An Act To Reduce the Cost of Local Government through Increased State Education Funding and Provide Property Tax Relief
Maine Legislature, Session 121, LD 1924
Committee: Taxation
Sponsors: DOUGLASS, CUMMINGS, MITCHELL, FISCHER, LEDWIN, MILLS
Amends: 20-A MRSA §15603, 20-A MRSA §15609, 20-A MRSA §15610, 20-A MRSA §15611, 20-A MRSA §15613, 20-A MRSA §15671, 20-A MRSA §15672, 20-A MRSA §15673, 20-A MRSA §15683, 20-A MRSA §15684, 20-A MRSA §15686

Legislative Document 
No. 1924 
S.P.761 
In Senate, March 10,2004 
An Act To Reduce the Cost of Local Government through Increased 
State Education Funding and Provide Property Tax Relief 
Reference to the Committee on Taxation suggested and ordered printed. 
JOY J. O'BRIEN 
Secretary of the Senate 
Presented by Senator DOUGLASS of Androscoggin. (GOVERNOR'S BILL) 
Cosponsored by Representative CUMMINGS of Portland and 
Senator: MITCHELL of Penobscot, Representatives: FISCHER of Presque Isle, LEDWIN of 
Holden, MILLS of Cornville. 
Printed on recycled paper 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 20-A MRSA §15603, sub-§II-A, as enacted by PL 1993, c. 
410, Pt. F, §13, is amended to read: 
II-A. 
Fiscal capacity. 
"Fiscal capacity" means the ability 
of a municipality to raise property tax revenues. 
For each year 
of funding, fiscal capacity is measured as the average of the 
state valuation amounts for the 2 most recent years prior to the 
year of funding. 
For fiscal year 1993-94 and fiscal year 1994-95 
only, if the most recent state valuation amount is less than the 
average of the 2 most recent state valuation amounts, the fiscal 
capacity of 
the municipality is considered to be 
the state 
valuation for the most recent year. 
Beginning in fiscal year 
2005-06, "fiscal capacity" means the certified state valuation 
for 
the 
year 
prior 
to 
the 
most 
recently 
certified 
state 
valuation. 
The 
fiscal 
capacity 
of 
a 
school 
administrative 
district or a community school district is the sum of the fiscal 
capacity amounts of its member municipalities. 
Sec. 2. 20-A MRSA §15603, sub-§26-A, ,B, as enacted by PL 
1993, c. 410, Pt. F, §15, is amended to read: 
B. 
"Actual local program costs" includes the following: 
(1) 
Bus purchase costs as defined in subsection 7; 
(2) 
Early 
childhood 
educational 
program 
costs 
as 
defined in subsection 10; 
(3) 
Special education costs as defined in subsection 
22; 
(4) 
Transportation 
operating 
costs 
as 
defined 
in 
subsection 
29~. __ ~T~h~i~s~suu~b~p~a~r~a~g~rga~PMh~~~'s~~r~e~p~e~a~l~e~d~~J~u~l~y~~l~, 
2..Q.Q.5.; and 
(5 ) 
Vocational 
education 
costs 
as 
defined 
in 
subsection 30. 
Sec.3. 20-A MRSA §15609, sub-§2 is enacted to read: 
2. 
Repeal. 
This section is repealed July I. 2005. 
Sec.4. 20-A MRSA §15610, sub-§2 is enacted to read: 
2. 
Repeal. 
This section is repealed July 1, 2005. 
Sec. 5. 20-A MRSA §15611, sub-§3 is enacted to read: 
Page l-LR2783(1) 
3. 
Repeal. 
This section is repealed July 1, 2005. 
Sec. 6. 20-A MRSA §15613, sub-§13, as enacted by PL 1987, c. 
848, §10, is amended to read: 
13. 
Minimum 
state allocation. 
Effective 
1988-89, 
each 
school administrative unit saall-Be is guaranteed a minimum state 
share of its total allocation that is determined by multiplying 
5% of the foundation per pupil operating rate by the average 
number of resident kindergarten to grade 12 pupils, including 
special education tuition pupils, in the unit on April 1st and 
October 1st of the calendar year immediately prior to the year of 
allocation. 
These funds saall must be included as part of the 
school unit's total allocation as computed under this chapter and 
not 
as 
an 
adjustment to the unit's total allocation. 
This 
subsection is repealed July 1, 2005. 
Sec. 7. 20-A MRSA §15671, sub-§l, as enacted by PL 2001, c. 
660, §1, is amended to read: 
1. 
State and local partnership. 
The State and each local 
school 
administrative 
unit 
are 
jointly 
responsible 
for 
contributing to the cost of the components of essential programs 
and services described in this chapter. 
The state contribution 
to the cost of the components of essential programs and services, 
exclusive of federal funds that are provided and accounted for in 
the cost of the components of essential programs and services, 
must be made in accordance with this subsection: 
A. 
The level of the state share of funding attributable to 
the 
cost 
of 
the 
components 
of 
essential 
programs 
and 
services must be at least 50% of eligible state and local 
General Fund education costs statewide, no later than fiscal 
year 2007-08; and 
B. 
By fiscal year 2009-10 the state share of the total cost 
of funding public education from kindergarten to grade 12, 
as described by essential programs and services, must be 
55%, 
Beginning in fiscal year 6QQa-Q4 2005-06 and in each 
fiscal year until fiscal year 6QQ+-Q8 2009-10, 
~ae-leyel-e~ 
the state share 
e~-.f-Q-fl:El..:i~-a-t-t-r-i-but.-ab-1e--1;&--the-~--G-~-~ae 
eempeBeB~s of essential 
programs 
and 
services 
described 
~ 
must increase toward the eQ% 
55% level 
e~-~l-~i-Ble 
s~a~e--and---l~--GeBel'al--F-u.nd--~.,i-en--ees~s reguired in 
fiscal year 2009-10. 
Beginning in fiscal year 6QQa-Q4 2005-06 and in each fiscal year 
thereafter, 
the 
commissioner 
shall 
use 
the 
funding 
level 
determined in accordance with this section as the basis for a 
recommended funding level for the state share of the cost of the 
components of essential programs and services. 
Sec. 8. 20-A MRS A §15671.A is enacted to read: 
§15671-A. 
Prgperty tax contribution to public education 
1. 
Definitions. 
As 
used 
in this 
section, 
unless 
the 
context 
otherwise 
indicates, 
the 
following 
terms 
have 
the 
following meanings. 
A. 
"Funding public education from kindergarten to grade 12" 
means providing the cost of funding essential programs and 
services 
as 
described 
in 
this 
chapter 
plus 
the 
total 
allocations 
for 
program 
cost, 
debt 
service 
costs 
and 
adjustments. 
B. 
"Local cost share expectation" means the maximum amount 
of money for funding public education from kindergarten to 
grade 12 that may be derived from property tax. 
2. 
Local cost share ezpgctation. 
The local cost share 
expectation is established as follows. 
A. 
This 
paragraph 
applies 
to 
the 
local 
cost 
share 
expectation. 
Notwithstanding any other provision of law, 
with respect to the assessment of any property taxes for 
property tax years beginning on or after April 1, 2005, this 
subsection establishes the local cost share expectation that 
may be assessed on the value of property for the purpose of 
funding public education from kindergarten to grade 12. 
The 
commissioner shall annually by February 1st notify each 
school 
administrative 
unit 
of 
its 
local 
cost 
share 
expectation. 
Each 
superintendent 
shall 
report 
to 
the 
municipal officers whenever a school administrative unit is 
notified of the local cost share expectation or a 
change 
made in the local cost share expectation resulting from an 
adjustment. 
B. 
This 
paragraph 
applies 
to 
the 
calculation 
of 
the 
full value education mill 
rate. 
For property tax years 
beginning on or after April 1, 2005, the commissioner shall 
calculate 
the 
full-value 
education mill 
rate 
that 
is 
required 
to 
raise 
the 
total 
of 
the 
local 
cost 
share 
expectation. 
The 
full-value 
education 
mill 
rate 
is 
calculated by dividing the applicable tax year percentage of 
the 
projected 
cost 
of 
funding 
public 
education 
from 
kindergarten 
to 
grade 
by 
the 
certified total 
state 
valuation for the year prior to the most recently certified 
total 
state 
valuation 
for 
all 
municipalities. 
The 
full-value education mill rate must decline over the period 
from fiscal year 2005 06 to fiscal year 2009-2010 and may 
not exceed 9.0 mills in fiscal year 2005-06 and may not 
exceed 8.0 mills in fiscal year 2009-10. 
The full-value 
education mill rate must be applied according to section 
15688, 
subsection 
3, 
paragraph 
A 
to 
determine 
a 
municipality's local cost share expectation. 
3. 
Exceeding 
maximum 
local 
cost 
. share 
expectations: 
separate article. 
Beginning with the 2009 2010 school budget. 
the legislative body of a school administrative unit may adopt 
property tax rates that exceed the local cost share expectation 
established by section 15688, subsection 3, paragraph A if that 
action is approved in a separate article by a vote of the school 
administrative unit's legislative body through the same process 
that the school budget is approved in that school administrative 
unit. 
Sec. 9. 20-A MRSA §15672, sub-§23, as enacted by PL 2003, c. 
504, Pt. A, §6, is amended to read: 
23. 
Property fiscal capacity. 
"Property fiscal capacity" 
means the ±esseF-e~-~~~~~~-~Be certified state valuation 
affieQB~S amount for the ~-ffies~-EeeeB~-yeaFs ~ 
prior to the yeaF 
e~--f"-und-1-nq--aBEl--t-he--s~a~e--¥a:l-ua-t-i-on--affieQBI::--f"~--~Be most 
FeeeB~ 
yeaF recently certified state valuation. 
Sec. 10. 20-A MRSA §15673, as enacted by PL 2003, c. 504, Pt. 
A, §6, is repealed and the following enacted in its place: 
§15673. 
Relationship to School Finance Act of 1985 
The provisions of chapter 606 apply for the purposes of 
calculating the total allocations for program costs and debt 
service and for the purposes of calculating adjustments under 
section 15612 and miscellaneous reimbursements and subsidy under 
section 15613. 
Sec. 11. 20-A MRSA §15683, first" as enacted by PL 2003, c. 
504, Pt. A, §6, is amended to read: 
For 
each 
school 
administrative 
unit, 
that unit's total 
operating allocation is the base total set forth in subsection 1 
as adjusted in accordance with subsection 2 and including the 
total amount for subsection 3. 
Sec. 12. 20-A MRSA §15683, sub-§3 is enacted to read: 
3. 
Transportation 
QPerating 
costs. 
Transportation 
operating costs as defined in section 15603, subsection 29 must 
be based on prior-year adjusted rates. 
In order to calculate 
adjusted rates, a predicted transportation cost for each school 
district based on district pupil transportation densities and the 
most recent fiscal year transportation expenditures available 
must be established. 
Predicted costs and actual expenditures per 
pupil must be increased 10% to yield an adjusted predicted cost 
rate and an adjusted expenditure rate per pupil. 
The essential 
programs and services transportation operating cost per pupil 
beginning fiscal year 2005 06 is an amount equal to a school 
district's adjusted cost or adjusted expenditure per pupil rate, 
whichever is lower. 
A. 
In no case may 
the essential programs 
and services 
transportation operating cost per pupil be less than 75% of 
the allocation for 
the 
previous 
year 
for 
fiscal 
years 
2005 06 
and 
2006-07. 
Beginning in fiscal year 
2006-07, 
individual school district essential programs and services 
transportation operating costs must be based on previous 
year's adjusted rates, plus an inflation adjustment. 
B. 
Beginning in fiscal year 2005-06, an appeals process to 
determine 
exceptions 
to 
the 
adjusted 
rates 
must 
be 
implemented. 
All appeals must include an analysis of cost 
efficiency and 
a 
cost 
comparison with 
school districts 
having comparable pupil transportation density indices. 
Sec. 13. 20-A MRSA §15684, sub-§3 is enacted to read: 
3. 
Repeal. 
This section is repealed July 1, 2005. 
Sec. 14. 20-A MRSA §15686, as enacted by PL 2003, c. 504, Pt. 
A, §6, is amended to read: 
§15686. 
Transition adjustment 
For each of the fiscal years described in section 15671, 
subsection 7, 
the 
commissioner 
shall establish 
a 
transition 
adjustment 
calculated to 
minimize 
the 
adverse 
fiscal 
impact 
ei~ee~~y---~e~a~ee---Ee 
that 
may 
be 
experienced 
by 
some 
municipalities as a result of the phase-in of this Act. 
The 
transition adjustment for a municipality must be directly related 
to the phase-in of essential programs and services and the local 
cost 
share 
expectation 
method 
under 
section 
15671-A 
of 
determining 
the 
local 
contribution 
to 
the 
cost 
of 
funding 
essential programs and services. 
The amount of this adjustment 
must 
decline 
with 
each 
successive 
fiscal 
year, 
and 
the 
adjustments must end no later than fiscal year 2009-10. 
Sec. 15. 20-A MRSA §§15688 and 15689 are enacted to read: 
§15688. 
School administrative unit contribution to total cost of 
funding public education from kindergarten to grade 12 
1. 
School administrative unit: total cost. 
For each school 
administrative unit, 
the commissioner shall annually determine 
the school administrative unit's total cost of education. 
A 
school administrative unit's total cost of education must include: 
A. 
The school administrative unit's total cost of funding 
essential programs and services subject to the transition 
percentages 
described 
in 
section 
15671. 
subsection 
7, 
paragraph A: 
B. 
The program cost allocation as used in chapter 606; and 
c. 
The debt service allocation as used in chapter 606. 
2. 
Member municipalities in school administrative districts 
or 
community 
school 
districts: 
total 
costs. 
For 
each 
municipality that is a member of a school administrative district 
or community school district, 
the commissioner shall annually 
determine 
each 
municipality's 
total 
cost 
of 
education. 
A 
municipality's 
total 
cost 
of 
education 
is 
the 
school 
administrative district's or community school district's total 
cost 
of 
funding 
multiplied 
by 
the 
percentage 
that 
the 
municipality's most recent calendar year average pupils is to the 
school administrative district's or community school district's 
most recent calendar year average pupils. 
3. 
School 
administrative unit: 
contribution. 
For 
each 
school 
administrative 
unit, 
the 
commissioner 
shall 
annually 
determine 
the 
school 
administrative 
unit's 
contribution 
in 
accordance with the following. 
A. 
The school administrative unit's contribution to the 
total cost of education is the lesser of: 
(1) 
The total cost for each municipality as described 
in subsection 1 or 2: and 
(2) 
The total of the full-value education mill rate 
calculated in section 15671 A, subsection 2 multiplied 
by the certified state valuation for the year prior to 
the most recently certified state valuation for each 
municipality in the school administrative unit. 
B. 
The school administrative unit's state contribution to 
the total cost of education is the total cost of education 
calculated 
pursuant 
to 
subsection 
less 
the 
school 
administrative unit's contribution calculated pursuant to 
paragraph A; 
4. 
Effective date. 
This section takes effect July 1, 2005. 
§15689. 
Adjustments to state share of total allocation 
Beginning July L 
2005, adjustments to the state share of 
the total allocation must be made as set out in this section. 
1. 
Minimum state allocation. 
Each school administrative 
unit must be guaranteed a 
minimum state share of its total 
allocation that is determined by the sum of the following: 
A. 
Multiplying 
5% 
of each 
school administrative unit's 
essential programs and services per-pupil elementary rate by 
the 
average 
number 
of 
resident kindergarten to grade 
pupils 
as 
determined under section 15674, 
subsection 1, 
paragraph C, subparagraph (1); and 
B. 
Multiplying 
5% 
of each 
school administrative unit's 
essential programs and services per-pupil secondary rate by 
the average,number of resident grade 9 to grade 12 pupils as 
determined under section 15674, subsection L 
paragraph C, 
subparagraph (1). 
These funds must be included as part of the school administrative 
unit's total allocation as computed under this chapter and not as 
an 
adjustment 
to 
the 
school 
administrative 
unit's 
total 
allocation. 
2. 
Adjustment for debt service grandfather clause. 
Each 
school administrative unit may receive an adjustment for a debt 
service grandfather clause determined as follows: 
A. 
A 
school 
administrative 
unit is eligible 
for 
this 
adjustment under the following conditions. 
(1) 
The 
school 
administrative 
unit's 
local 
share 
results in a mill rate expectation less than the local 
cost share expectation as described in section 15671-A. 
(2) 
The school administrative unit has debt service 
costs defined under section 15603, subsection 8 that 
have been placed on the state board's priority list by 
January 2005. 
B. 
The amount of the adjustment is the difference, but not 
less 
than 
zero, 
between 
the 
state 
share 
of 
the 
total 
allocation under this chapter and the amount computed as 
follows: 
(1) 
The school administrative unit's state share of 
the total allocation if the local share was the sum of 
the following: 
(a) 
The 
local 
share 
amount 
for 
the 
school 
administrative unit calculated as the lesser of 
the total allocation excluding debt service costs 
and 
the 
school 
administrative 
unit's 
fiscal 
capacity multiplied by the mill rate expectation 
established in section 1567l-A less .50 mills; and 
(b) 
The 
local 
share 
amount 
for 
the 
school 
administrative unit calculated as the lesser of 
the 
debt 
service 
costs 
and 
the 
school 
administrative unit's fiscal capacity multiplied 
by .50 mills. 
3. 
Adjustment limitations. 
The amounts of the adjustments 
paid 
to 
school 
administrative 
units 
or 
municipalities 
in 
subsections 1 and 2 are limited to the amounts appropriated by 
the Legislature for these adjustments. 
Sec. 16. Basis for funding costs of education from kindergarten to 
grade 12. 
Notwithstanding any other provision of law, beginning 
in fiscal year 2005-06, funding of the costs of education from 
kindergarten to grade 12 must be based on the cost of providing 
essential programs and services as described in the Maine Revised 
Statutes, Title 20-A, chapter 606-B. 
Sec. 17. Special education. 
To ensure greater consistency in 
providing special education services, beginning in fiscal year 
2004-05, 
state-approved 
guidelines 
must 
be 
utilized 
in 
the 
identification of children requiring special education services. 
Beginning in fiscal year 2004-05, 
the Department of Education 
shall provide to school administrative units training in the 
application of the state-approved identification guidelines and 
shall conduct periodic reviews to ascertain compliance in the 
application of the state-approved guidelines. 
To ensure greater 
equity and efficiency in the use of special education resources, 
beginning in fiscal year 2005-06, special education costs must be 
included in the essential programs and services operating cost 
calculations and be based on a special education funding formula 
that adheres to the 4 principles of being cost-based, equitable, 
flexible and identification-neutral. 
The funding formula must 
include provisions for providing supplemental funds for school 
districts with extraordinary expenses associated with high-cost 
in-district and out-of-district special education services and 
programs. 
Sec. 18. Early childhood and vocational education. 
To 
ensure 
greater equity of education opportunities and efficiency in the 
use 
of 
early 
childhood 
and 
vocational 
education 
resources, 
beginning no later than fiscal year 2007-08, 
early childhood 
program costs and vocational education program costs must be 
included in the essential programs and services operating cost 
calculations. 
SUMMARY 
The bill provides that by fiscal year 2009-10 the state 
share of kindergarten to grade 12 education funding, as described 
by essential 
programs 
and 
services, 
must 
be 
55%. 
It also 
establishes a local cost share expectation for property tax years 
beginning 
on 
or after April 
1, 
2005. 
The 
Commissioner 
of 
Education shall annually notify each school administrative unit 
of its expectation. 
This expectation must decline over 
the 
period from fiscal year 2005-06 to fiscal year 2009-10. 
The 
expectation may not exceed 9.0 mills in fiscal year 2005-06. 
It 
may not exceed 8.0 mills in fiscal year 2009-10. 
The legislative 
body of a school administrative unit may not adopt a property tax 
rate that exceeds its mill expectation unless, in a vote separate 
from its adoption of the school budget, it votes to increase the 
property tax rate. 
The bill also places transportation operating costs into the 
essential programs and services funding formula. 
It also states 
that 
special 
education costs will 
be 
included 
ln essential 
programs and services starting in fiscal year 2005-06. 
Beginning 
in fiscal year 2004-05, the Department of Education will provide 
training 
in 
state-approved guidelines 
for 
identification 
of 
special education students. 
The bill also places early childhood 
education program costs and vocational education program costs 
into essential programs and services no later than fiscal year 
2007-08.