An Act To Enact the School Finance and Tax Reform Act of 2003 Transmitted to the Clerk of the 121st Maine Legislature by the Secretary of State on February 19,2003 and ordered printed. Printed on recycled paper 11/~ /J7. 7J?t1£~
Maine Legislature, Session 121, LD 1372
Amends: 30-A MRSA §5681

Legislative Document 
No. 1372 
LB.3 
House of Representatives, March 18,2003 
An Act To Enact the School Finance and Tax Reform Act of 2003 
Transmitted to the Clerk of the 121st Maine Legislature by the Secretary of State on 
February 19,2003 and ordered printed. 
Printed on recycled paper 
11/~ 
/J7. 7J?t1£~ 
MILLICENT M. MacFARLAND 
Clerk 
Be it enacted by the People of the State of Maine as follows: 
Sec. I. 20-A MRSA c. 606-C is enacted to read: 
CHAPTER 606-C 
SCHOOL FINANCE ACT OF 2003 
§1568l. 
Short title 
This chapter may be known and cited as the "School Finance 
Act of 2003." 
§15682. 
Mandated legislative appropriations for kindergarten 
to grade 12 education 
Notwithstanding any other prov~s~on of law, the Legislature 
each year shall provide at least 55% of the cost of the total 
allocation for kindergarten to grade 12 education from General 
Fund revenue sources. 
For the purpose of this chapter, and until such time as the 
Legislature may implement an alternative school funding system, 
"total allocation" means the foundation allocation for a year, 
the 
debt 
service allocation for 
that year, 
the 
sum 
of all 
adjustments for that year and the total of the additional local 
appropriations for the prior year. 
In the event the Legislature 
implements an alternative school funding model that alters the 
meaning of the terms used in this Title or otherwise makes 
obsolete 
the 
system of 
allocations 
and 
local 
appropriations 
established by this Title, the term "total allocation" as it 
applies to the mandatory appropriation reguired by this section 
means the amount reasonably calculated as the eguivalent of this 
definition. 
§15683. 
Mandated legislative appropriations for special education 
Notwithstanding any other provision of law, the Legislature 
shall provide 100% of the state and local cost of providing all 
special education services mandated under federal or state law, 
rule or regulation. 
For the purposes of the mandatory appropriation reguired by 
this section, the commissioner shall identify and provide in the 
commissioner's recommendation pursuant to section 15605 the total 
costs to the individual school administrative units associated 
with providing all special education services mandated 
under 
federal or state law, rule or regulation for the school year 
concluding 
on 
the 
previous 
June 
30th. 
In 
addition 
to 
any 
appropriations reguired by section 15607, the Legislature shall 
Page l-LR202l(l) 
appropriate and ensure the accurate distribution of the total 
amount identified by the commissioner, adjusted by the actual 
state 
and 
federal 
reimbursements 
for 
the 
costs 
of 
special 
education services mandated by federal or state law, 
rule or 
regulation 
and previously provided to 
the 
individual 
school 
administrative units for that Same school year. 
§15684. 
Fund for the Efficient Deliye~ of Educational Services 
The Fund for the Efficient Delivery of Educational Seryices, 
referred to in this section as "the fund," is established. 
Two percent of the funds annually appropriated pursuant to 
this chapter must be dedicated to the fund and distributed from 
the fund to those school administratiye units and municipalities 
that can demonstrate significant and sustainable sayings in the 
cost 
of 
deliyering 
educational 
seryices 
through 
changes 
in 
governance, 
administratiye 
structure 
or 
adopted 
policy 
that 
result in the creation of consolidated school administrative 
uni ts, 
broad based 
purchasing 
alliances, 
enhanced 
regional 
delivery 
of 
educational 
services 
or 
collaborative 
sChool-municipal service delivery or service support systems. 
§15685. 
Entitlement 
The State's school administrative units and municipalities 
are entitled to the appropriations required by this chapter. 
Sec. 2. 30-A MRSA §5681, sub-§3, as amended by PL 1999, c. 
731, Pt. U, §2, is further amended to read: 
3. 
Revenue-sharing 
funds. 
To 
strengthen 
the 
state-municipal fiscal relationship pursuant to the findings and 
objectives 
of 
sUbsection 
1, 
there is established the 
Local 
Government 
Fund. 
To 
provide 
additional 
support 
for 
municipalities experiencing a 
higher-than-average property tax 
burden, 
there is established the Disproportionate Tax 
Burden 
Fund. 
To assist those municipalities that collaborate with other 
municipalities, counties or state agencies to obtain savings in 
the cost of delivering local and regional governmental services 
there is established the Fund for the Efficient Delivery of Local 
and Regional Services. 
Sec. 3. 30-A MRSA §5681, sub-§5-B is enacted to read: 
5-B. 
Fund for the Efficient Delive~ of Local and Regional 
Services. 
For the months beginning on or after July 1, 2004 and 
before the distributions required by subsections 4 A and 4-B, 2% 
of all receipts transferred each month pursuant to subsection 5 
must be deposited in the Fund for the Efficient Delivery of Local 
and 
Regional 
Services, 
as 
established in subsection 
3, 
and 
distributed 
to 
those 
municipalities 
that 
can 
demonstrate 
significant and sustainable savings in the cost of delivering 
local and regional governmental services through collaborative 
approaches 
to 
service 
delivery, 
enhanced 
regional 
delivery 
systems, 
the 
consolidation 
of 
administrative 
services, 
the 
creation of broad-based purchasing alliances or the execution of 
interlocal agreements. 
Sec. 4. Legislative duties. 
In carrying out its duties under 
this Act, the Legislature and its joint standing committees shall 
act to provide substantial property tax relief statewide in a 
manner that is sustained over time, reduce unnecessary spending, 
provide tax reform, avoid adding to the overall tax burden of 
citizens of this State and coordinate those efforts among the 
school administrative units and local and regional governments. 
1. 
State tax revenue. 
As soon as possible, but no later 
than 
March 
1, 
2004, 
the 
joint 
standing 
committee 
of 
the 
Legislature 
having 
jurisdiction 
over 
taxation 
matters 
shall 
report out revenue-neutral legislation designed in accordance 
with the intentions of this Act to generate the additional 
revenue 
necessary 
to 
provide 
adequate 
funding 
for 
public 
education from kindergarten to grade 12 pursuant to the Maine 
Revised Statutes, Title 20-A, chapter 606-C. 
The legislation may 
not 
defeat 
the 
intent 
of 
this 
Act 
by 
reducing, 
freezing, 
eliminating 
or 
otherwise 
restricting 
the 
state 
revenues, 
appropriations 
or 
reimbursements 
that historically have 
been 
provided to or shared with municipalities, 
including without 
limitation: 
state-municipal revenue sharing established in Title 
30-A, chapter 223, subchapter 2; property tax homestead exemption 
reimbursement established in Title 36, chapter 105, subchapter 
4-B; the County Jail Prisoner Support and Community Corrections 
Fund established in Title 34-A, section 1210-A; the tree growth 
tax reimbursement program established in Title 36, section 578; 
the general assistance reimbursement program established in Title 
22, section 4311; and the Rural Road Initiative and Urban Compact 
Initiative established in Title 23, section 1803-B. 
2. 
Fund 
for 
the 
Efficient 
Delivery 
of 
Educational 
Services. 
As soon as possible, but no later than March 1, 2004, 
the 
joint 
standing 
committee 
of 
the 
Legislature 
having 
jurisdiction over education matters shall report out legislation 
designed in accordance with the intentions of this Act to govern 
the design, implementation, management and oversight of the Fund 
for the Efficient Delivery of Educational Services established in 
the Maine Revised Statutes, Title 20-A, section 15684. 
3. 
Fund for the Efficient Delivery of Local and Reqional 
Services. 
As soon as possible, but no later than March 1, 2004, 
the 
joint 
standing 
committee 
of 
the 
Legislature 
having 
jurisdiction over state and local government matters shall report 
out legislation designed in accordance with the intentions of 
this Act to govern the design, 
implementation, management and 
oversight of the Fund for the Efficient Delivery of Local and 
Regional Services established in the Maine 
Revised Statutes, 
Title 30-A, section 5681, subsection 3. 
4. 
Tax burden manaqement. 
As 
soon as possible, but no 
later than March 1, 2004, the joint standing committees of the 
Legislature 
having 
jurisdiction 
over 
taxation 
matters 
and 
appropriations and financial affairs shall jointly 
develop and 
report out legislation that consists of a comprehensive plan that 
integrates the efforts of state, county and local governments and 
schools to reduce unnecessary spending, identifies cost savings 
in the delivery of governmental services and otherwise addresses 
the issue of the overall tax burden in this State. 
SUMMARY 
This initiated bill requires the State to provide 
55% of the total state and local cost of kindergarten to 
public 
education, 
including 
100% 
state 
support 
for 
education services mandated by state or federal law. 
at least 
grade 12 
special 
Two percent of the annual state appropriation for education 
required by this initiated bill is dedicated to the Fund for the 
Efficient Delivery of Educational Services, which is dedicated to 
providing 
incentive-based 
resources 
to 
those 
school 
administrative units or municipalities that would effect certain 
system changes that provide significant and sustainable cost 
savings in the delivery of educational services. 
The Fund for the Efficient Delivery of Local and Regional 
Services is established within the Local Government Fund, which 
is 
the 
fund 
from 
which 
state-municipal 
revenue 
sharing 
is 
distributed. 
This fund is capitalized by setting aside 2% of the 
sales and income tax revenue that would otherwise be distributed 
according to the revenue-sharing formula. 
This 2% is distributed 
to those municipalities that can demonstrate cost savings in the 
delivery of local 
and 
regional governmental 
services 
through 
collaboration with other 
local 
and 
regional 
governments 
and 
participating state agencies. 
This initiated bill directs the 
Legislature to develop the necessary implementing legislation to 
fully 
implement 
the 
Fund 
for 
the 
Efficient 
Delivery 
of 
Educational Services and the Fund for the Efficient Delivery of 
Local and Regional Services. 
This initiated bill also directs the Legislature to develop 
the 
necessary 
implementing 
legislation 
to 
provide 
for 
the 
necessary state revenue to meet the State's obligation to support 
public education without undermining existing municipal support 
systems 
such as municipal 
revenue sharing, 
the property tax 
homestead exemption and local road assistance, among others. 
Finally, 
this initiated bill directs the Legislature to 
develop a comprehensive plan as soon as possible but no later 
than March 1, 2004 that integrates the efforts of state, county 
and local government and schools to reduce unnecessary spending, 
identifies cost savings in the delivery of governmental services 
and otherwise addresses the issue of the overall tax burden in 
this State.