Chapter 1066 Oregon Laws 1999

Session Law

AN ACT

HB 2567

Relating to school finance; creating new provisions; amending ORS 327.008, 327.013, 327.077, 327.700 and 327.731 and section 12, chapter 61, Oregon Laws 1993, and section 5, chapter 821, Oregon Laws 1997, and section 6, chapter 887, Oregon Laws 1999 (Enrolled House Bill 5016), and section 9, chapter 908, Oregon Laws 1999 (Enrolled House Bill 5038); and appropriating money.

Be It Enacted by the People of the State of Oregon:

SECTION 1. Sections 2, 16, 17, 19, 23 and 35 of this 1999 Act are added to and made a part of ORS 327.006 to 327.081.

EDUCATION SERVICE DISTRICTS

SECTION 2. (1)(a) For the 1999-2000 fiscal year, the Superintendent of Public Instruction shall set aside $91,100,000 from the State School Fund for distribution to education service districts as Education Service District Grants and for distribution under section 35 of this 1999 Act for the Oregon Public Education Network.

(b) For the 2000-2001 fiscal year, the Superintendent of Public Instruction shall set aside $89,500,000 from the State School Fund for distribution to education service districts as Education Service District Grants and for distribution under section 35 of this 1999 Act for the Oregon Public Education Network.

(c) The Superintendent of Public Instruction shall apportion from the State School Fund to each education service district during the 1999-2000 and 2000-2001 fiscal years an amount = {funding percentage x (the Education Service District Grant calculated under subsection (2), (3) or (4) of this section + Education Service District Local Revenues)} - Education Service District Local Revenues.

(d) The funding percentage used in paragraph (c) of this subsection shall be calculated by the Superintendent of Public Instruction to distribute as nearly as practicable the total sum available for distribution to education service districts from the State School Fund for each fiscal year.

(2) For the 1999-2000 fiscal year, the Superintendent of Public Instruction shall calculate for education service districts that are not listed under subsection (3) of this section an Education Service District Grant from the State School Fund that, when combined with Education Service District Local Revenues, is equal to the greater of:

(a) An amount per extended Education Service District ADMw that is equal to the amount the education service district received in the 1998-1999 fiscal year from the State School Fund and from operating taxes actually imposed by the education service district based on the rate certified pursuant to ORS 310.060 per extended Education Service District ADMw; or

(b) The total amount the education service district received in the 1998-1999 fiscal year from the State School Fund and from operating taxes actually imposed by the education service district based on the rate certified pursuant to ORS 310.060.

(3)(a) For the 1999-2000 fiscal year, the Superintendent of Public Instruction shall calculate for education service districts listed in paragraph (b) of this subsection an Education Service District Grant from the State School Fund that consists of a positive amount = (Funding amount x extended Education Service District ADMw) - Education Service District Local Revenues.

(b) Funding amount = for education service districts in the following regions as designated under ORS 334.020:

(A) $150 for Region 1. Clatsop, Columbia, Tillamook and Washington Counties.

(B) $150 for Region 3. Marion and Polk Counties.

(C) $200 for Region 4. Lincoln, Linn and Benton Counties.

(D) $175 for Region 5. Lane County.

(E) $225 for Region 8. Jackson, Josephine and Klamath Counties.

(F) $125 for Region 10. Crook and Deschutes Counties.

(G) $165 for Region 14. Malheur County and the area comprising the Huntington School District.

(H) $175 for Region 16. Yamhill County.

(I) $150 for Region 21. Jefferson County and the area comprising the Warm Springs Reservation.

(4) For the 2000-2001 fiscal year, the Superintendent of Public Instruction shall calculate for education service districts an Education Service District Grant from the State School Fund that, when combined with Education Service District Local Revenues, is equal to the greater of:

(a) An amount per extended Education Service District ADMw that is equal to the amount the education service district received in the 1999-2000 fiscal year from the State School Fund and Education Service District Local Revenues per extended Education Service District ADMw; or

(b) The total amount the education service district received in the 1999-2000 fiscal year from the State School Fund and from Education Service District Local Revenues.

(5) Extended Education Service District ADMw equals the sum of the district extended ADMw, as described in ORS 327.013, for each of the component school districts in the education service district.

(6) Education Service District Local Revenues are the total of the following:

(a) The amount of revenue offset against local property taxes as determined by the Department of Revenue under ORS 311.175 (3)(a)(A);

(b) The amount of property taxes actually received by the district including penalties and interest on taxes;

(c) The amount of revenue received by the district from state managed forestlands under ORS 530.115 (1)(b) and (c); and

(d) Any positive amount obtained by subtracting the operating property taxes actually imposed by the education service district based on the rate certified pursuant to ORS 310.060 from the amount that would have been imposed by the education service district if the education service district had certified the maximum rate of operating property taxes allowed by law.

(7) The Superintendent of Public Instruction shall distribute funds due education service districts under this section following the same percentages and dates as specified for school districts under ORS 327.095.

(8) The Department of Education may require reports from education service districts of projected and estimated data necessary for the calculation of Education Service District Grants under this section.

(9) For the 1999-2000 and 2000-2001 fiscal years, each education service district shall cause to have prepared an annual audit of the books and accounts of the education service district in the same manner as a school district under ORS 328.465. For the 1999-2000 and 2000-2001 fiscal years, ORS 327.137 shall apply to education service districts.

(10) The Department of Education may adjust distributions to an education service district under this section to reflect the difference between the amount due the education service district and the amount actually distributed to the education service district based on audited data and data received from reports from education service districts.

SECTION 3. (1) For the 1999-2000 and 2000-2001 fiscal years, if an education service district certifies a rate pursuant to ORS 310.060 that is less than the maximum rate of operating property taxes allowed by law, the county assessor for each county within which the education service district is located shall determine the amount of operating property taxes that would have been imposed by the education service district if the education service district had certified the maximum rate of operating property taxes allowed by law.

(2) Each county assessor who is required to calculate an amount under subsection (1) of this section shall report that amount to the Department of Education.

SECTION 4. (1) There is created an interim task force on education service district funding.

(2) The members of the interim task force shall include:

(a) Two members appointed by the President of the Senate from among members of the Senate;

(b) Two members appointed by the Speaker of the House of Representatives from among members of the House of Representatives;

(c) Three school district superintendents appointed by the Superintendent of Public Instruction;

(d) Three education service district superintendents appointed by the Superintendent of Public Instruction from a list of nominees submitted by the Confederation of Oregon School Administrators;

(e) Three school district board members appointed by the Superintendent of Public Instruction from a list of nominees submitted by the Oregon School Boards Association;

(f) Three education service district board members appointed by the Superintendent of Public Instruction from a list of nominees submitted by the Oregon School Boards Association; and

(g) The Superintendent of Public Instruction or a designee of the superintendent.

(3) The Superintendent of Public Instruction or a designee of the superintendent shall be the chairperson of the interim task force.

(4) The interim task force shall:

(a) Assuming that education service districts do not exist:

(A) Identify services that are more cost-effective if delivered on a regional basis;

(B) Determine if those services vary according to individual school district size and geographical location;

(C) Determine if certain services such as special education and related services should be mandated to the regional service level; and

(D) Determine what is the best method of delivering special education and related services.

(b) After identifying services that should be delivered on a regional basis under paragraph (a) of this subsection:

(A) Determine what is the best, most cost-effective, efficient method of delivering regional services, which may include the following options for delivering regional services:

(i) Statewide delivery with the Department of Education providing administrative support;

(ii) Regional service boundaries, including redrawing regional education service district boundaries and specifying that school districts use specific regional service delivery organizations;

(iii) Free market with regional service providers bidding to provide services to school districts across the state; or

(iv) Several different regional service delivery models based on geography and population density.

(B) Determine the effect any change caused by the options listed in this paragraph would have on the taxing authority of education service districts and on collective bargaining agreements.

(c) After identifying a regional service delivery model under paragraph (b) of this subsection, identify the best methods of administration and communication to ensure accountability and responsiveness to school district needs, which may include:

(A) If the regional service delivery providers retain a board structure, determining if member school districts should be included on the board; and

(B) Determining if a certain percentage of education service district allocations should be directly allocated to individual school districts to buy back specific services.

(d) Review funding equity proposals, including:

(A) Determining if the regional service delivery providers retain a formula-based distribution system and, if so, determining whether funding should be distributed through the current school district formula or whether a separate formula should be developed; and

(B) Determining if funding should be tied to specific programs such as special education and related services.

(5) The interim task force shall make a progress report for each meeting of the interim legislative committees on revenue. Prior to October 1, 2000, the interim task force shall make a final report on the issues identified in subsection (4) of this section to the interim legislative committees on revenue.

(6) Nonlegislative members who serve on the interim task force are entitled to compensation and expenses as provided in ORS 292.495. Members of the Legislative Assembly who serve on the interim task force may receive the mileage and per diem expense payments as authorized by ORS 171.072.

(7) The Department of Education shall provide staff to the interim task force.

(8) Official action by the interim task force shall require the approval of a majority of the members of the interim task force.

SECTION 5. In addition to and not in lieu of any other appropriation, there is appropriated to the Department of Education, for the biennium beginning July 1, 1999, out of the General Fund, the sum of $150,000 for the interim task force on education service district funding created by section 4 of this 1999 Act.

NOTE: Sections 6 to 9 of this 1999 Act were deleted by amendment. Subsequent sections were not renumbered.

FACILITY GRANT

SECTION 10. ORS 327.008 is amended to read:

327.008. (1) There is established a State School Fund in the General Fund. The fund shall consist of moneys appropriated by the Legislative Assembly and moneys appropriated from the Education Endowment Fund. The State School Fund is continuously appropriated for the purposes of ORS 321.317, 327.006 to 327.081, 327.095, 327.099, 327.101, 327.125, 327.137, 334.380, 336.575, 336.580, 336.635, 342.173, 343.243, 343.533, 343.961 and 461.543.

(2) There shall be apportioned from the State School Fund to each school district a State School Fund grant, consisting of the positive amount equal to a general purpose grant and a facility grant and a transportation grant minus local revenue, computed as provided in ORS 327.013.

(3) All figures used in the determination of the distribution of the State School Fund shall be estimates for the same year as the distribution occurs, unless otherwise specified.

(4) Numbers of students in average daily membership used in the distribution formula shall be the numbers as of June of the year of distribution.

(5) A school district may not use the portion of the State School Fund grant that is attributable to the facility grant for capital construction costs.

(6) The total amount of the State School Fund that is distributed as facility grants shall not exceed [$10 million] $17.5 million in any biennium. If the total amount to be distributed as facility grants exceeds this limitation, the Department of Education shall prorate the amount of funds available for facility grants among those school districts that qualified for a facility grant.

EDUCATION LOTTERY BONDS

SECTION 11. Section 12 of this 1999 Act is added to and made a part of ORS 327.700 to 327.727.

SECTION 12. (1) Pursuant to ORS 327.700 to 327.727 and sections 1 to 9, chapter 44, Oregon Laws 1999 (Enrolled Senate Bill 200), during the 1999-2001 biennium, education lottery bonds may be issued to fund state education projects as defined in ORS 327.700.

(2) The use of education lottery bond proceeds is authorized based on the findings in ORS 327.708.

(3) The aggregate principal amount of education lottery bonds issued pursuant to this section during the 1999-2001 biennium shall not exceed the sum of $112 million and an additional amount estimated by the State Treasurer to be necessary to pay bond-related costs. Education lottery bonds issued pursuant to this section shall be issued only at the request of the Superintendent of Public Instruction.

(4) The net proceeds of education lottery bonds issued pursuant to this section shall be deposited in the School Capital Construction, Maintenance and Technology Fund.

(5) The proceeds of education lottery bonds issued pursuant to this section shall be used only for the purpose set forth in subsection (1) of this section and for bond-related costs.

SECTION 12a. Section 12 of this 1999 Act is amended to read:

Sec. 12. (1) Pursuant to ORS 327.700 to 327.727 and sections 1 to 9, chapter 44, Oregon Laws 1999 (Enrolled Senate Bill 200), during the 1999-2001 biennium, education lottery bonds may be issued to fund state education projects as defined in ORS 327.700.

(2) The use of education lottery bond proceeds is authorized based on the findings in ORS 327.708.

(3) The aggregate principal amount of education lottery bonds issued pursuant to this section during the 1999-2001 biennium shall not exceed the sum of [$112 million] $127 million and an additional amount estimated by the State Treasurer to be necessary to pay bond-related costs. Education lottery bonds issued pursuant to this section shall be issued only at the request of the Superintendent of Public Instruction.

(4) The net proceeds of education lottery bonds issued pursuant to this section shall be deposited in the School Capital Construction, Maintenance and Technology Fund.

(5) The proceeds of education lottery bonds issued pursuant to this section shall be used only for the purpose set forth in subsection (1) of this section and for bond-related costs.

SECTION 12b. The amendments to section 12 of this 1999 Act by section 12a of this 1999 Act become operative on January 1, 2001.

SECTION 12c. If Senate Bill 1284 becomes law before January 1, 2001, section 12a of this 1999 Act (amending section 12 of this 1999 Act) and section 12b of this 1999 Act are repealed.

SECTION 13. ORS 327.700, as amended by section 10, chapter 44, Oregon Laws 1999 (Enrolled Senate Bill 200), is amended to read:

327.700. As used in ORS 327.700 to 327.727, unless the context requires otherwise:

(1) "State education lottery bonds" means the bonds authorized to be issued under ORS 327.711 for the purpose of financing state education projects.

(2) "State education projects" means projects for instructional training and the acquisition, construction, improvement, remodeling, maintenance or repair of public school facilities in the State of Oregon, including but not limited to land, site preparation costs, permanent or portable buildings and equipment, telecommunications equipment, computers, software and related technology, textbooks, library books, furniture and furnishings, vehicles, costs of planning for bond issues and capital improvements, the payment of debt service on obligations, other than general obligation bonds, issued for such projects and holding in reserve for any of the purposes described in this subsection.

SECTION 14. ORS 327.731 is amended to read:

327.731. (1) Subject to rules of the State Board of Education, the Superintendent of Public Instruction shall distribute a share of moneys in the School Capital Construction, Maintenance and Technology Fund to school districts as education project grants. The education project grants shall be distributed in one payment each distribution year. The education project grants shall be used for any state education project, as defined in ORS 327.700.

(2) Each school district's education project [grants] grant = the district's extended ADMw for the [prior] distribution year x (the total amount available for the grants in each distribution year – the total statewide extended ADMw in the [prior] distribution year).

(3) Each school district shall deposit the amounts it receives as an education project [grants] grant in a separate account, and shall apply amounts in that account to pay for costs of state education projects or shall hold amounts in that account in reserve and apply them to pay costs of future state education projects.

(4) School districts receiving education project grants from the School Capital Construction, Maintenance and Technology Fund shall, if so directed by the Oregon Department of Administrative Services, take any action specified by the Oregon Department of Administrative Services that is necessary to maintain the excludability of lottery bond interest from gross income under the United States Internal Revenue Code.

SECTION 14a. If House Bill 5016 becomes law, section 6, chapter 887, Oregon Laws 1999 (Enrolled House Bill 5016), is amended to read:

Sec. 6. (1) Notwithstanding any other law limiting expenditures of the Department of Education, the amount of $2,644,490 is established for the biennium beginning July 1, 1999, as the maximum limit for payment of expenses by the Department of Education from the Lottery Bond Administrative Fund for [issuance] bond-related costs, as defined in section 1, chapter 44, Oregon Laws 1999 (Enrolled Senate Bill 200), of state education lottery bonds issued during the 1999-2001 biennium.

(2) In addition to and notwithstanding any other law, the amount of $10,872,000 is established for the biennium beginning July 1, 1999, as the maximum limit for payment of expenses by the Department of Education from the Lottery Bond Fund for debt service on the outstanding state education lottery bonds issued during the 1999-2001 biennium.

SECTION 14b. If House Bill 5038 becomes law, section 9, chapter 908, Oregon Laws 1999 (Enrolled House Bill 5038), is amended to read:

Sec. 9. There is allocated, from the Administrative Services Economic Development Fund, to the Department of Education, for the [Oregon Education] Lottery Bond Fund created under section [8] 4, chapter 44, Oregon Laws 1999 (Enrolled Senate Bill 200), for the purpose of paying, when due, the principal, interest and premium, if any, on outstanding lottery bonds, the amount of $2,313,000.

OUT-OF-STATE DISABILITIES

PLACEMENT EDUCATION FUND

SECTION 15. (1) There is transferred to the Out-of-State Disabilities Placement Education Fund from the State School Fund, for the fiscal year beginning July 1, 1999, the sum of $400,000.

(2) There is transferred to the Out-of-State Disabilities Placement Education Fund from the State School Fund, for the fiscal year beginning July 1, 2000, the sum of $400,000.

SCHOOL DISTRICT

DISTRIBUTION REDUCTION

SECTION 16. (1) For the fiscal year beginning July 1, 1999, if the Legislative Revenue Officer and the Department of Education jointly determine, based on reports filed with the department by school districts, that the total amount distributed or transferred from the State School Fund under ORS 327.013 and 343.243 and sections 3 and 5, chapter 821, Oregon Laws 1997, and section 15 of this 1999 Act, when combined with the total amount of local revenues, as jointly determined by the Legislative Revenue Officer and the Department of Education, is less than the distribution limitation, then:

(a) The department shall calculate the distribution and transfers from the State School Fund under ORS 327.013 and 343.243 and sections 3 and 5, chapter 821, Oregon Laws 1997, and section 15 of this 1999 Act, to school districts combined with the amount of local revenues based on the distribution limitation;

(b) The Superintendent of Public Instruction shall reduce the amount for each school district calculated under paragraph (a) of this subsection by the reduction percentage calculated under subsection (2) of this section; and

(c) The Legislative Revenue Officer and the department shall jointly calculate the difference between the distribution limitation and the amount available for distribution and transfers from the State School Fund under ORS 327.013 and 343.243 and sections 3 and 5, chapter 821, Oregon Laws 1997, and section 15 of this 1999 Act, when combined with the total amount of local revenues, as jointly determined by the Legislative Revenue Officer and the department.

(2) The reduction percentage = the amount calculated under subsection (1)(c) of this section – the distribution limitation.

(3) As used in this section, "distribution limitation" means the distribution limitation established for school districts under section 6, chapter 914, Oregon Laws 1999 (Enrolled House Bill 5018).

SECTION 17. (1) For the fiscal year beginning July 1, 2000, if the Legislative Revenue Officer and the Department of Education jointly determine, based on reports filed with the department by school districts, that the total amount distributed or transferred from the State School Fund under ORS 327.013 and 343.243 and section 3, chapter 821, Oregon Laws 1997, and section 15 of this 1999 Act, when combined with the total amount of local revenues, as jointly determined by the Legislative Revenue Officer and the department, is less than the distribution limitation, then:

(a) The department shall calculate the distribution and transfers from the State School Fund under ORS 327.013 and 343.243 and section 3, chapter 821, Oregon Laws 1997, and section 15 of this 1999 Act, to school districts combined with the amount of local revenues based on the distribution limitation;

(c) The Legislative Revenue Officer and the department shall jointly calculate the difference between the distribution limitation and the amount available for distribution and transfers from the State School Fund under ORS 327.013 and 343.243 and section 3, chapter 821, Oregon Laws 1997, and section 15 of this 1999 Act, when combined with the total amount of local revenues, as jointly determined by the Legislative Revenue Officer and the department.

(2) The reduction percentage = the amount calculated under subsection (1)(c) of this section – the distribution limitation.

(3) As used in this section, "distribution limitation" means the distribution limitation established for school districts under section 7, chapter 914, Oregon Laws 1999 (Enrolled House Bill 5018).

SCHOOL DISTRICT

DISTRIBUTION CORRECTION

SECTION 18. Section 5, chapter 821, Oregon Laws 1997, is amended to read:

Sec. 5. (1) For the 1999-2000 distribution, the Department of Education shall calculate:

(a) The amount per extended ADMw that would have been distributed to a school district under section 3 (1)(a) or (c) [of this 1997 Act], chapter 821, Oregon Laws 1997, if the limitation under section 3 (1)(d) [of this 1997 Act], chapter 821, Oregon Laws 1997, was not applied.

(b) The amount per extended ADMw that was distributed under section 3 (1)(a) or (c) [of this 1997 Act], chapter 821, Oregon Laws 1997, to a school district as limited by section 3 (1)(d) [of this 1997 Act], chapter 821, Oregon Laws 1997.

(2)(a) The Department of Education shall distribute to a school district an amount per extended ADMw as calculated under paragraph (b) of this subsection, if the school district:

(A) Receives less per extended ADMw in 1999-2000 than in 1998-1999 due to the limitation imposed by section 3 (1)(d) [of this 1997 Act], chapter 821, Oregon Laws 1997; and

(B) Received for the 1996-1997 distribution less than $7,000 per extended ADMw under section 3, chapter 649, Oregon Laws 1995.

(b) The amount distributed per extended ADMw to each school district under paragraph (a) of this subsection shall equal the amount calculated under section 3 (1)(d) [of this 1997 Act], chapter 821, Oregon Laws 1997, plus [33.3] 50 percent of the amount per extended ADMw calculated under subsection (1)(c) of this section.

(3)(a) The Department of Education shall distribute to a school district an amount per extended ADMw as calculated under paragraph (b) of this subsection, if the school district:

(A) Receives less per extended ADMw in 1999-2000 than in 1998-1999 due to the limitation imposed by section 3 (1)(d) [of this 1997 Act], chapter 821, Oregon Laws 1997; and

(B) Received for the 1996-1997 distribution $7,000 or more per extended ADMw under section 3, chapter 649, Oregon Laws 1995.

(A) The amount per extended ADMw calculated under subsection (1)(c) of this section; or

(B) $1,920 per extended ADMw.

SCHOOL DISTRICT

DISTRIBUTION ADJUSTMENT

SECTION 19. (1) Between April 1, 2000, and July 1, 2000, upon request of a school district with a weighted average daily membership (ADMw) greater than 50,000 for the prior fiscal year, the Superintendent of Public Instruction may distribute to the school district an amount from the State School Fund that is in addition to the State School Fund grant of the school district. The superintendent shall reduce the State School Fund grant amount of the school district for the fiscal year beginning July 1, 2000, by any additional amount that the school district receives under this section. To be eligible for an additional amount under this section, the school district must:

(a) Receive a State School Fund grant during the fiscal year beginning July 1, 1999; and

(b) Request the additional amount prior to January 1, 2000.

(2) The additional amount distributed to a school district under subsection (1) of this section shall be no more than the positive amount equal to the estimated amount of a school district's general purpose grant and transportation grant for the fiscal year beginning July 1, 2000, minus the estimated amount of the school district's general purpose grant and transportation grant for the fiscal year beginning July 1, 1999.

NOTE: Sections 20 and 21 of this 1999 Act were deleted by amendment. Subsequent sections were not renumbered.

SMALL HIGH SCHOOLS

SECTION 22. ORS 327.077, as amended by section 27, chapter 200, Oregon Laws 1999 (Enrolled Senate Bill 100), is amended to read:

327.077. (1) A school may qualify as a remote small elementary school if the average daily membership[:]

[(a)] in grades one through eight for an elementary school teaching:

[(A)] (a) Eight grades is below 224.

[(B)] (b) Seven grades is below 196.

[(C)] (c) Six grades is below 168.

[(D)] (d) Five grades is below 140.

[(E)] (e) Four grades is below 112.

[(F)] (f) Three grades is below 84.

[(G)] (g) Two grades is below 56.

[(H)] (h) One grade is below 28.

[(b)] (2) A school may qualify as a small high school if:

(a) The school is in a school district that has an ADMw of less than 8,500; and

(b) The average daily membership in grades 9 through 12 for a high school teaching:

(A) Four grades is below 350.

(B) Three grades is below 267.

[(2)(a)] (3) No elementary school shall qualify as a remote small elementary school under subsection [(1)(a)] (1) of this section if it is within eight miles by the nearest traveled road from another elementary school unless there are physiographic conditions that make transportation to another school not feasible.

[(b) No high school shall qualify as a remote small school under subsection (1)(b) of this section if it is within 10 miles by the nearest traveled road from another high school unless there are physiographic conditions that make transportation to another school not feasible.]

[(3)(a)] (4)(a) If an elementary school in a school district qualifies as a remote small elementary school, the district shall have an additional amount added to the district's ADMw.

(b) The additional amount = {224 - (ADMa – (number of grades in the school – eight))} x .0045 x ADMa x distance adjustment.

[(4)(a)] (5)(a) If a high school in a district qualifies as a [remote] small high school, the district shall have an additional amount added to the district's ADMw.

(b) The additional amount = {350 - (ADMa – (number of grades in the school – four))} x .0029 x ADMa [x distance adjustment].

[(5)(a)] (6) The distance adjustment for an elementary school = .025 for each 10th of a mile more than eight miles that a school is away from the nearest elementary school measured by the nearest traveled road or 1.0, whichever is less.

[(b) The distance adjustment for a high school = .01 for each 10th of a mile over 10 miles that a school is away from the nearest high school measured by the nearest traveled road or 1.0, whichever is less.]

[(6)(a)] (7)(a) A school may qualify as a remote small elementary school under this section only if the location of the school has not changed since January 1, 1995, and if the school qualified as a remote small school on July 18, 1995.

(b) A school may qualify as a small high school under this section only if the location of the school has not changed since January 1, 1995, and if the school qualified as a small high school on the effective date of this 1999 Act.

[(b)] (c) A public charter school as defined in section 2, chapter 200, Oregon Laws 1999 (Enrolled Senate Bill 100), [of this 1999 Act] may qualify as a remote small elementary school under this section only if the location of the school has not changed since January 1, 1995, and if the school qualified as a nonchartered public remote small school on July 18, 1995.

(d) A public charter school as defined in section 2, chapter 200, Oregon Laws 1999 (Enrolled Senate Bill 100), may qualify as a small high school under this section only if the location of the school has not changed since January 1, 1995, and if the school qualified as a nonchartered public remote small school on July 18, 1995.

[(c)] (e) The Superintendent of Public Instruction may waive the requirements of paragraph (a), [or] (b), (c) or (d) of this subsection if the superintendent determines that exceptional circumstances exist.

(f) An alternative education program as defined in ORS 336.615 may not qualify as a small high school under this section.

[(7)] (8) The opening of a public charter school shall not disqualify a school as a remote small elementary school under subsection [(2)] (3) of this section or change the distance adjustment for a school under subsection [(5)] (6) of this section.

[(8)] (9) For purposes of this section:

(a) The "adjusted average daily membership" or "ADMa" for an elementary school shall be the average daily membership for the school, but no less than 25.

(b) The "adjusted average daily membership" or "ADMa" for a high school shall be the average daily membership for the school, but no less than 60.

SECTION 23. (1) For each of the 1999-2005 distribution years, the Department of Education shall calculate for each school district that has a high school that qualifies as a small high school under ORS 327.077 a positive amount that equals the difference between the additional weighting amount added to the district's ADMw based on the calculation under ORS 327.077 for the distribution year and the additional weighting amount that would have been added to the district's ADMw based on the calculation under ORS 327.077 (1997 Edition).

(2) For each of the 1999-2005 distribution years, the department shall add a small high school weight to each school district that has at least one small high school.

(3) The small high school weight for each school district = the small high school additional weighting amount x phase-in percentage.

(4) As used in this section:

(a) "Phase-in percentage" equals:

(A) 25 percent for the 1999-2000 and 2000-2001 distribution years.

(B) 50 percent for the 2001-2002 and 2002-2003 distribution years.

(C) 75 percent for the 2003-2004 and 2004-2005 distribution years.

(b) "Small high school additional weighting amount" means the amount calculated under subsection (1) of this section.

SECTION 24. Section 12, chapter 61, Oregon Laws 1993, is amended to read:

Sec. 12. The reopening of an existing school structure for use as a school in an adjoining school district does not prevent an elementary school from qualifying as a remote small elementary school if the elementary school otherwise meets the requirements set forth in ORS 327.075 (1993 Edition).

SECTION 25. ORS 327.013 is amended to read:

327.013. The State School Fund distributions shall be computed as follows:

(1) General Purpose Grant = Funding Percentage x Target Grant x District extended ADMw.

(2) The funding percentage shall be calculated by the Superintendent of Public Instruction to distribute as nearly as practicable the total sum available for distribution of money.

(3) Target Grant = Statewide Target per ADMw Grant + Teacher Experience Factor.

(4) Statewide Target per ADMw Grant = $4,500.

(5) Teacher Experience Factor = $25 x {District average teacher experience - statewide average teacher experience}. "Average teacher experience" means the average, in years, of teaching experience of certified teachers as reported to the Department of Education.

(6) District extended ADMw = (ADMw or ADMw of the prior year, whichever is greater) + small high school additional weighting amount calculated under section 23 of this 1999 Act.

(7)(a) Weighted average daily membership or ADMw = average daily membership + an additional amount computed as follows:

(A) 1.0 for each student in average daily membership eligible for special education as a child with disabilities under ORS 343.035, applicable to not to exceed 11 percent of the district's ADM without review and approval of the Department of Education. Children with disabilities eligible for special education in county correctional facilities shall not be included in the calculation of the 11 percent.

(B) 0.5 for each student in average daily membership eligible for and enrolled in an English as a Second Language program under ORS 336.079.

(C) 0.2 for each student in average daily membership enrolled in a union high school district or in an area of a unified school district where the district is only responsible for educating students in grades 9 through 12 in that area.

(D) -0.1 for each student in average daily membership enrolled in an elementary district operating kindergarten through grade 6 or kindergarten through grade 8 or in an area of a unified school district where the district is only responsible for educating students in kindergarten through grade 8.

(E) 0.25 times the sum of the following:

(i) The number of children 5 to 17 years of age in poverty families in the district, as determined by the Department of Education from a report of the federal Department of Education, as adjusted by the school district's proportion of students in the county receiving free or reduced price lunches under the United States Department of Agriculture's current Income Eligibility Guidelines if the number is higher than the number determined from census data and only if the school district had an average daily membership of 2,500 or less for the 1995-1996 school year, and as further adjusted by the number of students in average daily membership in June of the year of distribution divided by number of students in average daily membership in the district, or its predecessors, in June 1990;

(ii) The number of children in foster homes in the district as determined by the report of the Department of Human Resources to the federal Department of Education, "Annual Statistical Report on Children in Foster Homes and Children in Families Receiving AFDC Payments in Excess of the Poverty Income Level," or its successor, for October 31 of the year prior to the year of distribution; and

(iii) The number of children in the district in state-recognized facilities for neglected and delinquent children, based on information from the Department of Human Resources for October 31 of the year prior to the year of distribution.

(F) An additional amount as determined by ORS 327.077 (1997 Edition) shall be added to the ADMw for each remote small school in the district.

(G) All numbers of children used for the computation in this section must reflect any district consolidations that have occurred since the numbers were compiled.

(b) The total additional weight that shall be assigned to any student in average daily membership in a district, exclusive of students described in paragraph (a)(E) and (F) of this subsection shall not exceed 2.0.

(8) Transportation Grant = 70 percent of Approved Transportation Costs.

(9) Local Revenues are the total of the following:

(a) The amount of revenue offset against local property taxes as determined by the Department of Revenue under ORS 311.175 (3)(a)(A);

(b) The amount of property taxes actually received by the district including penalties and interest on taxes;

(d) The amount of revenue received by the district from the county school fund;

(e) The amount of revenue received by the district from the 25 percent of federal forest reserve revenues required to be distributed to schools by ORS 294.060 (1);

(f) The amount of revenue received by the district from state managed forestlands under ORS 530.115 (1)(b) and (c);

(g) The amount of revenue received under ORS 334.400 by a school district in an education service district that provides equalization under ORS 334.400;

(h) Moneys received in lieu of property taxes; and

(i) Federal funds received without specific application by the school district and which are not deemed under federal law to be nonsupplantable.

(10) Notwithstanding subsection (9) of this section, Local Revenues do not include the amount of revenue actually received by the district, including penalties and interest on taxes, that is used for payment of bonds issued to finance or refinance an unfunded obligation for prior service costs under a contract of integration pursuant to ORS 238.685 (2)(a).

(11)(a) Facility Grant = [6] 8 percent of total construction costs of new school buildings.

(b) A school district shall receive a Facility Grant in the distribution year that a new school building is first used.

(A) "New school building" includes new school buildings, adding structures onto existing school buildings and adding premanufactured structures to a school district if those buildings or structures are to be used for instructing students.

(B) "Construction costs" does not include costs for land acquisition.

SECTION 26. ORS 327.013, as amended by section 25 of this 1999 Act, is amended to read:

327.013. The State School Fund distributions shall be computed as follows:

(1) General Purpose Grant = Funding Percentage x Target Grant x District extended ADMw.

(2) The funding percentage shall be calculated by the Superintendent of Public Instruction to distribute as nearly as practicable the total sum available for distribution of money.

(3) Target Grant = Statewide Target per ADMw Grant + Teacher Experience Factor.

(4) Statewide Target per ADMw Grant = $4,500.

(6) District extended ADMw = [(]ADMw or ADMw of the prior year, whichever is greater[) + small high school additional weighting amount calculated under section 23 of this 1999 Act].

(7)(a) Weighted average daily membership or ADMw = average daily membership + an additional amount computed as follows:

(B) 0.5 for each student in average daily membership eligible for and enrolled in an English as a Second Language program under ORS 336.079.

(E) 0.25 times the sum of the following:

(F)(i) An additional amount as determined by ORS 327.077 (1997 Edition) shall be added to the ADMw for each remote small school in the district.

(ii) An additional amount as determined by section 23 of this 1999 Act for each small high school in the district that is equal to the small high school additional weighting amount.

(G) All numbers of children used for the computation in this section must reflect any district consolidations that have occurred since the numbers were compiled.

(8) Transportation Grant = 70 percent of Approved Transportation Costs.

(9) Local Revenues are the total of the following:

(a) The amount of revenue offset against local property taxes as determined by the Department of Revenue under ORS 311.175 (3)(a)(A);

(b) The amount of property taxes actually received by the district including penalties and interest on taxes;

(d) The amount of revenue received by the district from the county school fund;

(e) The amount of revenue received by the district from the 25 percent of federal forest reserve revenues required to be distributed to schools by ORS 294.060 (1);

(f) The amount of revenue received by the district from state managed forestlands under ORS 530.115 (1)(b) and (c);

(g) The amount of revenue received under ORS 334.400 by a school district in an education service district that provides equalization under ORS 334.400;

(h) Moneys received in lieu of property taxes; and

(i) Federal funds received without specific application by the school district and which are not deemed under federal law to be nonsupplantable.

(11)(a) Facility Grant = 8 percent of total construction costs of new school buildings.

(b) A school district shall receive a Facility Grant in the distribution year that a new school building is first used.

(B) "Construction costs" does not include costs for land acquisition.

SECTION 27. Section 29 of this 1999 Act and the amendments to ORS 327.013 by section 26 of this 1999 Act become operative July 1, 2000.

SECTION 28. The amendments to ORS 327.013 by section 26 of this 1999 Act affect the State School Fund distribution commencing with the 2000-2001 distribution.

SECTION 29. For the 2000-2001 distribution, the district extended ADMw under ORS 327.013 shall be calculated as though the amendments to ORS 327.013 by section 26 of this 1999 Act were effective on July 1, 1999. A school district's ADMw of the prior year shall be adjusted to reflect the amendments to ORS 327.013 by section 26 of this 1999 Act.

SECTION 30. ORS 327.013, as amended by sections 25 and 26 of this 1999 Act, is amended to read:

327.013. The State School Fund distributions shall be computed as follows:

(1) General Purpose Grant = Funding Percentage x Target Grant x District extended ADMw.

(2) The funding percentage shall be calculated by the Superintendent of Public Instruction to distribute as nearly as practicable the total sum available for distribution of money.

(3) Target Grant = Statewide Target per ADMw Grant + Teacher Experience Factor.

(4) Statewide Target per ADMw Grant = $4,500.

(6) District extended ADMw = ADMw or ADMw of the prior year, whichever is greater.

(7)(a) Weighted average daily membership or ADMw = average daily membership + an additional amount computed as follows:

(B) 0.5 for each student in average daily membership eligible for and enrolled in an English as a Second Language program under ORS 336.079.

(E) 0.25 times the sum of the following:

(F)[(i)] An additional amount as determined by ORS 327.077 [(1997 Edition)] shall be added to the ADMw for each remote small elementary school and for each small high school in the district.

[(ii) An additional amount as determined by section 23 of this 1999 Act for each small high school in the district that is equal to the small high school additional weighting amount.]

(G) All numbers of children used for the computation in this section must reflect any district consolidations that have occurred since the numbers were compiled.

(8) Transportation Grant = 70 percent of Approved Transportation Costs.

(9) Local Revenues are the total of the following:

(a) The amount of revenue offset against local property taxes as determined by the Department of Revenue under ORS 311.175 (3)(a)(A);

(b) The amount of property taxes actually received by the district including penalties and interest on taxes;

(d) The amount of revenue received by the district from the county school fund;

(e) The amount of revenue received by the district from the 25 percent of federal forest reserve revenues required to be distributed to schools by ORS 294.060 (1);

(f) The amount of revenue received by the district from state managed forestlands under ORS 530.115 (1)(b) and (c);

(g) The amount of revenue received under ORS 334.400 by a school district in an education service district that provides equalization under ORS 334.400;

(h) Moneys received in lieu of property taxes; and

(i) Federal funds received without specific application by the school district and which are not deemed under federal law to be nonsupplantable.

(11)(a) Facility Grant = 8 percent of total construction costs of new school buildings.

(b) A school district shall receive a Facility Grant in the distribution year that a new school building is first used.

(B) "Construction costs" does not include costs for land acquisition.

SECTION 31. The amendments to ORS 327.013 by section 30 of this 1999 Act become operative July 1, 2005.

SECTION 32. The amendments to ORS 327.013 by section 30 of this 1999 Act affect the State School Fund distribution commencing with the 2005-2006 distribution.

URBAN ENHANCEMENT GRANT

SECTION 33. For the fiscal years beginning July 1, 1999, and July 1, 2000, in addition to and not in lieu of any other moneys, the Department of Education shall award a grant that equals $2 million to each school district with a weighted average daily membership (ADMw) greater than 50,000 for the prior fiscal year.

SECTION 34. (1) In addition to and not in lieu of any other appropriation, there is appropriated to the Department of Education, for the fiscal year beginning July 1, 1999, out of the General Fund, the sum of $2 million, which may be expended for grants to school districts under section 33 of this 1999 Act.

(2) In addition to and not in lieu of any other appropriation, there is appropriated to the Department of Education, for the fiscal year beginning July 1, 2000, out of the General Fund, the sum of $2 million, which may be expended for grants to school districts under section 33 of this 1999 Act.

OREGON PUBLIC EDUCATION NETWORK

SECTION 35. (1) Of the amounts set aside for distribution to education service districts under section 2 of this 1999 Act for the 1999-2000 and 2000-2001 fiscal years, the Superintendent of Public Instruction shall set aside $1,125,000 each fiscal year for the purpose of providing technology-based opportunities for Oregon classrooms.

(2) The superintendent shall distribute the amount set aside under subsection (1) of this section to the Oregon Association of Education Service Districts' Oregon Public Education Network Steering Committee based on a proposal from the committee, if the superintendent approves the proposal.

(3) The amounts distributed under this section shall be used for:

(a) Maintaining Oregon Public Education Network operations, including but not limited to further development and maintenance of the statewide network;

(b) Maintaining the Oregon Public Education Network clearinghouse for the purpose of the continuation of the development of electronically-based products for Oregon's teachers and classrooms;

(c) Training teachers and administrators on a statewide basis on the effective use of technology in Oregon's classrooms; and

(d) Maintaining the technical center of the Oregon Public Education Network for the purpose of ensuring the continued networking of all Oregon education service districts and school districts and providing technical support.

(4) The superintendent shall incorporate the operations budget and activities of the Oregon Public Education Network into the budget of the Department of Education for the 2001-2003 biennium.

(5) The superintendent shall cause a study of how kindergarten through grade 12 technology, networking, connectivity and access fit within the state enterprise network planning. Prior to October 1, 2000, the superintendent shall report the results of the study to the Governor and the appropriate interim legislative committees.

MISCELLANEOUS

SECTION 36. The unit captions used in this 1999 Act are provided only for the convenience of the reader and do not become part of the statutory law of this state or express any legislative intent in the enactment of this 1999 Act.

SECTION 37. Sections 2, 3, 15, 16, 19, 23 and 35 of this 1999 Act and the amendments to ORS 327.008, 327.013 and 327.077 and section 12, chapter 61, Oregon Laws 1993, and section 5, chapter 821, Oregon Laws 1997, and section 6, chapter 887, Oregon Laws 1999 (Enrolled House Bill 5016), and section 9, chapter 908, Oregon Laws 1999 (Enrolled House Bill 5038), by sections 10, 14a, 14b, 18, 22, 24 and 25 of this 1999 Act apply to fiscal years beginning on and after July 1, 1999.

SECTION 38. Sections 2, 3, 15, 16, 19, 23 and 35 of this 1999 Act and the amendments to ORS 327.008, 327.013 and 327.077 and section 12, chapter 61, Oregon Laws 1993, and section 5, chapter 821, Oregon Laws 1997, by sections 10, 18, 22, 24 and 25 of this 1999 Act affect State School Fund distributions commencing with the 1999-2000 distribution.

Approved by the Governor September 1, 1999

Filed in the office of the Secretary of State September 2, 1999

Effective date October 23, 1999

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