An Act To Promote Student and Taxpayer Equity in the School Funding Formula
Maine Legislature, Session 121, LD 1422
Committee: Education and Cultural Affairs
Sponsors: BRENNAN, CUMMINGS, KANE, MURPHY
Amends: 20-A MRSA §15603, 20-A MRSA §15657, 20-A MRSA §15658

Legislative Document 
No. 1422 
S.P.472 
In Senate, March 25, 2003 
An Act To Promote Student and Taxpayer Equity in the School 
Funding Formula 
(EMERGENCY) 
Reference to the Committee on Education and Cultural Affairs suggested and ordered 
printed. 
Presented by Senator BRENNAN of Cumberland. 
Cosponsored by Representative CUMMINGS of Portland and 
Representatives: KANE of Saco, MURPHY of Kennebunk. 
Printed on recycled paper 
JOY J. O'BRIEN 
Secretary of the Senate 
Emergency preamble. Whereas, Acts of the Legislature do not 
become effective until 90 days after adjournment unless enacted 
as emergencies; and 
Whereas, this legislation needs to take effect before the 
expiration of the 90-day period in order for its provisions to be 
in effect for the beginning of the next fiscal year; and 
Whereas, in the judgment of the Legislature, these facts 
create an emergency within the meaning of the Constitution of 
Maine 
and 
require 
the 
following 
legislation 
as 
immediately 
necessary for the preservation of the public peace, health and 
safety: now, therefore, 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 20-A MRSA §15603, sub-§26-A, V, as 
amEmded by PL 
1999, c. 401, Pt. GG, §2, is further amended to read: 
F. 
If for any fiscal year the total amount appropriated for 
the State's share of the total allocation is less than the 
amount specified in the certified funding level for that 
year, 
then all 
subsidizable 
costs 
except 
as 
noted 
in 
subparagraphs (1) and (2) are reduced by a percentage of the 
original cost amounts. 
The 
reduction percent.age is the 
smallest percentage that results in a state share of the 
total 
allocation 
that 
does 
not 
exceed 
the 
amount 
appropriated for this purpose, 
except that the reduction 
percentage that would ordinarily be used for operating and 
program costs must be reduced for the purpose of computing 
state subsidy for transportation operating costs as defined 
in subsection 29. 
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Beginning in 
fiscal year 2003-04, the reduction percentage for program 
costs must be 
O~. 
The following subsidizable costs may not 
be reduced: 
(1) 
Principal 
and 
interest 
on 
approved 
school 
construction costs; and 
(2) 
Approved lease costs. 
Sec. 2. 20·A MRSA §15652, sub·§6, as enacted by PL 1995, c. 
368, Pt. Z, §1 and affected by §2, is amended to read: 
6. 
Property fiscal capacity. 
"Property fiscal capacity" 
means the lesser of the average of the state valuation amounts 
for the 6 ~ most recent years prior to the year of funding or the 
state valuation amount for the most recent year. 
Sec. 3. 20·A MRSA §15653, sub·§l, as amended by PL 2001, c. 
358, Pt. u, §2, is repealed and the following enacted in its 
place: 
1. 
Per pu,pil guarantee. 
The Legislature shall annually 
establish a per pupil guarantee. 
For fiscal year 2003-04, the 
per pupil guarantee is $4,816. 
Sec. 4. 20·A MRSA §15653, sub·§4, as amended by PL 2001, c. 
559, Pt. D, §3, is further amended to read: 
4. 
Statewide local share. 
For fiscal year 2001-02, 
the 
statewide local share amount of the operating costs allocation is 
based on the sum of the amounts determined by mUltiplying for 
each unit 7.29 mills times the unit's property fiscal capacity. 
In subsequent years ~ae-ffi4~~-~~~~~-~~~~~~b&r-e~eep~-~aa~ the 
Legislature shall determine 
if-~-~~~-is the mill rate 
needed to achieve the targeted per pupil guarantee under this 
section. 
Sec. 5. 20·A MRSA §15656, sub-§l, as enacted by PL 1999, c. 
401, Pt. GG, §8, is amended to read: 
1. 
Pupil count used for operating costs. 
The resident 
pupil count used for operating costs in this chapter is the 
greater of the average of the 2 census counts for the most recent 
calendar year and the average of the -4-
~ census counts for the 
~ most recent calendar years. 
A. 
The 2 census counts in each calendar year must be for 
April 1st and October 1st. 
B. 
As an exception, only the 2 census counts in the most 
recent calendar year may be used for: 
(1) 
Kindergarten to grade 8 students for units that 
send all their kindergarten to grade 
students as 
tuition students to schools elsewhere in the State; 
(2) 
Grade 9 to grade 12 students for units that send 
all their grade 
to grade 
students as tuition 
students to schools elsewhere in the State; and 
(3) 
Kindergarten to grade 12 students for units that 
send all their kindergarten to grade 12 students as 
tuition students to schools elsewhere in the State. 
Sec. 6. 20-A MRSA §15657, sub-§l, as enacted by PL 1995, c. 
368, Pt. Z, §1 and affected by §2, is amended to read: 
1. 
capacity 
capacity 
property 
Fiscal capacity. 
divided by the 
as computed by 
weight ef-QT8§ as 
The local per pupil property fiscal 
statewide per pupil 
prop1erty fiscal 
the commissioner is multiplied by 
a 
described in this subsection. 
A. 
Beginning in fiscal year 2003-04, the determination of 
fiscal capacity must be computed in accordance with the 
following provisions: 
(1) For fiscal year 2003-04, the property weight used 
is 0.80; and 
(2) For fiscal year 2004 05, the property weight used 
is 0.75. 
B. 
As an exception to the property fiscal capacity computed 
under 
subsection 
1, 
the 
commissioner 
shall 
adjust 
the 
weighted 
relative 
property 
fiscal 
capacity 
used 
in 
accordance with this subsection for a school administrative 
unit that is located in a municipality that has tax-exempt 
property as described in Title 36, sections 651 and 652 that 
exceeds 20% or more of the property within the municipality 
as 
determined 
by 
the 
Department 
of 
Administrative 
and 
Financial Services, Bureau of Revenue Services under Title 
36, section 305, subsection 1. 
The commissioner shall adopt 
rules for the exception to be provided under this paragraph, 
including procedures for determining the adjustment needed 
for 
school 
administrative 
units 
that 
qualify 
for 
an 
adjustment under this paragraph. 
Rules adopted pursuant to 
this paragraph are routine technical rules as defined in 
Title 5, chapter 375, subchapter 2-A. 
Sec. 7. 20-A MRSA §15657, sub-§2, as amended by PL 1999, c. 
401, Pt. GG, §9, is repealed and the following enacted in its 
place: 
2. 
Local 
median 
hQusehold 
income. 
The 
local 
median 
household 
income is divided by the statewide average 
median 
household income. 
The final result is multiplied by an income 
weight as described in this subsection. 
For fiscal year 2003-04, 
the income weight used is 0.20 and for fiscal year 2004-05, the 
income weight used is 0.25. 
As an exception, the commissioner 
shall adjust the 
income weight used in accordance with this 
subsection for 
a 
school administrative unit that is located 
within a municipality whose weighted relative fiscal property 
capacity as determined under this section as a percent of the 
municipality's 
median 
household 
income 
is 
greater 
than 
the 
statewide 
weighted 
relative 
fiscal 
property 
capacity 
as 
determined under this section as 
a percent of the statewide 
median household income average. 
Sec. 8. 20-A MRSA §15658, sub-§l, as enacted by PL 1995, c. 
368, Pt. Z, §l and affected by §2, is amended to read: 
1. 
Operating CQsts mill rate. 
The operating costs mill 
rate, as described in chapter 606, is in effect for the limited 
purposes of determining the state and local shares of each school 
administrative unit's 
program 
costs 
allocation 
and its debt 
service allocation, and for determining the amount required to 
provide the statewide state share of the allocation for the per 
pupil guarantee. 
For each individual school administrative unit, 
the amounts described in section 15655, subsection 1 are used 
rather than the amounts in section 15608, subsection 1; section 
15609, subsection 1, paragraph A; 
and section 15610, subsection 
1, paragraph A. 
This subsection is repealed July 1, 2003. 
Sec. 9. 20-A MRSA §15658, sub-§2 is enacted to read: 
2. 
Operating CQsts mill rate. 
Beginning with fiscal year 
2003-04, the operating costs mill rate, as described in chapter 
606, is not in effect for the limited purposes of determining the 
state and local shares of each school administrative unit's 
program costs allocation and its debt service allocation, and for 
determining the amount required to provide the statewide state 
share of the allocation for the per pupil guarantee. 
For each 
individual school administrative unit, the amounts described in 
section 15655, subsection 1 are used rather than the amounts in 
section 
15608, 
subsection 
1; 
section 
15609, 
subsection 
L 
paragraph A: and section 15610, subsection L 
paragraph A, with 
the exception of the program millage limit and the debt service 
millage limit pursuant to section 15607, 
subsection 2. 
This 
subsection takes effect July 1, 2003. 
Sec. 10. Per pupil guarantee and statewide factor. 
The per pupil 
guarantee for the 2003-04 fiscal year is $4,816 in accordance 
with the Maine 
Revised Statutes, Title 
20-A, 
section 15653, 
subsection 1. The Department of Education shall calculate the 
statewide factor required for fiscal year 
2003-04 after the 
Legislature 
determines 
the 
amount 
of 
general 
fu.nds 
to 
be 
appropriated for 
the general 
purpose 
aid for 
local 
schools 
program pursuant to Title 20-A, chapters 606 and 606-A. 
Sec. 11. Foundation subsidy indexes. 
This section establishes 
the mill rates pursuant to the Maine Revised Stat.utes, Title 
20-A, 
chapter 
for 
the 
2003-04 
fiscal 
year 
as 
follows: 
operating 
cost millage 
is 
determined 
by 
the 
Department 
of 
Education; and the program millage limit is 1.45 mills. 
Sec. 12. Foundation reduction percentage. 
reduction percentage is 0%. 
The 
program cost 
Sec. 13. Debt service reduction percentage. 
The Department of 
Education 
shall 
determine 
the 
reduction 
percentage 
for 
the 
insured value factor for fiscal year 2003-04 pursuant to the 
Maine Revised Statutes, Title 20-A, chapter 606. 
Sec. 14. Debt service appropriation. 
The Department of Education 
shall calculate 
the 
debt 
service appropriation level 
to 
be 
provided for the general purpose aid for local schools program 
for the fiscal year beginning July 1, 2003 and ending June 30, 
2004 pursuant to the Maine Revised Statutes, Title 20-A, chapter 
606. 
Sec. 15. Adjustments and miscellaneous costs allocation; geographic 
isolation; 
out-of-district 
placements. 
The 
adjustments 
and 
miscellaneous costs allocation of state funds for fiscal year 
2003-04 for the cost of geographic isolation adjustments and the 
out-of-district placements adjustments under the General Purpose 
Aid for 
Local Schools program listed in this section is as 
follows: 
2003-04 
TOTAL 
Adjustments and Miscellaneous Costs 
Cost of Geographic Isolation Adjustments 
$1,792,317 
Out-of-district Placements 
3,788,679 
Total Adjustments and Miscellaneous Costs 
$5,580,996 
Sec. 16. Adjustments and miscellaneous costs allocation. 
Except as 
provided in section 14 and after the Legislature determines the 
amount of general 
funds 
to be 
appropriated for 
the general 
purpose aid for local schools program pursuant to the Maine 
Revised 
Statutes, 
Title 
20-A, 
chapters 
and 
606-A, 
the 
Department 
of 
Education shall 
determine 
the 
adjustments 
and 
miscellaneous 
costs 
allocation of 
state 
funds 
necessary 
for 
fiscal year 
2003-04 under the general purpose aid for local 
schools 
program for 
the following categories of adjustments: 
cost of quality incentive adjustments, audit adjustments, cost of 
reimbursement 
for 
private 
school 
services, 
special education 
tuition and 
board 
for 
state wards 
and 
other pupils 
placed 
directly by the State, state agency clients, English as a 2nd 
language, 
long-term 
drug 
treatment 
centers, 
contract 
for 
cost-of-education 
and 
income 
data, 
learning 
results 
implementation and the fiscal year 2003-04 cushion. 
Sec. 17. Updating and revising plan components of the essential 
programs and services model. The Department of Education and the 
State 
Board 
of 
Education 
implementation 
for 
the 
essential 
programs and services model must include, but may not be limited 
to, the following: 
1. 
Weiqhted pupil methodology. 
Any 
rev~s~ons necessary to 
the weighted pupil methodology established for special student 
populations in accordance with the Maine Revised Statutes, Title 
20-A, chapter 606-B; 
2. 
Reqional 
cost-of-education 
adjustment. 
A 
regional 
adjustment for legitimate regional differences in the cost of 
components, 
including what basis there may be for recognizing 
legitimate 
regional 
differences 
in 
the 
costs 
of 
purchasing 
educational goods and services that are elements of the essential 
programs and services model; and 
3. 
School 
administrative unit cost determination. 
Any 
revisions to the current method of using a 
statewide average 
methodology in determining school administrative unit costs in 
accordance with the Maine Revised Statutes, Title 20-A, chapters 
and 606-A. 
Sec. 18. Consolidation incentives. 
The State Board of Education 
and the Department of Education shall prepare a state incentive 
plan 
for 
school 
consolidation, 
including 
organizational 
structures and functions that can provide adequate instructional 
opportunities for all students while also ensuring a high level 
of operational efficiencies. 
The Department of Education shall 
designate 
a 
senior 
staff 
person 
to 
be 
responsible 
for 
investigating other state models of consolidation and to work 
with local school administrative units to promote administrative 
unit consolidation. 
The 
State 
Board 
of 
Education 
and 
the 
Department of Education shall present the plan for adopting rules 
on school administrative unit consolidation to the Joint Standing 
Committee 
on 
Education 
and 
Cultural 
Affairs 
no 
later 
than 
November 1, 2003 and may provide for an additional allocation of 
state subsidy to school administrative units that consolidate 
schools. 
Sec. 19. 
Early retirement program. 
Concurrent with 
their 
review 
of 
the 
feasibility 
of 
establishing 
recruitment 
and 
retention incentives for educational personnel pursuant to Public 
Law 2001, chapter 660, section 6, the State Board of Education 
and the Department of Education shall prepare an analysis of the 
alternatives 
available 
for 
establishing 
an 
early 
retirement 
program for educational personnel. 
Emergency clause. 
preamble, 
this 
Act 
otherwise indicated. 
In view of 
takes 
effect 
the emergency cited in 
when 
approved, 
except 
SUMMARY 
the 
as 
This bill provides amendments to the school funding formula 
to ensure student equity and taxpayer equity in the distribution 
of state resources for kindergarten to grade 12 public education 
in the State. In order to achieve these goals, the bill provides 
the following changes to the school funding formula. 
1. 
Beginning in fiscal year 2003-04, the pupil counts and 
the property valuation data used for determination of the state 
subsidy to be distributed to each school administrative unit will 
be based on the averages of the annual numbers for pupil count 
and for property valuation for the most recent 4-year period. 
2. 
As 
an exception to the current method of computing 
property fiscal capacity, 
the Commissioner of Education shall 
provide municipalities that have tax-exempt property that exceeds 
20% of property in the municipality due to the location of 
nonprofit and governmental organizations within the municipality, 
with an adjustment to the property weight used to determine their 
school funding subsidy. 
3. 
In fiscal year 
2003-04, 
the 
income 
factor 
used to 
determine local fiscal capacity will be calculated at 20% and in 
fiscal year 2004-05, the income factor used will be calculated at 
25G.t.. 
4. 
As 
an exception to using income to determine local 
fiscal capacity, the Commissioner of Education shall adjust the 
income factor used for 
a 
school administrative unit that is 
located 
within 
a 
municipality 
whose 
local 
fiscal 
property 
capacity as 
a percent of the municipality's median household 
income 
exceeds 
the 
statewide fiscal 
property capacity as 
a 
percent of the statewide median household income. 
5. 
For fiscal year 2003-04, the program millage limit will 
be 1.45 mills, approximately the level established for fiscal 
year 2002-03. 
6. 
For fiscal year 2003-04, the operating mill rate will be 
determined by the Department of Education. 
7. 
For fiscal year 2003-04, 
the program cost reduction 
percentage will be 0%. 
8. 
In 
fiscal 
year 
2003-04, 
the 
adjustment 
for 
out-of-district placement will be increased to $3,788,679. 
9. 
In fiscal year 2003-04, the adjustment for the costs of 
geographic isolation will be fully funded at $1,792,317. 
10. 
The 
implementation 
of 
the 
essential 
program 
and 
services model 
must 
include 
a 
weighted pupil methodology, 
a 
cost-of-education adjustment and a method of calculating district 
costs other than using a statewide average cost method. 
11. 
The State Board of Education and the Department of 
Education shall prepare and present a state incentive plan for 
school 
consolidation. 
The 
Department 
of 
Education 
shall 
designate 
a 
senior 
staff 
person 
to 
be 
responsible 
for 
investigating other state models of consolidation and shall adopt 
rules on school administrative unit consolidation no later than 
November 1, 2003, which may provide for an additional allocation 
of state subsidy to school administrative units that consolidate 
schools. 
12. 
The State Board of Education and the Commissioner of 
Education shall study the possibility of establishing an early 
retirement program for educational personnel.