUTE

Sec. 41.  Section 15-2011, Arizona Revised Statutes, is amended to read:

START_STATUTE15-2011.  Minimum school facility adequacy requirements; definition

A.  The school facilities board, as determined and prescribed in this chapter, shall provide funding to school districts for new construction as the projected number of pupils in the district will fill fills the existing school facilities and require requires more pupil space.

B.  School buildings in a school district are adequate if all of the following requirements are met:

1.  The buildings contain sufficient and appropriate space and equipment that comply with the minimum school facility adequacy guidelines established pursuant to subsection F of this section.  The state shall not fund facilities for elective courses that require the school district facilities to exceed minimum school facility adequacy requirements.  The school facilities board shall determine whether a school building meets the requirements of this paragraph by analyzing the total square footage that is available for each pupil in conjunction with the need for specialized spaces and equipment.

2.  The buildings are in compliance with federal, state and local building and fire codes and laws that are applicable to the particular building.  An existing school building is not required to comply with current requirements for new buildings unless this compliance is specifically mandated by law or by the building or fire code of the jurisdiction where the building is located.

3.  The building systems, including roofs, plumbing, telephone systems, electrical systems, heating systems and cooling systems, are in working order and are capable of being properly maintained.

4.  The buildings are structurally sound.

C.  The standards that shall be used by the school facilities board to determine whether a school building meets the minimum adequate gross square footage requirements are as follows:

1.  For a school district that provides instruction to pupils in programs for preschool children with disabilities, kindergarten programs and grades one through six, eighty square feet per pupil in programs for preschool children with disabilities, kindergarten programs and grades one through six.

2.  For a school district that provides instruction to up to eight hundred pupils in grades seven and eight, eighty‑four square feet per pupil in grades seven and eight.

3.  For a school district that provides instruction to more than eight hundred pupils in grades seven and eight, eighty square feet per pupil in grades seven and eight or sixty‑seven thousand two hundred square feet, whichever is more.

4.  For a school district that provides instruction to up to four hundred pupils in grades nine through twelve, one hundred twenty‑five square feet per pupil in grades nine through twelve.

5.  For a school district that provides instruction to more than four hundred and up to one thousand pupils in grades nine through twelve, one hundred twenty square feet per pupil in grades nine through twelve or fifty thousand square feet, whichever is more.

6.  For a school district that provides instruction to more than one thousand and up to one thousand eight hundred pupils in grades nine through twelve, one hundred twelve square feet per pupil in grades nine through twelve or one hundred twenty thousand square feet, whichever is more.

7.  For a school district that provides instruction to more than one thousand eight hundred pupils in grades nine through twelve, ninety‑four square feet per pupil in grades nine through twelve or two hundred one thousand six hundred square feet, whichever is more.

D.  The school facilities board may modify the square footage requirements prescribed in subsection C of this section or modify the amount of monies awarded to cure the square footage deficiency pursuant to this section for particular school districts based on extraordinary circumstances for any of the following considerations:

1.  The number of pupils served by the school district.

2.  Geographic factors.

3.  Grade configurations other than those prescribed in subsection C of this section.

E.  In measuring the square footage per pupil requirements of subsection C of this section, the school facilities board shall:

1.  Use the most recent one hundredth day average daily membership.

2.  For each school, use the lesser of either:

(a)  Total gross square footage.

(b)  Student capacity multiplied by the appropriate square footage per pupil prescribed by subsection C of this section.

3.  Consider the total space available in all schools in use in the school district, except that the school facilities board shall allow an exclusion of the square footage for certain schools and the pupils within the schools' boundaries if the school district demonstrates to the board's satisfaction unusual or excessive busing of pupils or unusual attendance boundary changes between schools.

4.  Compute the gross square footage of all buildings by measuring from exterior wall to exterior wall.  Square footage used solely for district administration, storage of vehicles and other nonacademic purposes shall be excluded from the gross square footage.

5.  Include all portable and modular buildings.

6.  Include in the net square footage new construction funded wholly or partially by the school facilities board based on the square footage funded by the school facilities board.  If the new construction is to exceed the square footage funded by the school facilities board, the excess square footage shall not be included in the net square footage if any of the following applies:

(a)  The excess square footage was constructed before July 1, 2002 or funded by a class B bond, impact aid revenue bond or capital outlay override approved by the voters after August 1, 1998 and before June 30, 2002 or funded from unrestricted capital outlay expended before June 30, 2002.

(b)  The excess square footage of new school facilities does not exceed twenty‑five per cent of the minimum square footage requirements pursuant to subsection C of this section.

(c)  The excess square footage of expansions to school facilities does not exceed twenty‑five per cent of the minimum square footage requirements pursuant to subsection C of this section.

7.  Require that excess square footage that is constructed after July 1, 2002 and that is not excluded pursuant to paragraph 6 of this subsection meets the minimum school facility adequacy guidelines in order to be eligible for building renewal monies as computed in section 15‑2031.

8.  7.  Exclude square footage built under a developer agreement according to section 15‑342, paragraph 33 until the school facilities board provides funding for the square footage under section 15-2041, subsection O.

9.  8.  Include square footage that a school district has leased to another entity, including square footage leased to a charter school that is sponsored by a school district pursuant to section 15‑183.

F.  The school facilities board shall adopt rules establishing minimum school facility adequacy guidelines.  The guidelines shall provide the minimum quality and quantity of school buildings and facilities and equipment necessary and appropriate to enable pupils to achieve the academic standards pursuant to section 15‑203, subsection A, paragraphs 12 and 13 and sections 15‑701 and 15‑701.01.  At a minimum, the school facilities board shall address all of the following in developing these guidelines:

1.  School sites.

2.  Classrooms.

3.  Libraries and media centers, or both.

4.  Cafeterias.

5.  Auditoriums, multipurpose rooms or other multiuse space.

6.  Technology.

7.  Transportation.

8.  Facilities for science, arts and physical education.

9.  Other facilities and equipment that are necessary and appropriate to achieve the academic standards prescribed pursuant to section 15‑203, subsection A, paragraphs 12 and 13 and sections 15‑701 and 15‑701.01.

10.  Appropriate combinations of facilities or uses listed in this section.

G.  The board shall consider the facilities and equipment of the schools with the highest academic productivity scores, as prescribed in section 15‑2002, subsection A, paragraph 9, subdivision (d), and the highest parent quality ratings in the establishment of the guidelines.

H.  The school facilities board may consider appropriate combinations of facilities or uses in making assessments of and curing existing deficiencies pursuant to section 15‑2002, subsection A, paragraph 1 and in certifying plans for new school facilities pursuant to section 15‑2002, subsection A, paragraph 5.

I.  For the purposes of this section, "student capacity" means the capacity adjusted to include any additions to or deletions of space, including modular or portable buildings at the school.  The school facilities board shall determine the student capacity for each school in conjunction with each school district, recognizing each school's allocation of space as of July 1, 1998, to achieve the academic standards prescribed pursuant to section 15‑203, subsection A, paragraphs 12 and 13 and sections 15‑701 and 15‑701.01. END_STATUTE

Sec. 42.  Repeal

Section 15-2031, Arizona Revised Statutes, is repealed.

Sec. 43.  Section 15-2032, Arizona Revised Statutes, is amended to read:

START_STATUTE15-2032.  School facilities board building renewal grant fund; definitions

A.  Notwithstanding section 15‑2031, The building renewal grant fund is established consisting of monies appropriated to the fund by the legislature. The school facilities board shall administer the fund and distribute monies to school districts for the purpose of maintaining the adequacy of existing school facilities.  Monies in the fund are exempt from the provisions of section 35‑190 relating to lapsing of appropriations.

B.  The school facilities board shall distribute monies from the fund based on grant requests from school districts to fund primary building renewal projects.  Project requests shall be prioritized by the school facilities board, with priority given to school districts that have provided routine preventative maintenance on the facility, and to school districts that can provide a match of monies provided by the fund.  The school facilities board shall approve only projects that will be completed within twelve months, unless similar projects on average take longer to complete.

C.  School districts that receive monies from the fund shall use these monies on projects for buildings or any part of a building in the school facilities board's database for any of the following:

1.  Major renovations and repairs to a building.

2.  Upgrading systems and areas that will maintain or extend the useful life of the building.

3.  Infrastructure costs.

D.  Monies received from the fund shall not be used for any of the following purposes:

1.  New construction.

2.  Remodeling interior space for aesthetic or preferential reasons.

3.  Exterior beautification.

4.  Demolition.

5.  The purchase of soft capital items pursuant to section 15-962.

6.  5.  Routine preventative maintenance.

7.  6.  Any project in a building, or part of a building, that is being leased to another entity, including a charter school that is sponsored by a school district pursuant to section 15‑183.

E.  Accommodation schools are not eligible for monies from the building renewal grant fund.

E.  F.  For the purposes of this section:

1.  "Primary building renewal projects" means projects that are necessary for buildings owned by school districts that are required to meet the minimum adequacy standards for student capacity and that fall below the minimum school facility adequacy guidelines, as adopted by the school facilities board pursuant to section 15‑2011, for school districts that have provided routine preventative maintenance to the school facility.

2.  "Routine preventative maintenance" means services that are performed on a regular schedule at intervals ranging from four times a year to once every three years and that are intended to extend the useful life of a building system and reduce the need for major repairs.

3.  "Student capacity" has the same meaning prescribed in section 15‑2011. END_STATUTE

Sec. 44.  Section 15-2041, Arizona Revised Statutes, is amended to read:

START_STATUTE15-2041.  New school facilities fund; capital plan; report

A.  A new school facilities fund is established consisting of monies appropriated by the legislature and monies credited to the fund pursuant to section 37‑221.  The school facilities board shall administer the fund and distribute monies, as a continuing appropriation, to school districts for the purpose of constructing new school facilities and for contracted expenses pursuant to section 15‑2002, subsection B, paragraphs 2, 3 and 4.  On June 30 of each fiscal year, any unobligated contract monies in the new school facilities fund shall be transferred to the capital reserve fund established by section 15‑2003.

B.  The school facilities board shall prescribe a uniform format for use by the school district governing board in developing and annually updating a capital plan that consists of each of the following:

1.  Enrollment projections for the next five years for elementary schools and eight years for middle and high schools, including a description of the methods used to make the projections.

2.  A description of new schools or additions to existing schools needed to meet the building adequacy standards prescribed in section 15‑2011. The description shall include:

(a)  The grade levels and the total number of pupils that the school or addition is intended to serve.

(b)  The year in which it is necessary for the school or addition to begin operations.

(c)  A timeline that shows the planning and construction process for the school or addition.

3.  Long‑term projections of the need for land for new schools.

4.  Any other necessary information required by the school facilities board to evaluate a school district's capital plan.

5.  If a school district pays tuition for all or a portion of the school district's high school pupils to another school district, the capital plan shall indicate the number of pupils for which the district pays tuition to another district.  If a school district accepts pupils from another school district pursuant to section 15‑824, subsection A, the school district shall indicate the projections for this population separately.  This paragraph does not apply to a small isolated school district as defined in section 15‑901.

C.  If the capital plan indicates a need for a new school or an addition to an existing school within the next four years or a need for land within the next ten years, the school district shall submit its plan to the school facilities board by September 1 and shall request monies from the new school facilities fund for the new construction or land.  The school facilities board may require a school district to sell land that was previously purchased entirely with monies provided by the school facilities board if the school facilities board determines that the property is no longer needed within the ten year period specified in this subsection for a new school or no longer needed within that ten year period for an addition to an existing school.  Monies provided for land shall be in addition to any monies provided pursuant to subsection D of this section.

D.  The school facilities board shall distribute monies from the new school facilities fund as follows:

1.  The school facilities board shall review and evaluate the enrollment projections.  and On or before March 1, following the submission of the enrollment projections, the school facilities board shall either approve the projections as submitted or revise the projections.  In determining new construction requirements, the school facilities board shall determine the net new growth of pupils that will require additional square footage that exceeds the building adequacy standards prescribed in section 15‑2011.  If the projected growth and the existing number of pupils exceed three hundred fifty pupils who are served in a school district other than the pupil's resident school district, the school facilities board, the receiving school district and the resident school district shall develop a capital facilities plan on how to best serve those pupils.  A small isolated school district as defined in section 15‑901 is not required to develop a capital facilities plan pursuant to this paragraph.

2.  If the approved projections indicate that additional space will not be needed within the next two years for elementary schools or three years for middle or high schools would not have been needed during the current school year in order to meet the building adequacy standards prescribed in section 15‑2011, the request shall be held for consideration by the school facilities board for possible future funding and the school district shall annually submit an updated plan until the additional space is needed.

3.  If the approved projections indicate that additional space will be needed within the next two years for elementary schools or three years for middle or high schools would have been needed during the current school year in order to meet the building adequacy standards prescribed in section 15‑2011, the school facilities board shall provide an amount as follows:

(a)  Determine the number of pupils requiring additional square footage to meet building adequacy standards.  This amount for elementary schools shall not be less than the number of new pupils for whom space will be needed in the next year and shall not exceed the number of new pupils for whom space will be needed in the next five years.  This amount for middle and high schools shall not be less than the number of new pupils for whom space will be needed in the next four years and shall not exceed the number of new pupils for whom space will be needed in the next eight years.

(b)  Multiply the number of pupils determined in subdivision (a) of this paragraph by the square footage per pupil.  The square footage per pupil is ninety square feet per pupil for preschool children with disabilities, kindergarten programs and grades one through six, one hundred square feet for grades seven and eight, one hundred thirty‑four square feet for a school district that provides instruction in grades nine through twelve for fewer than one thousand eight hundred pupils and one hundred twenty‑five square feet for a school district that provides instruction in grades nine through twelve for at least one thousand eight hundred pupils.  The total number of pupils in grades nine through twelve in the district shall determine the square footage factor to use for net new pupils.  The school facilities board may modify the square footage requirements prescribed in this subdivision for particular schools based on any of the following factors:

(i)  The number of pupils served or projected to be served by the school district.

(ii)  Geographic factors.

(iii)  Grade configurations other than those prescribed in this subdivision.

(iv)  Compliance with minimum school facility adequacy requirements established pursuant to section 15‑2011.

(c)  Multiply the product obtained in subdivision (b) of this paragraph by the cost per square foot.  The cost per square foot is ninety dollars for preschool children with disabilities, kindergarten programs and grades one through six, ninety‑five dollars for grades seven and eight and one hundred ten dollars for grades nine through twelve.  The cost per square foot shall be adjusted annually for construction market considerations based on an index identified or developed by the joint legislative budget committee as necessary but not less than once each year.  The school facilities board shall multiply the cost per square foot by 1.05 for any school district located in a rural area.  The school facilities board may only modify the base cost per square foot prescribed in this subdivision for particular schools based on geographic conditions or site conditions.  For the purposes of this subdivision, "rural area" means an area outside a thirty‑five mile radius of a boundary of a municipality with a population of more than fifty thousand persons.

(d)  Once the school district governing board obtains approval from the school facilities board for new facility construction funds, additional portable or modular square footage created for the express purpose of providing temporary space for pupils until the completion of the new facility shall not be included by the school facilities board for the purpose of new construction funding calculations.  On completion of the new facility construction project, if the portable or modular facilities continue in use, the portable or modular facilities shall be included as prescribed by this chapter, unless the school facilities board approves their continued use for the purpose of providing temporary space for pupils until the completion of the next new facility that has been approved for funding from the new school facilities fund.

4.  For projects approved after December 31, 2001, and notwithstanding paragraph 3 of this subsection, a unified school district that does not have a high school is not eligible to receive high school space as prescribed by section 15‑2011 and this section unless the unified district qualifies for geographic factors prescribed by paragraph 3, subdivision (b), item (ii) of this subsection.

5.  If a joint technical education district leases a building from a school district, that building shall be included in the school district's square footage calculation for the purposes of new construction pursuant to this section.

6.  If a school district leases a building to another entity, including a charter school that is sponsored by a school district pursuant to section 15‑183, that building shall be included in the school district's square footage calculation for purposes of new construction pursuant to this section.

7.  A school district shall qualify for new construction funding in a fiscal year only if the school facilities board has approved or revised its enrollment projection under paragraph 3 of this subsection on or before March 1 of the prior fiscal year.

E.  Monies for architectural and engineering fees, project management services and preconstruction services shall be distributed on the completion of the analysis by the school facilities board of the school district's request.  After receiving monies pursuant to this subsection, the school district shall submit a design development plan for the school or addition to the school facilities board before any monies for construction are distributed.  If the school district's request meets the building adequacy standards, the school facilities board may review and comment on the district's plan with respect to the efficiency and effectiveness of the plan in meeting state square footage and facility standards before distributing the remainder of the monies.  If the school facilities board modifies the cost per square foot as prescribed in subsection D, paragraph 3, subdivision (c) of this section, the school facilities board may deduct the cost of project management services and preconstruction services from the required cost per square foot.  The school facilities board may decline to fund the project if the square footage is no longer required due to revised enrollment projections.

F.  The school facilities board shall distribute the monies needed for land for new schools so that land may be purchased at a price that is less than or equal to fair market value and in advance of the construction of the new school.  If necessary, the school facilities board may distribute monies for land to be leased for new schools if the duration of the lease exceeds the life expectancy of the school facility by at least fifty per cent.  A school district shall not use land purchased or partially purchased with monies provided by the school facilities board for a purpose other than a site for a school facility without obtaining prior written approval from the school facilities board.  A school district shall not lease, sell or take any action that would diminish the value of land purchased or partially purchased with monies provided by the school facilities board without obtaining prior written approval from the school facilities board.  The proceeds derived through the sale of any land purchased or partially purchased, or the sale of buildings funded or partially funded, with monies provided by the school facilities board shall be returned to the state fund from which it was appropriated and to any other participating entity on a proportional basis.  Except as provided in section 15‑342, paragraph 33, if a school district acquires real property by donation at an appropriate school site approved by the school facilities board, the school facilities board shall distribute an amount equal to twenty per cent of the fair market value of the donated real property that can be used for academic purposes.  The school district shall place the monies in the unrestricted capital outlay fund and increase the unrestricted capital budget limit by the amount of monies placed in the fund. Monies distributed under this subsection shall be distributed from the new school facilities fund.  A school district that receives monies from the new school facilities fund for a donation of land pursuant to section 15‑342, paragraph 33 shall not receive monies from the school facilities board for the donation of real property pursuant to this subsection.  A school district shall not pay a consultant a percentage of the value of any of the following:

1.  Donations of real property, services or cash from any of the following:

(a)  Entities that have offered to provide construction services to the school district.

(b)  Entities that have been contracted to provide construction services to the school district.

(c)  Entities that build residential units in that school district.

(d)  Entities that develop land for residential use in that school district.

2.  Monies received from the school facilities board on behalf of the school district.

3.  Monies paid by the school facilities board on behalf of the school district.

G.  In addition to distributions to school districts based on pupil growth projections, a school district may submit an application to the school facilities board for monies from the new school facilities fund if one or more school buildings have outlived their useful life.  If the school facilities board determines that the school district needs to build a new school building for these reasons, the school facilities board shall remove the square footage computations that represent the building from the computation of the school district's total square footage for purposes of this section.  If the square footage recomputation reflects that the school district no longer meets building adequacy standards, the school district qualifies for a distribution of monies from the new school construction formula in an amount determined pursuant to subsection D of this section.  Buildings removed from a school district's total square footage pursuant to this subsection shall not be included in the computation of monies from the building renewal fund established by section 15‑2031.  The school facilities board may only modify the base cost per square foot prescribed in this subsection under extraordinary circumstances for geographic factors or site conditions.

H.  School districts that receive monies from the new school facilities fund shall establish a district new school facilities fund and shall use the monies in the district new school facilities fund only for the purposes prescribed in this section.  By October 15 of each year, each school district shall report to the school facilities board the projects funded at each school in the previous fiscal year with monies from the district new school facilities fund and shall provide an accounting of the monies remaining in the new school facilities fund at the end of the previous fiscal year.

I.  If a school district has surplus monies received from the new school facilities fund, the school district may use the surplus monies only for capital purposes for the project for up to one year after completion of the project.  If the school district possesses surplus monies from the new school construction project that have not been expended within one year of the completion of the project, the school district shall return the surplus monies to the school facilities board for deposit in the new school facilities fund.  

J.  The board's consideration of any application filed after December 31 of the year in which the property becomes territory in the vicinity of a military airport or ancillary military facility as defined in section 28‑8461 for monies to fund the construction of new school facilities proposed to be located in territory in the vicinity of a military airport or ancillary military facility shall include, if after notice is transmitted to the military airport pursuant to section 15‑2002 and before the public hearing the military airport provides comments and an analysis concerning compatibility of the proposed school facilities with the high noise or accident potential generated by military airport or ancillary military facility operations that may have an adverse effect on public health and safety, consideration and analysis of the comments and analysis provided by the military airport before making a final determination.

K.  If a school district uses its own project manager for new school construction, the members of the school district governing board and the project manager shall sign an affidavit stating that the members and the project manager understand and will follow the minimum adequacy requirements prescribed in section 15‑2011.

L.  The school facilities board shall establish a separate account in the new school facilities fund designated as the litigation account to pay attorney fees, expert witness fees and other costs associated with litigation in which the school facilities board pursues the recovery of damages for deficiencies correction that resulted from alleged construction defects or design defects that the school facilities board believes caused or contributed to a failure of the school building to conform to the building adequacy requirements prescribed in section 15‑2011.  Attorney fees paid pursuant to this subsection shall not exceed the market rate for similar types of litigation.  On or before December 1 of each year, the school facilities board shall report to the joint committee on capital review the costs associated with current and potential litigation that may be paid from the litigation account.

M.  Until the state board of education and the auditor general adopt rules pursuant to section 15‑213, subsection I, the school facilities board may allow school districts to contract for construction services and materials through the qualified select bidders list method of project delivery for new school facilities pursuant to this section.

N.  The school facilities board shall submit electronically a report on project management services and preconstruction services to the governor, the president of the senate and the speaker of the house of representatives by December 31 of each year.  The report shall compare projects that use project management and preconstruction services with those that do not.  The report shall address cost, schedule and other measurable components of a construction project.  School districts, construction manager at risk firms and project management firms that participate in a school facilities board funded project shall provide the information required by the school facilities board in relation to this report.

O.  If a school district constructs new square footage according to section 15‑342, paragraph 33, the school facilities board shall review the design plans and location of any new school facility submitted by school districts and another party to determine whether the design plans comply with the adequacy standards prescribed in section 15‑2011 and the square footage per pupil requirements pursuant to subsection D, paragraph 3, subdivision (b) of this section.  When the school district qualifies for a distribution of monies from the new school facilities fund according to this section, the school facilities board shall distribute monies to the school district from the new school facilities fund for the square footage constructed under section 15‑342, paragraph 33 at the same cost per square foot established by this section that was in effect at the time of the beginning of the construction of the school facility.  Before the school facilities board distributes any monies pursuant to this subsection, the school district shall demonstrate to the school facilities board that the facilities to be funded pursuant to this section meet the minimum adequacy standards prescribed in section 15‑2011.  The agreement entered into pursuant to section 15‑342, paragraph 33 shall set forth the procedures for the allocation of these funds to the parties that participated in the agreement.

P.  Accommodation schools are not eligible for monies from the new school facilities fund. END_STATUTE

Sec. 45.  Repeal

Laws 2011, second special session, chapter 1, section 135, is repealed.

Sec. 46.  Joint technical education district equalization funding; fiscal year 2013‑2014

Notwithstanding section 15-393, Arizona Revised Statutes, or any other law, the department of education shall fund state aid for joint technical education districts with a student count of more than two thousand students for fiscal year 2013‑2014 at ninety‑one per cent of the amount that otherwise would be provided by law and shall reduce its budget limits accordingly.

Sec. 47.  Deposits in the education learning and accountability fund

On or before December 31, 2013, each community college district shall transmit six dollars per full-time student equivalent according to the most recent audit and each university under the jurisdiction of the Arizona board of regents shall transmit six dollars per actual university full-time equivalent student to the department of education for deposit in the education learning and accountability fund established by section 15-249.02, Arizona Revised Statutes.

Sec. 48.  School facilities board; refinancing or refunding agreement

A.  Notwithstanding section 15‑2004, subsection L, Arizona Revised Statutes, section 15‑2005, subsection L, Arizona Revised Statutes, and section 15‑2006, Arizona Revised Statutes, the school facilities board may enter into a refinancing or refunding agreement in fiscal year 2013‑2014 that will reduce the school facilities board's fiscal year 2013‑2014 and fiscal year 2014‑2015 lease‑purchase payments by a combined total of at least $4,000,000 but that will not increase or decrease the total amount of the school facilities board's lease‑purchase payments in any other fiscal year by more than $100,000.

B.  Before the school facilities board enters into a refinancing or refunding agreement pursuant to subsection A of this section, the agreement's proposed terms shall be submitted for review by the joint committee on capital review.

C.  The school facilities board shall revert any unexpended monies appropriated to the new school facilities debt service special line item in fiscal year 2013‑2014 to the state general fund on or before June 30, 2014.

Sec. 49.  Soft capital carryforward balances; transfer

Notwithstanding any other law, a school district shall transfer any budget capacity and cash remaining in its soft capital allocation fund at the end of fiscal year 2012‑2013 to its maintenance and operations fund or its unrestricted capital outlay fund.

Sec. 50.  Existing capital outlay revenue limit overrides

Notwithstanding section 15‑481, subsection Z, Arizona Revised Statutes, a budget in excess of the capital outlay revenue limit that was approved by the voters in a school district before the effective date of this act shall remain in effect until the end of the period authorized pursuant to the previous election.

Sec. 51.  Budget reductions; soft capital overexpenditures

Beginning in fiscal year 2013‑2014, a school district that overexpended its soft capital allocation in fiscal year 2012‑2013 or in a prior fiscal year shall apply any correction required for that overexpenditure pursuant to section 15‑905, subsection L or M, Arizona Revised Statutes, to its maintenance and operation or unrestricted capital budgets.

Sec. 52.  District additional assistance reduction for school districts for fiscal year 2013-2014

A.  For fiscal year 2013-2014, the department of education shall reduce by $238,985,500 the amount of basic state aid that otherwise would be apportioned to school districts statewide for fiscal year 2013-2014 for district additional assistance prescribed in section 15-961, Arizona Revised Statutes, as amended by this act, and shall reduce school district budget limits accordingly.

B.  For fiscal year 2013-2014, the department of education shall reduce district additional assistance for a school district that is not eligible to receive basic state aid funding for fiscal year 2013-2014 by the amount that its district additional assistance would be reduced pursuant to subsection A of this section if the district was eligible to receive basic state aid funding for fiscal year 2013-2014 and shall reduce the school district's budget limits accordingly.

Sec. 53.  K-12 formula reductions; small districts; maximum

Notwithstanding any other law, the sum of district additional assistance reductions in fiscal year 2013-2014 for school districts with a student count of fewer than 1,100 pupils shall not exceed $5,000,000.

Sec. 54.  Additional assistance funding for school districts and charter schools; reduction for fiscal year 2013-2014

A.  The department of education shall reduce by $15,656,000 the amount of charter additional assistance funding that otherwise would be apportioned to charter schools and school districts statewide for fiscal year 2013-2014 pursuant to section 15‑185, subsection B, paragraph 4, Arizona Revised Statutes, as amended by this act and shall reduce school district budget limits accordingly.  The funding reduction required under this section shall be made on a proportional basis based on the charter additional assistance funding that each charter school and school district in the state would have received for fiscal year 2013‑2014 without the prescribed reduction.

B.  For fiscal year 2013‑2014, the department of education shall reduce charter additional assistance for a school district that is not eligible to receive basic state aid funding for fiscal year 2013‑2014 by the amount that its charter additional assistance would be reduced pursuant to subsection A of this section if the school district was eligible to receive basic state aid funding for fiscal year 2013‑2014 and shall reduce the school district's budget limits accordingly.

Sec. 55.  Pilot program on school emergency readiness; report; delayed repeal

A.  The $3,646,400 state general fund appropriation to the department of education for the school safety program for fiscal year 2013-2014 in the general appropriations act includes $100,000 for a pilot program on school emergency readiness.

B.  School districts shall submit applications to the department of education to participate in the pilot program on or before September 30, 2013.

C.  On or before November 30, 2013, the department of education shall select three school districts to participate in the pilot program.  The selected school districts shall collectively consist of no more than thirty‑one individual school sites and shall consist of:

1.  One school district that is located in a county with a population of more than eight hundred thousand persons.

2.  One school district that is located in a county with a population of more than one hundred thousand persons but less than eight hundred thousand persons.

3.  One school district that is located in a county with a population of less than one hundred thousand persons.

D.  School districts that are selected to participate in the pilot program shall be provided and use a readiness and emergency management program that incorporates the following:

1.  Education specific emergency management software.  All plans and critical emergency readiness information including contacts, floor plans and critical equipment photos and locations shall be accessible online and off‑line via mobile device applications.  The software used in the pilot program shall comply with the national emergency information management system adopted by the federal emergency management agency.

2.  Training of teachers and administrators in the readiness and emergency management program.

3.  The development, implementation and maintenance of a comprehensive crisis plan for those school districts and their teachers and administrators.

E.  On or before November 1, 2014, the department of education shall submit to the governor, the president of the senate and the speaker of the house of representatives a report that summarizes the results of the pilot program.  The department of education shall provide a copy of the annual report to the secretary of state.

F.  This section is repealed from and after December 31, 2014.

Sec. 56.  Transfer; Arizona structured English immersion fund

On or before July 31, 2013, the department of education shall transfer $10,000,000 to the state general fund from the Arizona structured English immersion fund established by section 15‑756.04, Arizona Revised Statutes.

Sec. 57.  Soft capital carryforward balances; transfer

Notwithstanding any other law, a school district shall transfer any budget capacity and cash remaining in its soft capital allocation fund at the end of fiscal year 2012‑2013 to its maintenance and operations fund or its unrestricted capital outlay fund.

Sec. 58.  Provisions for bonds authorized by prior elections; legislative finding

A.  The bonded indebtedness limits prescribed in section 15‑1021, Arizona Revised Statutes, as amended by this act, apply to bonds issued pursuant to elections held both before and after the effective date of this act.

B.  The legislature finds and declares that the social, economic and financial welfare of the state is affected by the economic and financial conditions that have existed since 2008 and continue today.  The conditions have caused a decrease in tax revenue and in assessed valuations, which has resulted in a temporary emergency involving the ability to fund needed construction and repair of school facilities that is alleviated by this act.

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