Background: Basic Education and K-12 Funding Formulas. In the 2009-11 biennium, two pieces of legislation were enacted to redefine basic education and restructure the K-12 funding formulas. The first was Engrossed Substitute House Bill 2261, Chapter 548, Laws of 2009, which expands the definition of basic education by adding the programs for highly capable students and student transportation to and from school. A new transportation funding formula was adopted to predict pupil transportation costs based on regression analysis. Additionally, the all-day kindergarten programs that had been phased in since 2007 are to become part of basic education with the continued phase in of the highest poverty schools first. Increases in the number of instructional hours and the minimum number of credits for high school graduation are to be phased in on a schedule set by the Legislature. The framework for a new K-12 funding allocation formula based on prototypical schools was created. These changes are to take effect September 1, 2011.

The second bill, Substitute House Bill 2776, Chapter 236, Laws of 2010, enacted new prototypical school allocation formulas at funding levels which represent the 2009-10 school year state spending on basic education. The bill also established a timeline, effective September 1, 2011, for phasing in enhancements to the program of basic education and certain funding levels as follows: During the 2011-13 biennium,

enhanced funding for transportation must begin to be phased in to be completed by the 2013-15 biennium;
beginning with the schools with the highest poverty students, the K-3 class size must be reduced to 17 students per teacher by 2017;
the minimum allocation for maintenance, supplies, and operating costs (MSOC) must be increased as specified in the Omnibus Appropriations Act until specific amounts are provided in the 2015-16 school year; and
funding for all-day kindergarten must continue to be phased in each year until full statewide implementation is achieved in the 2017-18 school year.

Career and Technical (CTE) Student Organizations. SPI must provide staff support for statewide coordination of CTE student organizations, including but not limited to the National FFA Organization; Family Career, and Community Leaders of America; SkillsUSA; Distributive Education Clubs of America; Future Business Leaders of America; and the Technology Student Organization.

Special Services Pilot Program. In 2003 the Legislature authorized and funded two school districts to pilot programs of early and intensive intervention services in reading and language with the intent to reduce the number of children who may eventually require special education services. The pilot program was originally to expire June 30, 2007. In 2007 the Legislature reauthorized, expanded, and funded the pilot program for seven school districts. The expanded pilot program is to expire June 30, 2011.

Summary: Basic Education and K-12 Funding Formulas. It is clarified that the number of instructional hours and the minimum number of credits for high school graduation will be increased no sooner than the 2014-15 school year.

The pupil transportation funding formula, scheduled to go into effect September 1, 2011, is adjusted as follows:

The new formula includes statistically significant factors only.
The indirect-cost rate added to the final prior year expenditures is specified as the federal restricted indirect rate.
The growth in salaries and benefits in the allowable prior year expenditures will not exceed the growth provided in the budget.
During the transition to full implementation, the funding will include budgeted increases provided in the Omnibus Appropriations Act for salaries or fringe benefits.
Clarifies that, during the transition to full implementation, in-lieu bus depreciation payments to contracting districts are not included in the reported prior year expenditures.

The transitional bilingual education funding formula is amended to provide that, notwithstanding the requirement that funding allocation provide a statewide average additional number of hours per week of instruction, the actual per-student allocation may be scaled for a larger allocation for students needing more intensive intervention and a commensurate reduced allocation for those needing less intensive intervention.

(CTE) Student Organizations and Special Services Pilot. The SPI is responsible for staffing the CTE student organizations only to the extent that funds are available. The special services pilot program expires March 1, 2011, instead of June 30, 2011.

Senate	34	11
House	57	39

Effective:	June 7, 2011.
	August 24, 2011 (Section 7).
	September 1, 2011 (Sections 1 - 3).