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Chapter 1 - 435S - S Ver of SB1001

Reference Title: Students FIRST

AN ACT
REPEALING LAWS 1998, THIRD SPECIAL SESSION, CHAPTER 1, LAWS 1998, CHAPTER 164, LAWS 1998, CHAPTER 219 AND LAWS 1998, CHAPTER 286, SECTION 1; AMENDING TITLE 9, CHAPTER 4, ARTICLE 8, ARIZONA REVISED STATUTES, BY ADDING SECTION 9-500.18; AMENDING SECTIONS 15-101, 15-181, 15-185, 15-203, 15-341, 15-342, 15-393, 15-481, 15-491, 15-902, 15-903, 15-904, 15-905, 15-906, 15-909, 15-910, 15-947, 15-947.01, 15-951, 15-961, 15-962, 15-962.01, 15-963, 15-964, 15-971, 15-973, 15-974, 15-996 AND 15-1021, ARIZONA REVISED STATUTES; PROVIDING FOR THE DELAYED REPEAL OF SECTION 15-185.01, ARIZONA REVISED STATUTES; REPEALING SECTION 15-991.02, ARIZONA REVISED STATUTES; AMENDING TITLE 15, CHAPTER 9, ARTICLE 7, ARIZONA REVISED STATUTES, BY ADDING SECTION 15-1023.01; AMENDING SECTIONS 15-1102, 15-1103 AND 15-1107, ARIZONA REVISED STATUTES; AMENDING TITLE 15, ARIZONA REVISED STATUTES, BY ADDING CHAPTER 16; AMENDING SECTION 37-521, ARIZONA REVISED STATUTES, AS AMENDED BY LAWS 1996, FIFTH SPECIAL SESSION, CHAPTER 8, SECTION 14; REPEALING SECTION 37-521, ARIZONA REVISED STATUTES, AS AMENDED BY LAWS 1996, CHAPTER 335, SECTION 18; AMENDING SECTION 41-1231, ARIZONA REVISED STATUTES; AMENDING TITLE 41, CHAPTER 27, ARTICLE 2, ARIZONA REVISED STATUTES, BY ADDING SECTION 41-3008.18; AMENDING TITLE 42, CHAPTER 8, ARTICLE 1, ARIZONA REVISED STATUTES, BY ADDING SECTION 42-1342; AMENDING SECTION 42-5029, ARIZONA REVISED STATUTES, AS AMENDED BY LAWS 1998, CHAPTER 1, SECTION 162; TRANSFERRING AND RENUMBERING SECTION 42-1342, ARIZONA REVISED STATUTES, AS ADDED BY THIS ACT, FOR PLACEMENT IN TITLE 42, CHAPTER 5, ARTICLE 1, ARIZONA REVISED STATUTES, AS SECTION 42-5030.01; BLENDING MULTIPLE ENACTMENTS; PROVIDING FOR THE DELAYED REPEAL OF TITLE 15, CHAPTER 16, ARTICLE 3, ARIZONA REVISED STATUTES, AS ADDED BY THIS ACT; MAKING APPROPRIATIONS; RELATING TO SCHOOL FINANCE.

Be it enacted by the Legislature of the State of Arizona:

Section 1. Designation of act

This act shall be known and may be cited as "The Students FIRST Act of 1998."

Sec. 2. Repeal

Laws 1998, third special session, chapter 1, Laws 1998, chapter 164, Laws 1998, chapter 219 and Laws 1998, chapter 286, section 1 are repealed.

Sec. 3. Title 9, chapter 4, article 8, Arizona Revised Statutes, is amended by adding section 9-500.18, to read:

9-500.18 . School district construction fees; prohibition

NOTWITHSTANDING ANY OTHER LAW, A CITY OR TOWN SHALL NOT ASSESS OR COLLECT ANY FEES OR COSTS FROM A SCHOOL DISTRICT OR CHARTER SCHOOL FOR FEES PURSUANT TO SECTION 9-463.05. THIS PROHIBITION DOES NOT INCLUDE FEES ASSESSED OR COLLECTED FOR STREETS AND WATER AND SEWER UTILITY FUNCTIONS.

Sec. 4. Section 15-101, Arizona Revised Statutes, is amended to read:

15-101 . Definitions

In this title, unless the context otherwise requires:

1. "Accommodation school" means a school which is operated through the county board of supervisors and the county school superintendent and which the county school superintendent administers to serve a military reservation or territory which is not included within the boundaries of a school district. Accommodation school also means a school that provides educational services to homeless children or alternative education programs as provided in section 15-308, subsection B.

2. "Assessed valuation" means the valuation derived by applying the applicable percentage as provided in section 42-227 to the full cash value or limited property value, whichever is applicable, of the property.

3. "Charter school" means a public school established by contract with a district governing board, the state board of education or the state board for charter schools pursuant to article 8 of this chapter to provide learning that will improve pupil achievement.

4. "CLASS A BONDS" MEANS GENERAL OBLIGATION BONDS APPROVED BY A VOTE OF THE QUALIFIED ELECTORS OF A SCHOOL DISTRICT AT AN ELECTION HELD ON OR BEFORE DECEMBER 31, 1998.

5. "CLASS B BONDS" MEANS GENERAL OBLIGATION BONDS APPROVED BY A VOTE OF THE QUALIFIED ELECTORS OF A SCHOOL DISTRICT AT AN ELECTION HELD FROM AND AFTER DECEMBER 31, 1998.

4. 6. "Competency" means a demonstrated ability in a skill at a specified performance level.

5. 7. "Course" means organized subject matter in which instruction is offered within a given period of time and for which credit toward promotion, graduation or certification is usually given. A course consists of knowledge selected from a subject for instructional purposes in the schools.

6. 8. "Course of study" means a list of required and optional subjects to be taught in the schools.

7. 9. "Fiscal year" means the year beginning July 1 and ending June 30.

8. 10. "Governing board" means a body organized for the government and management of the schools within a school district or a county school superintendent in the conduct of an accommodation school.

9. 11. "Handicapped child" means a child with a disability as defined in section 15-761.

10. 12. "Lease" means an agreement for conveyance and possession of real or personal property.

11. 13. "Limited property value" means the value determined pursuant to section 42-201.02. Limited property value shall be used as the basis for assessing, fixing, determining and levying primary property taxes.

12. 14. "Parent" means the natural or adoptive parent of a child or a person who has custody of a child.

13. 15. "Person who has custody" means a parent or legal guardian of a child, a person to whom custody of the child has been given by order of a court or a person who stands in loco parentis to the child.

14. 16. "P.L. 81-874" means P.L. 81-874 or its successors.

15. 17. "Primary property taxes" means all ad valorem taxes except for secondary property taxes.

16. 18. "Private school" means a nonpublic institution where instruction is imparted.

17. 19. "School" means a public institution established by a school district or by a county school superintendent where instruction is imparted ANY PUBLIC SCHOOL ESTABLISHED FOR THE PURPOSES OF OFFERING INSTRUCTION TO PUPILS IN PROGRAMS FOR PRESCHOOL CHILDREN WITH DISABILITIES, KINDERGARTEN PROGRAMS OR ANY COMBINATION OF GRADES ONE THROUGH TWELVE .

18. 20. "School district" means a political subdivision of this state with geographic boundaries organized for the purpose of the administration, support and maintenance of the public schools or an accommodation school.

19. 21. "Secondary property taxes" means ad valorem taxes used to pay the principal of and the interest and redemption charges on any bonded indebtedness or other lawful long-term obligation issued or incurred for a specific purpose by a school district or a community college district and amounts levied pursuant to an election to exceed a budget, expenditure or tax limitation.

20. 22. "Subject" means a division or field of organized knowledge, such as English or mathematics, or a selection from an organized body of knowledge for a course or teaching unit, such as the English novel or elementary algebra.

Sec. 5. Section 15-181, Arizona Revised Statutes, is amended to read:

15-181 . Charter schools; purpose; scope

A. Charter schools may be established pursuant to this article to provide a learning environment that will improve pupil achievement. Charter schools provide additional academic choices for parents and pupils. Charter schools may consist of new schools or all or any portion of an existing school. CHARTER SCHOOLS ARE PUBLIC SCHOOLS THAT SERVE AS ALTERNATIVES TO TRADITIONAL PUBLIC SCHOOLS AND CHARTER SCHOOLS ARE NOT SUBJECT TO THE REQUIREMENTS OF ARTICLE XI, SECTION 1, CONSTITUTION OF ARIZONA, OR CHAPTER 16 OF THIS TITLE.

B. Charter schools shall comply with all provisions of this article in order to receive state funding as prescribed in section 15-185.

Sec. 6. Section 15-185, Arizona Revised Statutes, is amended to read:

15-185 . Charter schools; financing; definition

A. Financial provisions for a charter school that is sponsored by a school district governing board are as follows:

1. UNTIL JUNE 30, 1999, the charter school shall be included in the district's budget and financial assistance calculations pursuant to section 15-185.01, subsection B and chapter 9 of this title . FROM AND AFTER JUNE 30, 1999, THE CHARTER SCHOOL SHALL BE INCLUDED IN THE DISTRICT'S BUDGET AND FINANCIAL ASSISTANCE CALCULATIONS PURSUANT TO PARAGRAPH 3 OF THIS SUBSECTION AND CHAPTER 9 OF THIS TITLE, EXCEPT FOR CHAPTER 9, ARTICLE 4 OF THIS TITLE. The charter of the charter school shall include a description of the methods of funding the charter school by the school district. The school district shall send a copy of the charter and charter school application, including a description of how the school district plans to fund the school, to the state board of education before the start of the first fiscal year of operation of the charter school. The charter school charter or charter school application shall include an estimate of the student count for the charter school for its first fiscal year of operation. This estimate shall be computed pursuant to the requirements of paragraph 3 of this subsection.

2. A school district is not financially responsible for any charter school that is sponsored by the state board of education or the state board for charter schools.

3. A school district that sponsors a charter school may:

(a) Increase its student count as provided in subsection B, paragraph 2 of this section during the first year of the charter school's operation to include those charter school pupils who were not previously enrolled in the school district. FROM AND AFTER JUNE 30, 1999, A CHARTER SCHOOL SPONSORED BY A SCHOOL DISTRICT GOVERNING BOARD IS ELIGIBLE FOR THE ASSISTANCE PRESCRIBED IN SUBSECTION B, PARAGRAPH 5 OF THIS SECTION IF AT LEAST NINETY PER CENT OF THE PUPILS ENROLLED IN THE CHARTER SCHOOL WERE NOT ENROLLED IN THE SCHOOL DISTRICT IN THE YEAR BEFORE THE FIRST YEAR OF ENROLLMENT IN THE CHARTER SCHOOL. THE SOFT CAPITAL ALLOCATION AS PROVIDED IN SECTION 15-962 FOR THE SCHOOL DISTRICT SPONSORING THE CHARTER SCHOOL SHALL BE INCREASED BY THE AMOUNT OF THE ADDITIONAL ASSISTANCE. THE SCHOOL DISTRICT SHALL INCLUDE THE FULL AMOUNT OF THE ADDITIONAL ASSISTANCE IN THE FUNDING PROVIDED TO THE CHARTER SCHOOL.

(b) UNTIL JUNE 30, 1999, increase its transportation support level as provided in subsection B, paragraph 3 of this section to include the increases caused by the transportation of eligible pupils enrolled in the charter school.

(c) Increase its student count and transportation support level as provided in subdivisions (a) and (b) of this paragraph in subsequent years if the school meets the requirements of subsection B, paragraph 5 of this section.

4. If a school district uses the provisions of paragraph 3 of this subsection, the school district is not eligible to include those pupils in its student count for the purposes of computing an increase in its revenue control limit and district support level as provided in section 15-948.

5. Beginning July 1, 1997, A school district that sponsors a charter school is not eligible to include the charter school pupils in its student count for the purpose of computing an increase in its capital outlay revenue limit as provided in section 15-961, subsection C, except that if the charter school was previously a school in the district, the district may include in its student count any charter school pupils who were enrolled in the school district in the prior year.

6. Beginning July 1, 1997, A school district that sponsors a charter school is not eligible to include the charter school pupils in its student count for the purpose of computing the revenue control limit which is used to determine the maximum budget increase as provided in chapter 4, article 4 of this title unless the charter school is located within the boundaries of the school district.

B. Financial provisions for a charter school that is sponsored by the state board of education or the state board for charter schools are as follows:

1. The charter school shall calculate a base support level as prescribed in section 15-943, AND UNTIL JUNE 30, 1999, a transportation support level as prescribed in section 15-945 and paragraph 3 of this subsection, a capital outlay revenue limit as prescribed in section 15-961 and a capital levy revenue limit as prescribed in section 15-962, except that sections 15-941 and 15-942 do not apply to these charter schools.

2. Notwithstanding paragraph 1 of this subsection, the student count shall be determined initially using an estimated student count based on actual registration of pupils before the beginning of the school year. After the first one hundred days in session the charter school shall revise the student count to be equal to the actual average daily membership, as defined in section 15-901, or the adjusted average daily membership, as prescribed in section 15-902, of the charter school. Before the one hundredth day in session, the state board of education or the state board for charter schools may require a charter school to report periodically regarding pupil enrollment and attendance and the department of education may revise its computation of equalization assistance based on the report. A charter school shall revise its student count, base support level, AND UNTIL JUNE 30, 1999, transportation support level and capital outlay revenue limit , AND FROM AND AFTER JUNE 30, 1999, ADDITIONAL ASSISTANCE, before May 15. A charter school that overestimated its student count shall revise its budget before May 15. A charter school that underestimated its student count may revise its budget before May 15.

3. UNTIL JUNE 30, 1999, notwithstanding paragraph 1 of this subsection, the transportation support level shall be determined using an estimated transportation support level as prescribed in section 15-945 before the beginning of the school year. After the first one hundred days in session the charter school shall revise the transportation support level to be equal to the actual transportation support level of the charter school. Before the one hundredth day in session, the state board of education or the state board for charter schools may require a charter school to report periodically regarding the daily route mileage and the number of eligible students transported. A charter school that overestimated its transportation support level shall revise its budget before May 15. A charter school that underestimated its transportation support level may revise its budget before May 15.

4. A charter school may utilize section 15-855 for the purposes of this section. The charter school and the department of education shall prescribe procedures for determining average daily attendance and average daily membership.

5. Equalization assistance for the charter school shall be determined by adding the amount of the base support level, AND UNTIL JUNE 30, 1999, the transportation support level, the capital levy revenue limit and the capital outlay revenue limit as calculated pursuant to this section, and additional capital assistance calculated pursuant to section 15-185.01, subsection A. FROM AND AFTER JUNE 30, 1999, THE AMOUNT OF THE ADDITIONAL ASSISTANCE IS ONE THOUSAND TWO HUNDRED FOUR DOLLARS SIXTY-SEVEN CENTS PER STUDENT COUNT IN KINDERGARTEN PROGRAMS AND GRADES ONE THROUGH EIGHT AND ONE THOUSAND FOUR HUNDRED FOUR DOLLARS ONE CENT PER STUDENT COUNT IN GRADES NINE THROUGH TWELVE.

6. The state board of education shall apportion state aid from the appropriations made for such purposes to the state treasurer for disbursement to the counties for the charter school in each county in an amount as determined by this paragraph. The apportionments shall be as follows:

(a) During the first year of operation:

(i) On July 1, one-third of the total amount to be apportioned during the fiscal year.

(ii) On October 15, one-twelfth of the total amount to be apportioned during the fiscal year.

(iii) On December 15, one-twelfth of the total amount to be apportioned during the fiscal year.

(iv) On January 15, one-twelfth of the total amount to be apportioned during the fiscal year.

(v) On February 15, one-twelfth of the total amount to be apportioned during the fiscal year.

(vi) On March 15, one-twelfth of the total amount to be apportioned during the fiscal year.

(vii) On April 15, one-twelfth of the total amount to be apportioned during the fiscal year.

(viii) On May 15, one-twelfth of the total amount to be apportioned during the fiscal year.

(ix) On June 15, one-twelfth of the total amount to be apportioned during the fiscal year.

(b) During the second and subsequent years of operation, one-twelfth of the total amount to be apportioned during the fiscal year on the fifteenth day of each month of the school year.

7. Notwithstanding the provisions of paragraph 8 of this subsection, if sufficient appropriated funds MONIES are available after the first forty days in session of the current year, a charter school may request additional state monies to fund the increased state aid due to anticipated student growth through the first one hundred days in session of the current year as provided in section 15-948. In no event shall a charter school have received more than three-fourths of its total apportionment before April 15 of the fiscal year. Early payments pursuant to this subsection must be approved by the state treasurer, the director of the department of administration and the superintendent of public instruction.

8. The charter school shall not charge tuition, levy taxes or issue bonds.

9. The superintendent of public instruction shall furnish to the county treasurer an abstract of the apportionment and shall certify the apportionment to the department of administration, which shall draw its warrant in favor of the county treasurer of each county for the amount apportioned.

C. If a pupil is enrolled in both a charter school and a public school that is not a charter school, the sum of the daily membership, which includes enrollment as prescribed in section 15-901, subsection A, paragraph 2, subdivisions (a) and (b) and daily attendance as prescribed in section 15-901, subsection A, paragraph 6, for that pupil in the school district and the charter school shall not exceed 1.0. If the pupil is enrolled in both a charter school and a public school that is not a charter school and the sum of the daily membership or daily attendance for that pupil is greater than 1.0, the sum shall be reduced to 1.0 and shall be apportioned between the public school and the charter school based on the percentage of total time that the pupil is enrolled or in attendance in the public school and the charter school. The uniform system of financial records shall include guidelines for the apportionment of the pupil enrollment and attendance as provided in this section.

D. Charter schools are allowed to accept grants and gifts to supplement their state funding but it is not the intent of the charter school law to require taxpayers to pay twice to educate the same pupils. The base support level for a charter school or for a school district sponsoring a charter school shall be reduced by an amount equal to the total amount of monies received by a charter school from a federal or state agency if the federal or state monies are intended for the basic maintenance and operations of the school. The superintendent of public instruction shall estimate the amount of the reduction for the budget year and shall revise the reduction to reflect the actual amount before May 15 of the current year. If the reduction results in a negative amount, the negative amount shall be used in computing all budget limits and equalization assistance, except that:

1. Equalization assistance shall not be less than zero.

2. For a charter school sponsored by the state board of education or the state board for charter schools, the total of the base support level, AND UNTIL JUNE 30, 1999, THE transportation support level, THE capital outlay revenue limit and the capital levy revenue limit , AND FROM AND AFTER JUNE 30, 1999, THE ADDITIONAL ASSISTANCE, shall not be less than zero.

3. For a charter school sponsored by a school district, the base support level for the school district shall not be reduced by more than the amount that the charter school increased the district's base support level, AND UNTIL JUNE 30, 1999, THE transportation support level, capital outlay revenue limit and capital levy revenue limit , AND FROM AND AFTER JUNE 30, 1999, THE SOFT CAPITAL ALLOCATION .

E. FROM AND AFTER JUNE 30, 1999, NOTWITHSTANDING SUBSECTION B, PARAGRAPH 5 OF THIS SECTION, EQUALIZATION ASSISTANCE FOR CHARTER SCHOOLS SHALL BE PROVIDED AS A SINGLE AMOUNT BASED ON AVERAGE DAILY MEMBERSHIP WITHOUT CATEGORICAL DISTINCTIONS BETWEEN MAINTENANCE AND OPERATIONS OR CAPITAL.

E. F. For the purposes of this section, "monies intended for the basic maintenance and operations of the school" means monies intended to provide support for the educational program of the school, except that it does not include supplemental assistance for a specific purpose or P.L. 81-874 monies. The auditor general shall determine which federal or state monies meet the definition in this subsection.

Sec. 7. Delayed repeal

Section 15-185.01 , Arizona Revised Statutes, is repealed from and after June 30, 1999.

Sec. 8. Section 15-203, Arizona Revised Statutes, is amended to read:

15-203 . Powers and duties

A. The state board of education shall:

1. Exercise general supervision over and regulate the conduct of the public school system.

2. Keep a record of its proceedings.

3. Make rules for its own government.

4. Determine the policy and work undertaken by it.

5. Appoint its employees, on the recommendation of the superintendent of public instruction.

6. Prescribe the duties of its employees if not prescribed by statute.

7. Delegate to the superintendent of public instruction the execution of board policies.

8. Recommend to the legislature changes or additions to the statutes pertaining to schools.

9. Prepare, publish and distribute reports concerning the educational welfare of this state.

10. Prepare a budget for expenditures necessary for proper maintenance of the board and accomplishment of its purposes and present the budget to the legislature.

11. Aid in the enforcement of laws relating to schools.

12. Prescribe a minimum course of study in the common schools, minimum competency requirements for the promotion of pupils from the third grade and minimum course of study and competency requirements for the promotion of pupils from the eighth grade. THE STATE BOARD OF EDUCATION SHALL PREPARE A FISCAL IMPACT STATEMENT OF ANY PROPOSED CHANGES TO THE MINIMUM COURSE OF STUDY OR COMPETENCY REQUIREMENTS AND, ON COMPLETION, SHALL SEND A COPY TO THE DIRECTOR OF THE JOINT LEGISLATIVE BUDGET COMMITTEE AND THE EXECUTIVE DIRECTOR OF THE SCHOOL FACILITIES BOARD. THE STATE BOARD OF EDUCATION SHALL NOT ADOPT ANY CHANGES IN THE MINIMUM COURSE OF STUDY OR COMPETENCY REQUIREMENTS IN EFFECT ON JULY 1, 1998 THAT WILL HAVE A FISCAL IMPACT ON SCHOOL CAPITAL COSTS.

13. Prescribe minimum course of study and competency requirements for the graduation of pupils from high school. THE STATE BOARD OF EDUCATION SHALL PREPARE A FISCAL IMPACT STATEMENT OF ANY PROPOSED CHANGES TO THE MINIMUM COURSE OF STUDY OR COMPETENCY REQUIREMENTS AND, ON COMPLETION, SHALL SEND A COPY TO THE DIRECTOR OF THE JOINT LEGISLATIVE BUDGET COMMITTEE AND THE EXECUTIVE DIRECTOR OF THE SCHOOL FACILITIES BOARD. THE STATE BOARD OF EDUCATION SHALL NOT ADOPT ANY CHANGES IN THE MINIMUM COURSE OF STUDY OR COMPETENCY REQUIREMENTS IN EFFECT ON JULY 1, 1998 THAT WILL HAVE A FISCAL IMPACT ON SCHOOL CAPITAL COSTS.

14. Supervise and control the certification of persons engaged in instructional work directly as any classroom, laboratory or other teacher or indirectly as a supervisory teacher, speech therapist, principal or superintendent in a school district, including school district preschool programs, or any other educational institution below the community college, college or university level, and prescribe rules for certification, including rules for certification of teachers who have teaching experience and who are trained in other states, which are not unnecessarily restrictive and are substantially similar to the rules prescribed for the certification of teachers trained in this state. The rules shall not require a teacher to obtain a master's degree or to take any additional graduate courses as a condition of certification or recertification.

15. Adopt a list of approved tests for determining special education assistance to gifted students as defined in section 15-761 and as provided in section 15-764. The adopted tests shall provide separate scores for quantitative reasoning, verbal reasoning and nonverbal reasoning and shall be capable of providing reliable and valid scores at the highest ranges of the score distribution.

16. Adopt rules governing the methods for the administration of all reading, grammar and mathematics proficiency examinations.

17. Adopt proficiency examinations for its use. The state board of education shall determine the passing score for the proficiency examination.

18. Include within its budget the cost of contracting for the purchase, distribution and scoring of the examinations as provided in paragraphs 16 and 17 of this subsection.

19. Supervise and control the qualifications of professional nonteaching school personnel and prescribe standards relating to qualifications.

20. Impose such disciplinary action, including the issuance of a letter of censure, suspension, suspension with conditions or revocation of a certificate, upon a finding of immoral or unprofessional conduct.

21. Establish an assessment, data gathering and reporting system for pupil performance as prescribed in chapter 7, article 3 of this title.

22. Adopt a rule to promote braille literacy pursuant to section 15-214.

23. Adopt rules prescribing procedures for the investigation by the department of education of every written complaint alleging that a certificated person has engaged in immoral conduct.

24. By December 15, 1995, review the time frame required pursuant to section 15-539, subsection C, in which a teacher is allowed to improve after receiving a preliminary notice of inadequacy of classroom performance and establish an equivalent time frame to accommodate teachers who are employed in year-round school year operation programs or other schools which do not use the traditional school year calendar.

B. The state board of education may:

1. Contract.

2. Sue and be sued.

3. Distribute and score the tests prescribed in chapter 7, article 3 of this title.

4. Provide for an advisory committee and administrative law judges to conduct hearings to determine whether grounds exist to impose disciplinary action against a certificated person and whether grounds exist to reinstate a revoked or surrendered certificate. The board may delegate its responsibility to conduct hearings to its advisory committee and to administrative law judges. Hearings shall be conducted pursuant to title 41, chapter 6, article 10 .

5. Proceed with the disposal of any complaint requesting disciplinary action or with any disciplinary action against a person holding a certificate as prescribed in subsection A, paragraph 14 of this section after the suspension or expiration of the certificate or surrender of the certificate by the holder.

6. Assess costs and reasonable attorney fees against a person who files a frivolous complaint or who files a complaint in bad faith. Costs assessed pursuant to this paragraph shall not exceed the expenses incurred by the state board in the investigation of the complaint.

Sec. 9. Section 15-341, Arizona Revised Statutes, is amended to read:

15-341 . General powers and duties; immunity; delegation

A. The governing board shall:

1. Prescribe and enforce policies and procedures for the governance of the schools, not inconsistent with law or rules prescribed by the state board of education.

2. Maintain the schools established by it for the attendance of each pupil for a period of not less than one hundred seventy-five school days, or its equivalent as approved by the superintendent of public instruction for a school district operating on a year-round operation basis, to offer an educational program on the basis of a four day school week or to offer an alternative kindergarten program on the basis of a three day school week, in each school year, and if the funds of the district are sufficient, for a longer period, and as far as practicable with equal rights and privileges.

3. Exclude from schools all books, publications, papers or audiovisual materials of a sectarian, partisan or denominational character.

4. Manage and control the school property within its district.

5. Acquire school furniture, apparatus, equipment, library books and supplies for the use of the schools.

6. Prescribe the curricula and criteria for the promotion and graduation of pupils as provided in sections 15-701 and 15-701.01.

7. Furnish, repair and insure the school property of the district.

8. Construct school buildings on approval by a vote of the district electors.

9. Make in the name of the district conveyances of property belonging to the district and sold by the board.

10. Purchase school sites when authorized by a vote of the district at an election conducted as nearly as practicable in the same manner as the election provided in section 15-481 and held on a date prescribed in section 15-491, subsection E, but such authorization shall not necessarily specify the site to be purchased and such authorization shall not be necessary to exchange unimproved property as provided in section 15-342, paragraph 23.

11. Construct, improve and furnish buildings used for school purposes when such buildings or premises are leased from the national park service.

12. Purchase school sites or construct, improve and furnish school buildings from the proceeds of the sale of school property only on approval by a vote of the district electors.

13. Hold pupils to strict account for disorderly conduct on school property.

14. Discipline students for disorderly conduct on the way to and from school.

15. Except as provided in section 15-1224, deposit all monies received by the district as gifts, grants and devises with the county treasurer who shall credit the deposits as designated in the uniform system of financial records. If not inconsistent with the terms of the gifts, grants and devises given, any balance remaining after expenditures for the intended purpose of the monies have been made shall be used for reduction of school district taxes for the budget year, except that in the case of accommodation schools the county treasurer shall carry the balance forward for use by the county school superintendent for accommodation schools for the budget year.

16. Provide that, if a parent or legal guardian chooses not to accept a decision of the teacher as provided in section 15-521, paragraph 3, the parent or legal guardian may request in writing that the governing board review the teacher's decision. Nothing in this paragraph shall be construed to release school districts from any liability relating to a child's promotion or retention.

17. Provide for adequate supervision over pupils in instructional and noninstructional activities by certificated or noncertificated personnel.

18. Use school monies received from the state and county school apportionment exclusively for payment of salaries of teachers and other employees and contingent expenses of the district.

19. Make an annual report to the county school superintendent on or before October 1 each year in the manner and form and on the blanks prescribed by the superintendent of public instruction or county school superintendent. The board shall also make reports directly to the county school superintendent or the superintendent of public instruction whenever required.

20. Deposit all monies received by school districts other than student activities monies or monies from auxiliary operations as provided in sections 15-1125 and 15-1126 with the county treasurer to the credit of the school district except as provided in paragraph 21 of this subsection and sections 15-1223 and 15-1224, and the board shall expend the monies as provided by law for other school funds.

21. Establish a bank account in which the board may during a month deposit miscellaneous monies received directly by the district. The board shall remit monies deposited in the bank account at least monthly to the county treasurer for deposit as provided in paragraph 20 of this subsection and in accordance with the uniform system of financial records.

22. Employ an attorney admitted to practice in this state whose principal practice is in the area of commercial real estate, or a real estate broker who is licensed by this state and who is employed by a reputable commercial real estate company, to negotiate a lease of five or more years for the school district if the governing board decides to enter into a lease of five or more years as lessor of school buildings or grounds as provided in section 15-342, paragraph 7 or 10. Any lease of five or more years negotiated pursuant to this paragraph shall provide that the lessee is responsible for payment of property taxes pursuant to the requirements of section 42-271, subsection A, paragraph 3.

23. Prescribe and enforce policies and procedures for disciplinary action against a teacher who engages in conduct which is a violation of the policies of the governing board but which is not cause for dismissal of the teacher or for revocation of the certificate of the teacher. Disciplinary action may include suspension without pay for a period of time not to exceed ten school days. Disciplinary action shall not include suspension with pay or suspension without pay for a period of time longer than ten school days. The procedures shall include notice, hearing and appeal provisions for violations which are cause for disciplinary action. The governing board may designate a person or persons to act on behalf of the board on these matters.

24. Prescribe and enforce policies and procedures for disciplinary action against an administrator who engages in conduct which is a violation of the policies of the governing board regarding duties of administrators but which is not cause for dismissal of the administrator or for revocation of the certificate of the administrator. Disciplinary action may include suspension without pay for a period of time not to exceed ten school days. Disciplinary action shall not include suspension with pay or suspension without pay for a period of time longer than ten school days. The procedures shall include notice, hearing and appeal provisions for violations which are cause for disciplinary action. The governing board may designate a person or persons to act on behalf of the board on these matters. For violations which are cause for dismissal, the provisions of notice, hearing and appeal in chapter 5, article 3 of this title shall apply. The filing of a timely request for a hearing suspends the imposition of a suspension without pay or a dismissal pending completion of the hearing.

25. Prescribe and enforce policies and procedures that prohibit a person from carrying or possessing a weapon on school grounds unless the person is a peace officer or has obtained specific authorization from the school administrator.

26. Prescribe and enforce policies and procedures relating to the health and safety of all pupils participating in district sponsored practice sessions, games or other interscholastic athletic activities, including the provision of water. A school district and its employees are immune from civil liability for the consequences of the good faith adoption and implementation of policies and procedures pursuant to this paragraph.

27. Prescribe and enforce policies and procedures regarding the smoking of tobacco within school buildings. The policies and procedures shall be adopted in consultation with school district personnel and members of the community and shall state whether smoking is prohibited in school buildings. If smoking in school buildings is not prohibited, the policies and procedures shall clearly state the conditions and circumstances under which smoking is permitted, those areas in a school building which may be designated as smoking areas and those areas in a school building which may not be designated as smoking areas.

28. Establish an assessment, data gathering and reporting system as prescribed in chapter 7, article 3 of this title.

29. Provide special education programs and related services pursuant to section 15-764, subsection A to all children with disabilities as defined in section 15-761.

30. Administer competency tests prescribed by the state board of education for the graduation of pupils from high school.

B. Notwithstanding subsection A, paragraphs 8, 10 and 12 of this section, the county school superintendent may construct, improve and furnish school buildings or purchase or sell school sites in the conduct of an accommodation school.

C. A school district's governing board members and its school council members are immune from civil liability for the consequences of adoption and implementation of policies and procedures pursuant to subsection A of this section and section 15-342. This waiver does not apply if the school district's governing board members , or its school council members are guilty of gross negligence or intentional misconduct.

D. A governing board may delegate in writing to a superintendent, principal or head teacher the authority to prescribe procedures that are consistent with the governing board's policies.

E. NOTWITHSTANDING ANY OTHER PROVISION OF THIS TITLE, A SCHOOL DISTRICT GOVERNING BOARD SHALL NOT TAKE ANY ACTION THAT WOULD RESULT IN AN IMMEDIATE REDUCTION OR A REDUCTION WITHIN THREE YEARS OF PUPIL SQUARE FOOTAGE THAT WOULD CAUSE THE SCHOOL DISTRICT TO FALL BELOW THE MINIMUM ADEQUATE GROSS SQUARE FOOTAGE REQUIREMENTS PRESCRIBED IN SECTION 15-2011, SUBSECTION C, UNLESS THE GOVERNING BOARD NOTIFIES THE SCHOOL FACILITIES BOARD ESTABLISHED BY SECTION 15-2001 OF THE PROPOSED ACTION AND RECEIVES WRITTEN APPROVAL FROM THE SCHOOL FACILITIES BOARD TO TAKE THE ACTION. A REDUCTION INCLUDES AN INCREASE IN ADMINISTRATIVE SPACE THAT RESULTS IN A REDUCTION OF PUPIL SQUARE FOOTAGE OR SALE OF SCHOOL SITES OR BUILDINGS, OR BOTH. THE SALE OF EQUIPMENT THAT RESULTS IN AN IMMEDIATE REDUCTION OR A REDUCTION WITHIN THREE YEARS THAT FALLS BELOW THE EQUIPMENT REQUIREMENTS PRESCRIBED IN SECTION 15-2011, SUBSECTION B IS SUBJECT TO COMMENSURATE WITHHOLDING OF SCHOOL DISTRICT CAPITAL OUTLAY REVENUE LIMIT MONIES PURSUANT TO THE DIRECTION OF THE SCHOOL FACILITIES BOARD. PROCEEDS FROM THE SALE OF SCHOOL SITES, BUILDINGS OR OTHER EQUIPMENT SHALL BE DEPOSITED IN THE SCHOOL PLANT FUND AS PROVIDED IN SECTION 15-1102.

E. F. Subsections C and D of this section shall apply to a county board of supervisors and a county school superintendent when operating and administering an accommodation school.

Sec. 10. Section 15-342, Arizona Revised Statutes, is amended to read:

15-342 . Discretionary powers

The governing board may:

1. Expel pupils for misconduct.

2. Exclude from grades one through eight children under six years of age.

3. Make such separation of groups of pupils as it deems advisable.

4. Maintain such special schools during vacation as deemed necessary for the benefit of the pupils of the school district.

5. Permit a superintendent or principal or his representatives to travel for a school purpose, as determined by a majority vote of the board. The board may permit members and members-elect of the board to travel within or without the school district for a school purpose and receive reimbursement. Any expenditure for travel and subsistence pursuant to this paragraph shall be as provided in title 38, chapter 4, article 2. The designated post of duty referred to in section 38-621 shall be construed, for school district governing board members, to be the member's actual place of residence, as opposed to the school district office or the school district boundaries. Such expenditures shall be a charge against the budgeted school district funds. The governing board of a school district shall prescribe procedures and amounts for reimbursement of lodging and subsistence expenses. Reimbursement amounts shall not exceed the maximum amounts established pursuant to section 38-624, subsection C.

6. Construct or provide in rural districts housing facilities for teachers and other school employees which the board determines are necessary for the operation of the school.

7. Sell or lease to the state, county or city any school property required for a public purpose, provided the sale or lease of the property will not affect the normal operations of a school within the school district.

8. Annually budget and expend funds for membership in an association of school districts within this state.

9. Enter into leases or lease-purchase agreements for school buildings or grounds, or both, as lessor or as lessee, for periods of less than five years subject to voter approval for construction of school buildings as prescribed in section 15-341, subsection A, paragraph 8.

10. Sell school sites or enter into leases or lease-purchase agreements for school buildings and grounds, as lessor or as lessee, for a period of five years or more, but not to exceed ninety-nine years, if authorized by vote of the school district electors in an election called by the governing board as provided in section 15-491, except that if the market value of the school property is less than fifty thousand dollars authorization by the school district electors in an election is not required.

11. Review the decision of a teacher to promote a pupil to a grade or retain a pupil in a grade in a common school or to pass or fail a pupil in a course in high school. Notwithstanding title 38, chapter 3, article 3.1, the governing board shall review the decision of a teacher to promote a pupil to a grade or retain a pupil in a grade in a common school or to pass or fail a pupil in a course in high school in executive session unless a parent or legal guardian of the pupil or the pupil, if emancipated, disagrees that the review should be conducted in executive session and then the review shall be conducted in an open meeting. If the review is conducted in executive session, the board shall notify the teacher of the date, time and place of the review and shall allow the teacher to be present at the review. If the teacher is not present at the review, the board shall consult with the teacher before making its decision. Any request, including the written request as provided in section 15-341, the written evidence presented at the review and the written record of the review, including the decision of the governing board to accept or reject the teacher's decision, shall be retained by the governing board as part of its permanent records.

12. Provide transportation or site transportation loading and unloading areas for any child or children if deemed for the best interest of the district, whether within or without the district, county or state.

13. Enter into intergovernmental agreements and contracts with school districts or other governing bodies as provided in section 11-952.

14. Include in the curricula which it prescribes for high schools in the school district vocational and technological education programs and vocational and technological program improvement services for the high schools, subject to approval by the state board of education. The governing board may contract for the provision of vocational and technological education as provided in section 15-789.

15. Suspend a teacher or administrator from his duties without pay for a period of time of not to exceed ten school days, if the board determines that suspension is warranted pursuant to section 15-341, subsection A, paragraphs 23 and 24.

16. Dedicate school property within an incorporated city or town to such city or town or within a county to that county for use as a public right-of-way if both of the following apply:

(a) Pursuant to an ordinance adopted by such city, town or county, there will be conferred upon the school district privileges and benefits which may include benefits related to zoning.

(b) The dedication will not affect the normal operation of any school within the district.

17. Enter into option agreements for the purchase of school sites.

18. Donate surplus or outdated learning materials to nonprofit community organizations where the governing board determines that the anticipated cost of selling the learning materials equals or exceeds the estimated market value of the materials.

19. Prescribe policies for the assessment of reasonable fees for students to use district-provided parking facilities. The fees are to be applied by the district solely against costs incurred in operating or securing the parking facilities. Any policy adopted by the governing board pursuant to this paragraph shall include a fee waiver provision in appropriate cases of need or economic hardship.

20. Establish alternative educational programs that are consistent with the laws of this state to educate pupils, including pupils who have been reassigned pursuant to section 15-841, subsection E or F.

21. Require a period of silence to be observed at the commencement of the first class of the day in the schools. If a governing board chooses to require a period of silence to be observed, the teacher in charge of the room in which the first class is held shall announce that a period of silence not to exceed one minute in duration will be observed for meditation, and during that time no activities shall take place and silence shall be maintained.

22. Require students to wear uniforms.

23. Exchange unimproved property or improved property, including school sites, where the governing board determines that the improved property is unnecessary for the continued operation of the school district and determines the improvements to the property are to be substantially removed, dismantled or demolished for unimproved property of substantially equal or greater value without requesting authorization by a vote of the school district electors if the governing board determines that the exchange is necessary to protect the health or safety of pupils.

24. For common and high school pupils, assess reasonable fees for optional extracurricular activities and programs conducted when the common or high school is not in session, except that no fees shall be charged for pupils' access to or use of computers or related materials. For high school pupils, the governing board may assess reasonable fees for fine arts and vocational education courses and for optional services, equipment and materials offered to the pupils beyond those required to successfully complete the basic requirements of any other course, except that no fees shall be charged for pupils' access to or use of computers or related materials. Fees assessed pursuant to this paragraph shall be adopted at a public meeting after notice has been given to all parents of pupils enrolled at schools in the district and shall not exceed the actual costs of the activities, programs, services, equipment or materials. The governing board shall authorize principals to waive the assessment of all or part of a fee assessed pursuant to this paragraph if it creates an economic hardship for a pupil. For the purposes of this paragraph, "extracurricular activity" means any optional, noncredit, educational or recreational activity which supplements the education program of the school, whether offered before, during or after regular school hours.

25. Notwithstanding section 15-341, subsection A, paragraphs 8 and 10, construct school buildings and purchase school sites, without a vote of the school district electors, if the buildings and sites are totally funded from one or more of the following:

(a) UNTIL JUNE 30, 1999, monies in the capital outlay fund or in the plan for the use of the reserve of the capital outlay fund, AND FROM AND AFTER JUNE 30, 1999, MONIES IN THE UNRESTRICTED CAPITAL OUTLAY FUND, except THAT the estimated cost shall not exceed two hundred fifty thousand dollars for a district that utilizes the provisions of section 15-949.

(b) Monies from the assistance to build classrooms fund established in section 15-1061.

(b) MONIES DISTRIBUTED FROM THE SCHOOL FACILITIES BOARD ESTABLISHED BY SECTION 15-2001.

(c) Monies specifically donated for the purpose of constructing school buildings.

(d) Monies distributed from the school capital equity fund established in section 15-1054.

Nothing in this paragraph shall be construed to eliminate the requirement for an election to raise revenues for a capital outlay override pursuant to section 15-481 or a bond election pursuant to section 15-491.

26. Conduct a background investigation that includes a fingerprint check conducted pursuant to section 41-1750, subsection G for certificated personnel and personnel who are not paid employees of the school district, as a condition of employment. A school district may release the results of a background check to another school district for employment purposes. The school district may charge the costs of fingerprint checks to its fingerprinted employee, except that the school district may not charge the costs of fingerprint checks for personnel who are not paid employees of the school district.

27. Sell advertising space on the exterior of school buses as follows:

(a) Advertisements shall be age appropriate and not contain promotion of any substance that is illegal for minors such as alcohol, tobacco, drugs and OR gambling. Advertisements shall comply with the state sex education policy in OF abstinence.

(b) Advertising approved by the governing board may appear only on the sides of the bus in the following areas:

(i) The signs shall be below the seat level rub rail and not extend above the bottom of the side windows.

(ii) The signs shall be at least three inches from any required lettering, lamp, wheel well or reflector behind the service door or stop signal arm.

(iii) The signs shall not extend from the body of the bus so as to allow a handhold or present a danger to pedestrians.

(iv) The signs shall not interfere with the operation of any door or window.

(v) The signs shall not be placed on any emergency doors.

(c) Establish a school bus advertisement fund that is comprised of revenues from the sale of advertising space on school buses. The monies in a school bus advertisement fund are not subject to reversion and shall be used for the following purposes:

(i) To comply with the energy conservation measures prescribed in section 15-349 in school districts that are in area A as defined in section 49-541, and any remaining monies shall be used to purchase alternative fuel support vehicles and any other pupil related costs as determined by the governing board.

(ii) For any pupil related costs as determined by the governing board in school districts not subject to the provisions of item (i) of this subdivision.

Sec. 11. Section 15-393, Arizona Revised Statutes, is amended to read:

15-393 . Joint technological education district governing board

A. The management and control of the joint district are vested in the joint technological education district governing board. Unless the governing boards of the school districts participating in the formation of the joint district vote to implement an alternative election system as provided in subsection B of this section, the joint board shall consist of five members elected from five single member districts formed within the joint district. The single member district election system shall be submitted as part of the plan for the joint district pursuant to section 15-392 and shall be established in the plan as follows:

1. The governing boards of the school districts participating in the formation of the joint district shall define the boundaries of the single member districts so that the single member districts are as nearly equal in population as is practicable, except that if the joint district lies in part in each of two or more counties, at least one single member district may be entirely within each of the counties comprising the joint district if this district design is consistent with the obligation to equalize the population among single member districts.

2. The boundaries of each single member district shall follow election precinct boundary lines, as far as practicable, in order to avoid further segmentation of the precincts.

3. A person who is a registered voter of this state and who is a resident of the single member district is eligible for election to the office of joint board member from the single member district. The terms of office of the members of the joint board shall be as prescribed in section 15-427, subsection B.

4. Nominating petitions shall be signed by the number of qualified electors of the single member district as provided in section 16-322.

B. The governing boards of the school districts participating in the formation of the joint district may vote to implement any other alternative election system for the election of joint district board members. If an alternative election system is selected, it shall be submitted as part of the plan for the joint district pursuant to section 15-392, and the implementation of the system shall be as approved by the United States justice department.

C. The joint technological education district shall be subject to the following provisions of this title:

1. Chapter 1, articles 1 through 6.

2. Sections 15-208, 15-210, 15-213 and 15-234.

3. Chapter 3, articles 2, 3 and 5.

4. Section 15-361.

5. Chapter 4, articles 1, 2 and 5.

6. Chapter 5, articles 1, 2 and 3.

7. Sections 15-701.01, 15-722, 15-723, 15-724, 15-725, 15-727, 15-728, 15-729 and 15-730.

8. Chapter 7, article 5.

9. Chapter 8, articles 1, 3 and 4.

10. Sections 15-828 and 15-829.

11. Chapter 9, articles 1, 6 and 7.

12. Sections 15-941, 15-948, 15-952, 15-953 and 15-973.

13. Sections 15-1101 and 15-1104.

14. Chapter 10, articles 2, 3, 4 and 8.

D. Notwithstanding subsection C of this section, the following apply to a joint technological education district:

1. A joint district may issue bonds for the purposes specified in section 15-1021 and in chapter 4, article 5 of this title to an amount in the aggregate, including the existing indebtedness, not exceeding one per cent of the taxable property used for secondary tax purposes, as determined pursuant to section 42-227, within the joint technological education district as ascertained by the last assessment of state and county taxes previous to issuing the bonds.

2. The number of governing board members for a joint district shall be as prescribed in subsection A of this section.

3. If a vocational and technological course or program provided pursuant to this article is provided in a facility owned and operated by a school district in which a pupil is enrolled, the sum of the daily attendance as provided in section 15-901, subsection A, paragraph 6, for that pupil in both the school district and joint technological education district shall not exceed 1.250 and the sum of the fractional student enrollment as provided in section 15-901, subsection A, paragraph 2, subdivision (a), shall not exceed 1.250 for the courses taken in the school district and the facility. If the pupil is enrolled in at least two courses in the school district and at least three courses in the joint district, the fractional student enrollment for that pupil in the school district shall be calculated to be the difference between 1.250 and the fractional student enrollment for that pupil in the joint district.

4. The student count for the first year of operation of a joint technological education district as provided in this article shall be determined as follows:

(a) Determine the estimated student count for joint district classes which will operate in the first year of operation. This estimate shall be based upon actual registration of pupils as of March 30 scheduled to attend classes which will be operated by the joint district. The student count for the district of residence of the pupils registered at the joint district shall be adjusted. The adjustment shall cause the district of residence to reduce the student count for the pupil to reflect the courses to be taken at the joint district. The district of residence shall review and approve the adjustment of its own student count as provided in this subdivision before the pupils from the school district can be added to the student count of the joint district.

(b) The student count for the new joint district shall be the student count as determined in subdivision (a) of this paragraph.

(c) After the first one hundred days in session for the first year of operation, the joint district shall revise the student count to the actual student count for students attending classes in the joint district. A joint district shall revise its student count and revise the base support level as provided in section 15-943.02, the revenue control limit as provided in section 15-944.01 and the capital outlay revenue limit and UNTIL JUNE 30, 1999, THE capital levy revenue limit AND FROM AND AFTER JUNE 30, 1999, THE SOFT CAPITAL ALLOCATION as provided in section 15-962.01 prior to May 15. A joint district which overestimated its student count shall revise its budget prior to May 15. A joint district which underestimated its student count may revise its budget prior to May 15.

(d) After the first one hundred days in session for the first year of operation, the district of residence shall adjust its student count by reducing it to reflect the courses actually taken at the joint district. The district of residence shall revise its student count, revise the base support level as provided in section 15-943, the revenue control limit as provided in section 15-944, the capital outlay revenue limit as provided in section 15-961 and UNTIL JUNE 30, 1999, the capital levy revenue limit AND FROM AND AFTER JUNE 30, 1999, THE SOFT CAPITAL ALLOCATION as provided in section 15-962, prior to May 15. A district which underestimated the student count for students attending the joint district shall revise its budget prior to May 15. A district which overestimated the student count for students attending the joint district may revise its budget prior to May 15.

(e) A joint district for the first year of operation shall not be eligible for the provisions of section 15-948.

(f) The procedures for implementing the provisions of this paragraph shall be as prescribed in the uniform system of financial records.

(g) If the district of residence utilizes the provisions of section 15-942 to determine its student count, the district shall reduce its student count as provided in this paragraph by subtracting the appropriate count from the student count determined as provided in section 15-942.

(h) For the purposes of this paragraph, "district of residence" means the district which included the pupil in its average daily membership for the year before the first year of operation of the joint district and would have included the pupil in its student count for the purposes of computing its base support level for the fiscal year of the first year of operation of the joint district if the pupil had not enrolled in the joint district.

5. A student includes any person enrolled in the joint district without regard to the person's age or high school graduation status.

6. A joint district may operate for more than one hundred seventy-five days per year, with expanded hours of service.

E. The joint board shall appoint a superintendent as the executive officer of the joint district.

F. Taxes may be levied for the support of the joint district as prescribed in chapter 9, article 6 of this title. Except for the taxes levied pursuant to section 15-994, such taxes shall be obtained from a levy of taxes upon the taxable property used for secondary tax purposes.

G. The schools in the joint district are available to all children of school age who reside in the joint district subject to the rules for admission prescribed by the joint board.

H. The joint board may collect tuition for adult students and the attendance of pupils who are residents of school districts which are not participating in the joint district pursuant to arrangements made between the governing board of the district and the joint board.

I. The joint board may accept gifts, grants, federal monies, tuition and other allocations of monies to erect, repair and equip buildings and for the cost of operation of the schools of the joint district.

J. One member of the joint board shall be selected chairman. The chairman shall be selected annually on a rotation basis from among the participating school districts. The chairman of the joint board shall be a voting member.

Sec. 12. Section 15-481, Arizona Revised Statutes, is amended to read:

15-481 . Override election; budget increases; notice; ballot; effect

A. If the proposed budget of a school district includes an increase of more than EXCEEDS the aggregate budget limit for the budget year, the governing board shall order an override election to be held not less than ninety days from the date of the order for the purpose of presenting the proposed budget to the qualified electors of the school district who shall by a majority of those voting either affirm or reject the budget. In addition, the governing board shall prepare an alternate budget which does not include an increase in the budget of more than the amount permitted as provided in section 15-905. If the qualified electors approve the proposed budget, the governing board of the school district shall follow the procedures prescribed in section 15-905 for adopting a budget that includes the authorized increase. If the qualified electors disapprove the proposed budget the governing board shall follow the procedures prescribed in section 15-905 for adopting a budget that does not include the proposed increase or the portion of the proposed increase that exceeds the amount authorized by a previously approved budget increase as prescribed in subsection P of this section.

B. The county school superintendent shall prepare an informational report on the proposed increase in the budget and a sample ballot and at least thirty-five days prior to the election shall transmit the report and the ballot to the governing board of the school district. For a school district located in a county with a population of two hundred thousand persons or more, the governing board, upon receipt of the report and the ballot, shall mail or distribute the report and the ballot to the households, in which qualified electors reside, within the school district at least thirty days prior to the election. For a school district located in a county with a population of less than two hundred thousand persons, the governing board, upon receipt of the report and the ballot, shall mail or distribute the report and the ballot to the households within the school district at least thirty days prior to the election. Any distribution of material concerning the proposed increase in the budget shall not be conducted by children enrolled in the school district. The report shall contain the following information:

1. The date of the election.

2. The polling places and times they are open.

3. The proposed total increase in the budget which exceeds the amount permitted pursuant to section 15-905.

4. The total amount of the current year's budget, the total amount of the proposed budget and the total amount of the alternate budget.

5. If the override is for a period of more than one year, a statement indicating the number of years the proposed increase in the budget would be in effect and the percentage of the school district's revenue control limit that the district is requesting for the future years.

6. The proposed total amount of revenues which will fund the increase in the budget and the amount which will be obtained from a levy of taxes upon the taxable property within the school district for the first year for which the budget increase was adopted.

7. The proposed amount of revenues which will fund the increase in the budget and which will be obtained from other than a levy of taxes upon the taxable property within the school district for the first year for which the budget increase was adopted.

8. The dollar amount and the purpose for which the proposed increase in the budget is to be expended for the first year for which the budget increase was adopted.

9. At least two arguments, if submitted, but no more than ten arguments for and two arguments, if submitted, but no more than ten arguments against the proposed increase in the budget. The arguments shall be in a form prescribed by the county school superintendent and each argument shall not exceed two hundred words. Arguments for the proposed increase in the budget shall be provided in writing and signed by the governing board. If submitted, additional arguments in favor of the proposed increase in the budget shall be provided in writing and signed by those in favor. Arguments against the proposed increase in the budget shall be provided in writing and signed by those in opposition. The names of those persons other than the governing board or superintendent submitting written arguments shall not be included in the report without their specific permission, but shall be made available only upon request to the county school superintendent. The county school superintendent shall review all factual statements contained in the written arguments and correct any inaccurate statements of fact. The superintendent shall not review and correct any portion of the written arguments which are identified as statements of the author's opinion. The county school superintendent shall make the written arguments available to the public as provided in title 39, chapter 1, article 2. A deadline for submitting arguments to be included in the informational report shall be set by the county school superintendent.

10. A statement that the alternate budget shall be adopted by the governing board if the proposed budget is not adopted by the qualified electors of the school district.

11. The full cash value, the assessed valuation and the estimated amount of the secondary tax bill if the proposed budget is adopted for each of the following:

(a) An owner-occupied residence whose assessed valuation is the average assessed valuation of property classified as class five for the current year in the school district.

(b) An owner-occupied residence whose assessed valuation is one-half of the assessed valuation of the residence in subdivision (a) of this paragraph.

(c) An owner-occupied residence whose assessed valuation is twice the assessed valuation of the residence in subdivision (a) of this paragraph.

(d) A business whose assessed valuation is the average of the assessed valuation of property classified as class three for the current year in the school district.

C. For the purpose of this section, the school district may use its staff, equipment, materials, buildings or other resources only to distribute the informational report at the school district office or at public hearings and to produce such information as required in subsection B of this section, provided that nothing in this subsection shall preclude school districts from holding or participating in any public hearings at which testimony is given by at least one person for the proposed increase and one person against the proposed increase.

D. The elections prescribed in subsection A of this section shall be held on a date prescribed by section 16-204 and shall be conducted as nearly as practicable in the manner prescribed in article 1 of this chapter, sections 15-422 through 15-424 and section 15-426, relating to special elections, except that:

1. The notices required pursuant to section 15-403 shall be posted not less than twenty-five days before the election.

2. Ballots shall be counted pursuant to title 16, chapter 4, article 10.

E. If the election is to exceed the revenue control limit and if the proposed increase will be fully funded by a levy of taxes upon the taxable property within the school district, the ballot shall contain the words "budget increase, yes" and "budget increase, no", and the voter shall signify his desired choice. The ballot shall also contain the amount of the proposed increase of the proposed budget over the alternate budget, a statement that the amount of the proposed increase will be based on a percentage of the school district's revenue control limit in future years, if applicable, as provided in subsection P of this section and the following statement:

Any budget increase authorized by this election shall be entirely funded by a levy of taxes upon the taxable property within this school district for the year for which adopted and for ____ subsequent years, shall not be realized from monies furnished by the state and shall not be subject to the limitation on taxes specified in article IX, section 18, Constitution of Arizona. Based on an estimate of assessed valuation used for secondary property tax purposes, the proposed increase in the school district's budget over that allowed by law would result in an estimated increase in the school district's tax rate of _______________ dollar per one hundred dollars of assessed valuation used for secondary property tax purposes and is in addition to the school district's tax rate which will be levied to fund the school district's revenue control limit allowed by law.

F. If the election is to exceed the revenue control limit and if the proposed increase will be fully funded by revenues from other than a levy of taxes upon the taxable property within the school district, the ballot shall contain the words "budget increase, yes" and "budget increase, no", and the voter shall signify his desired choice. The ballot shall also contain:

1. The amount of the proposed increase of the proposed budget over the alternate budget.

2. A statement that the amount of the proposed increase will be based on a percentage of the school district's revenue control limit in future years, if applicable, as provided in subsection P of this section.

3. The following statement:

Any budget increase authorized by this election shall be entirely funded by this school district with revenues from other than a levy of taxes on the taxable property within the school district for the year for which adopted and for ______ subsequent years and shall not be realized from monies furnished by the state.

G. Except as provided in subsection H of this section, the maximum budget increase which may be requested and authorized as provided in subsection E or F of this section or the combination of subsections E and F of this section is ten per cent of the revenue control limit as provided in section 15-947, subsection A for the budget year.

H. Special budget override provisions for school districts with a student count of less than one hundred fifty-four in kindergarten programs and grades one through eight or with a student count of less than one hundred seventy-six in grades nine through twelve are as follows:

1. The maximum budget increase that may be requested and authorized as provided in subsections E and F of this section is the greater of the amount prescribed in subsection G of this section or a limit computed as follows:

(a) For common or unified districts with a student count of less than one hundred fifty-four in kindergarten programs and grades one through eight, the limit computed as prescribed in item (i) or (ii) of this subdivision, whichever is appropriate:

(i)

Student Small School Support Level Weight Phase Down Count Student for Small Isolated Reduction Count Limit School Districts Base Level Factor - 125 x 1.358 + (0.0005 x x $ = $ (500 - Student Count))


Small Isolated Phase Down Phase Down School District Base Reduction Factor Elementary Limit $150,000 - $ = $

(ii)

Student Small School Support Level Weight Phase Down Count Student for Small Reduction Count Limit School Districts Base Level Factor - 125 x 1.278 + (0.0003 x x $ = $ (500 - Student Count))

Small Phase Down Phase Down School District Base Reduction Factor Elementary Limit $150,000 - $ = $

(b) For unified or union high school districts with a student count of less than one hundred seventy-six in grades nine through twelve, the limit computed as prescribed in item (i) or (ii) of this subdivision, whichever is appropriate: (i)

Student Small School Support Level Weight Phase Down Count Student for Small Isolated Reduction Count Limit School Districts Base Level Factor - 100 x 1.468 + (0.0005 x x $ = $ (500 - Student Count))


Small Isolated Phase Down Phase Down District Base Reduction Factor Secondary Limit $350,000 - $ = $


(ii)

Student Small School Support Level Weight Phase Down Count Student for Small Reduction Count Limit School Districts Base Level Factor - 100 x 1.398 + (0.0004 x x $ = $ (500 - Student Count))

Small Phase Down Phase Down School District Base Reduction Factor Secondary Limit $350,000 - $ = $

(c) If both subdivisions (a) and (b) of this paragraph apply to a unified school district, its limit for the purposes of this paragraph is the combination of its elementary limit and its secondary limit.

2. If a school district utilizes the provisions of this subsection to request an override of more than one year, the ballot shall include an estimate of the amount of the proposed increase in the future years in place of the statement that the amount of the proposed increase will be based on a percentage of the school district's revenue control limit in future years, as prescribed in subsections E and F of this section.

3. Notwithstanding subsection P of this section, the maximum period of an override authorized pursuant to this subsection is five years.

4. Subsection P, paragraphs 1 and 2 of this section do not apply to overrides authorized pursuant to this subsection.

I. If the election is to exceed the revenue control limit as provided in section 15-482 and if the proposed increase will be fully funded by a levy of taxes on the taxable property within the school district, the ballot shall contain the words "budget increase, yes" and "budget increase, no", and the voter shall signify his desired choice. The ballot shall also contain the amount of the proposed increase of the budget over the alternate budget, a statement that the amount of the proposed increase will be based on a percentage of the school district's revenue control limit in future years, if applicable, as provided in subsection Q of this section, and the following statement:

Any budget increase authorized by this election shall be entirely funded by a levy of taxes on the taxable property within this school district for the year for which adopted and for _____ subsequent years, shall not be realized from monies furnished by the state and shall not be subject to the limitation on taxes specified in article IX, section 18, Constitution of Arizona. Based on an estimate of assessed valuation used for secondary property tax purposes, the portion of the proposed increase in the school district's budget over that allowed by law which will be funded by a levy of taxes upon the taxable property within this school district would result in an estimated increase in the school district's tax rate of __________ dollar per one hundred dollars of assessed valuation used for secondary property tax purposes and is in addition to the school district's tax rate that will be levied to fund the school district's revenue control limit allowed by law.

J. If the election is to exceed the revenue control limit as provided in section 15-482 and if the proposed increase will be fully funded by revenues other than a levy of taxes on the taxable property within the school district, the ballot shall contain the words "budget increase, yes" and "budget increase, no", and the voter shall signify his desired choice. The ballot shall also contain the amount of the proposed increase of the proposed budget over the alternate budget, a statement that the amount of the proposed increase will be based on a percentage of the school district's revenue control limit in future years, if applicable, as provided in subsection Q of this section and the following statement:

Any budget increase authorized by this election shall be entirely funded by this school district with revenues from other than a levy of taxes on the taxable property within the school district for the year for which adopted and for _____ subsequent years and shall not be realized from monies furnished by the state.

K. The maximum budget increase that may be requested and authorized as provided in subsection I or J of this section, or a combination of both of these subsections, is five per cent of the revenue control limit as provided in section 15-947, subsection A for the budget year. For a unified school district, a common school district not within a high school district or a common school district within a high school district that offers instruction in high school subjects as provided in section 15-447, five per cent of the revenue control limit means five per cent of the revenue control limit attributable to the weighted student count in preschool programs for handicapped children, kindergarten programs and grades one through eight as provided in section 15-971, subsection B.

L. If the election is to exceed the capital outlay revenue limit and if the proposed increase will be fully funded by a levy of taxes upon the taxable property within the school district, the ballot shall contain the words "budget increase, yes" and "budget increase, no", and the voter shall signify his desired choice. AN ELECTION HELD PURSUANT TO THIS SUBSECTION SHALL BE HELD ON THE FIRST TUESDAY AFTER THE FIRST MONDAY OF NOVEMBER. The ballot shall also contain the amount of the proposed increase of the proposed budget over the alternate budget and the following statement:

Any budget increase authorized by this election shall be entirely funded by a levy of taxes upon the taxable property within this school district for the year in which adopted and for _____ subsequent years, shall not be realized from monies furnished by the state and shall not be subject to the limitation on taxes specified in article IX, section 18, Constitution of Arizona. Based on an estimate of assessed valuation used for secondary property tax purposes, the proposed increase in the school district's budget over that allowed by law would result in an estimated increase in the school district's tax rate of _______________ dollar per one hundred dollars of assessed valuation used for secondary property tax purposes and is in addition to the school district's tax rate which will be levied to fund the school district's capital outlay revenue limit allowed by law.

M. If the election is to exceed the capital outlay revenue limit and if the proposed increase will be fully funded by revenues from other than a levy of taxes upon the taxable property within the school district, the ballot shall contain the words "budget increase, yes" and "budget increase, no", and the voter shall signify his desired choice. AN ELECTION HELD PURSUANT TO THIS SUBSECTION SHALL BE HELD ON THE FIRST TUESDAY AFTER THE FIRST MONDAY OF NOVEMBER. The ballot shall also contain the amount of the proposed increase of the proposed budget over the alternate budget and the following statement:

Any budget increase authorized by this election shall be entirely funded by this school district with revenues from other than a levy of taxes on the taxable property within the school district for the year in which adopted and for ______ subsequent years and shall not be realized from monies furnished by the state.

N. If the election is to exceed a combination of the revenue control limit as provided in subsection E or F of this section, the revenue control limit as provided in subsection I or J of this section or the capital outlay revenue limit as provided in subsection L or M of this section, the ballot shall be prepared so that the voters may vote on each proposed increase separately and shall contain statements required in the same manner as if each proposed increase were submitted separately.

O. If the election provides for a levy of taxes on the taxable property within the school district, at least thirty days prior to the election, the department of revenue shall provide the school district governing board and the county school superintendent with an estimate of the school district's assessed valuation used for secondary property tax purposes for the ensuing fiscal year. The governing board and the county school superintendent shall use this estimate to translate the amount of the proposed dollar increase in the budget of the school district over that allowed by law into a tax rate figure.

P. If the voters in a school district vote to adopt a budget in excess of the revenue control limit as provided in subsection E or F of this section, any additional increase shall be included in the aggregate budget limit for each of the years authorized. Any additional increase shall be excluded from the determination of equalization assistance. The school district governing board may, however, levy on the assessed valuation used for secondary property tax purposes of the property in the school district the additional increase if adopted under subsection E of this section for the period of one year, two years or five through seven years as authorized. If an additional increase is approved as provided in subsection F of this section, the school district governing board may only use revenues derived from the school district's prior year's maintenance and operation fund ending cash balance, after any reversion as required pursuant to section 15-991.02, to fund the additional increase. If a budget increase was previously authorized and will be in effect for the budget year or budget year and subsequent years, as provided in subsection E or F of this section, the governing board may request a new budget increase as provided in the same subsection under which the prior budget increase was adopted which shall not exceed the maximum amount permitted under subsection G of this section. If the voters in the school district authorize the new budget increase amount, the existing budget increase no longer is in effect. If the voters in the school district do not authorize the budget increase amount, the existing budget increase remains in effect for the time period for which it was authorized. The maximum additional increase authorized as provided in subsection E or F of this section and the additional increase which is included in the aggregate budget limit is based on a percentage of a school district's revenue control limit in future years, if the budget increase is authorized for more than one year. If the additional increase:

1. Is for two years, the proposed increase in the second year is equal to the initial proposed percentage increase.

2. Is for five years or more, the proposed increase is equal to the initial proposed percentage increase in the following years of the proposed increase, except that in the next to last year it is two-thirds of the initial proposed percentage increase and it is one-third of the initial proposed percentage increase in the last year of the proposed increase.

Q. If the voters in a school district vote to adopt a budget in excess of the revenue control limit as provided in subsection I or J of this section, any additional increase shall be included in the aggregate budget limit for each of the years authorized. Any additional increase shall be excluded from the determination of equalization assistance. The school district governing board, however, may levy on the assessed valuation used for secondary property tax purposes of the property in the school district the additional increase if adopted under subsection I of this section for the period of one year, two years or five through seven years as authorized. If an additional increase is approved as provided in subsection J of this section, the increase may only be budgeted and expended if sufficient monies are available in the maintenance and operation fund of the school district. If a budget increase was previously authorized and will be in effect for the budget year or budget year and subsequent years, as provided in subsection I or J of this section, the governing board may request a new budget increase as provided in the same subsection under which the prior budget increase was adopted that does not exceed the maximum amount permitted under subsection K of this section. If the voters in the school district authorize the new budget increase amount, the existing budget increase no longer is in effect. If the voters in the school district do not authorize the budget increase amount, the existing budget increase remains in effect for the time period for which it was authorized. The maximum additional increase authorized as provided in subsection I or J of this section and the additional increase that is included in the aggregate budget limit is based on a percentage of a school district's revenue control limit in future years, if the budget increase is authorized for more than one year. If the additional increase:

1. Is for two years, the proposed increase in the second year is equal to the initial proposed percentage increase.

2. Is for five years or more, the proposed increase is equal to the initial proposed percentage increase in the following years of the proposed increase, except that in the next to last year it is two-thirds of the initial proposed percentage increase and it is one-third of the initial proposed percentage increase in the last year of the proposed increase.

R. If the voters in a school district vote to adopt a budget in excess of the capital outlay revenue limit as provided in subsection L of this section, any additional increase shall be included in the aggregate budget limit for each of the years authorized. The additional increase shall be excluded from the determination of equalization assistance. The school district governing board may, however, levy on the assessed valuation used for secondary property tax purposes of the property in the school district the additional increase for the period authorized but not to exceed ten years. FOR OVERRIDES APPROVED BY A VOTE OF THE QUALIFIED ELECTORS OF THE SCHOOL DISTRICT AT AN ELECTION HELD FROM AND AFTER OCTOBER 31, 1998, THE PERIOD OF THE ADDITIONAL INCREASE PRESCRIBED IN THIS SUBSECTION SHALL NOT EXCEED SEVEN YEARS FOR ANY CAPITAL OVERRIDE ELECTION.

S. If the voters in a school district vote to adopt a budget in excess of the capital outlay revenue limit as provided in subsection M of this section, any additional increase shall be included in the aggregate budget limit for each of the years authorized. The additional increase shall be excluded from the determination of equalization assistance. The school district governing board may only use revenues derived from the school district's prior year's maintenance and operation fund ending cash balance , after any reversion as required pursuant to section 15-991.02, and capital outlay fund ending cash balance , after any reversion as required pursuant to section 15-991.02, to fund the additional increase for the period authorized but not to exceed ten years. FOR OVERRIDES APPROVED BY A VOTE OF THE QUALIFIED ELECTORS OF THE SCHOOL DISTRICT AT AN ELECTION HELD FROM AND AFTER OCTOBER 31, 1998, THE PERIOD OF THE ADDITIONAL INCREASE PRESCRIBED IN THIS SUBSECTION SHALL NOT EXCEED SEVEN YEARS FOR ANY CAPITAL OVERRIDE ELECTION.

T. In addition to subsections P and S of this section, from the maintenance and operation fund and capital outlay fund ending cash balances, after any reversions as required pursuant to section 15-991.02, the school district governing board shall first use any available revenues to reduce its primary tax rate to zero and shall use any remaining revenues to fund the additional increase authorized as provided in subsections F and M of this section.

U. If the voters in a school district disapprove the proposed budget, the alternate budget which, except for any budget increase authorized by a prior election, does not include an increase in the budget in excess of the amount provided in section 15-905 shall be adopted by the governing board as provided in section 15-905.

V. The governing board may request that any override election be cancelled if any change in chapter 9 of this title changes the amount of the aggregate budget limit as provided in section 15-905. The request to cancel the override election shall be made to the county school superintendent at least ten days prior to the date of the scheduled override election.

W. FOR ANY ELECTION CONDUCTED PURSUANT TO SUBSECTION L OR M OF THIS SECTION:

1. THE BALLOT SHALL INCLUDE THE FOLLOWING STATEMENT IN ADDITION TO ANY OTHER STATEMENT REQUIRED BY THIS SECTION:

THE CAPITAL IMPROVEMENTS THAT ARE PROPOSED TO BE FUNDED THROUGH THIS OVERRIDE ELECTION ARE TO EXCEED THE STATE STANDARDS AND ARE IN ADDITION TO MONIES PROVIDED BY THE STATE.

___________ SCHOOL DISTRICT IS PROPOSING TO INCREASE ITS BUDGET BY $__________ TO FUND CAPITAL IMPROVEMENTS OVER AND ABOVE THOSE FUNDED BY THE STATE. UNDER THE STUDENTS FIRST CAPITAL FUNDING SYSTEM, _________ SCHOOL DISTRICT IS ENTITLED TO STATE MONIES FOR BUILDING RENEWAL, NEW CONSTRUCTION AND RENOVATION OF SCHOOL BUILDINGS IN ACCORDANCE WITH STATE LAW.

2. THE BALLOT SHALL CONTAIN THE WORDS "BUDGET INCREASE, YES" AND "BUDGET INCREASE, NO", AND THE VOTER SHALL SIGNIFY THE VOTER'S DESIRED CHOICE.

3. AT LEAST EIGHTY-FIVE DAYS BEFORE THE ELECTION, A SCHOOL DISTRICT SHALL SUBMIT PROPOSED BALLOT LANGUAGE TO THE DIRECTOR OF THE ARIZONA LEGISLATIVE COUNCIL. THE DIRECTOR OF THE ARIZONA LEGISLATIVE COUNCIL SHALL REVIEW THE PROPOSED BALLOT LANGUAGE TO DETERMINE WHETHER THE PROPOSED BALLOT LANGUAGE COMPLIES WITH THIS SECTION. IF THE DIRECTOR OF THE ARIZONA LEGISLATIVE COUNCIL DETERMINES THAT THE PROPOSED BALLOT LANGUAGE DOES NOT COMPLY WITH THIS SECTION, THE DIRECTOR, WITHIN TEN CALENDAR DAYS OF THE RECEIPT OF THE PROPOSED BALLOT LANGUAGE, SHALL NOTIFY THE SCHOOL DISTRICT OF THE DIRECTOR'S OBJECTIONS AND THE SCHOOL DISTRICT SHALL RESUBMIT REVISED BALLOT LANGUAGE TO THE DIRECTOR FOR APPROVAL.

4. NO LATER THAN TEN DAYS BEFORE AN ELECTION CONDUCTED PURSUANT TO THIS SECTION, A SCHOOL DISTRICT SHALL MAIL TO EACH QUALIFIED ELECTOR IN THE SCHOOL DISTRICT A PUBLICITY PAMPHLET. THE PUBLICITY PAMPHLET SHALL CONTAIN AT A MINIMUM, THE FOLLOWING INFORMATION:

( a ) AN EXECUTIVE SUMMARY OF THE SCHOOL DISTRICT'S MOST RECENT CAPITAL PLAN SUBMITTED TO THE SCHOOL FACILITIES BOARD.

( b ) A COMPLETE LIST OF EACH PROPOSED CAPITAL IMPROVEMENT THAT WILL BE FUNDED WITH THE BUDGET INCREASE AND A DESCRIPTION OF THE PROPOSED COST OF EACH IMPROVEMENT, INCLUDING A SEPARATE AGGREGATION OF CAPITAL IMPROVEMENTS FOR ADMINISTRATIVE PURPOSES AS DEFINED BY THE SCHOOL FACILITIES BOARD.

( c ) THE TAX RATE ASSOCIATED WITH EACH OF THE PROPOSED CAPITAL IMPROVEMENTS AND THE ESTIMATED COST OF EACH CAPITAL IMPROVEMENT FOR THE OWNER OF A SINGLE FAMILY HOME THAT IS VALUED AT EIGHTY THOUSAND DOLLARS.

X. IF THE VOTERS APPROVE THE BUDGET INCREASE PURSUANT TO SUBSECTION L OR M OF THIS SECTION, THE SCHOOL DISTRICT SHALL NOT USE THE OVERRIDE PROCEEDS FOR ANY PURPOSES OTHER THAN THE PROPOSED CAPITAL IMPROVEMENTS LISTED IN THE PUBLICITY PAMPHLET, EXCEPT THAT UP TO TEN PER CENT OF THE OVERRIDE PROCEEDS MAY BE USED FOR GENERAL CAPITAL EXPENSES, INCLUDING COST OVERRUNS OF PROPOSED CAPITAL IMPROVEMENTS.

Y. EACH SCHOOL DISTRICT THAT INCREASES ITS BUDGET PURSUANT TO SUBSECTION L OR M OF THIS SECTION IS REQUIRED TO HOLD A PUBLIC MEETING EACH YEAR BETWEEN SEPTEMBER 1 AND OCTOBER 31 AT WHICH AN UPDATE OF THE PROGRESS OF CAPITAL IMPROVEMENTS FINANCED THROUGH THE OVERRIDE IS DISCUSSED AND AT WHICH THE PUBLIC IS PERMITTED AN OPPORTUNITY TO COMMENT. AT A MINIMUM, THE UPDATE SHALL INCLUDE A COMPARISON OF THE CURRENT STATUS AND THE ORIGINAL PROJECTIONS ON THE CONSTRUCTION OF CAPITAL IMPROVEMENTS, THE COSTS OF CAPITAL IMPROVEMENTS AND THE COSTS OF CAPITAL IMPROVEMENTS IN PROGRESS OR COMPLETED SINCE THE PRIOR MEETING AND THE FUTURE CAPITAL PLANS OF THE SCHOOL DISTRICT. THE SCHOOL DISTRICT SHALL INCLUDE IN THE PUBLIC MEETING A DISCUSSION OF THE SCHOOL DISTRICT'S USE OF STATE CAPITAL AID AND VOTER-APPROVED BONDING IN FUNDING CAPITAL IMPROVEMENTS, IF ANY.

Sec. 13. Section 15-491, Arizona Revised Statutes, is amended to read:

15-491 . Elections on school property; exceptions

A. The governing board of a school district may, and upon petition of fifteen per cent of the school electors as shown by the poll list at the last preceding annual school election shall, call an election for the following purposes:

1. To locate or change the location of school buildings.

2. To purchase or sell school sites or buildings or sell school sites pursuant to section 15-342 or to build school buildings, but the authorization by vote of the school district shall not necessarily specify the site to be purchased.

3. To decide whether the bonds of the school district shall be issued and sold for the purpose of raising money for purchasing or leasing school lots, for building OR RENOVATING school buildings, for supplying school buildings with furniture and apparatus, for improving school grounds, for purchasing pupil transportation vehicles or for liquidating any indebtedness already incurred for such purposes. THE PROCEEDS OF CLASS B BONDS SHALL NOT BE USED FOR SOFT CAPITAL PURPOSES. A SCHOOL DISTRICT SHALL NOT ISSUE CLASS B BONDS UNTIL THE SCHOOL DISTRICT HAS OBLIGATED IN CONTRACT THE ENTIRE PROCEEDS OF ANY CLASS A BONDS ISSUED BY THE SCHOOL DISTRICT. THE TOTAL AMOUNT OF CLASS A AND CLASS B BONDS ISSUED BY A SCHOOL DISTRICT SHALL NOT EXCEED THE DEBT LIMITATIONS PRESCRIBED IN ARTICLE IX, SECTIONS 8 AND 8.1, CONSTITUTION OF ARIZONA.

4. To lease for five or more years, as lessor or as lessee, school buildings or grounds. Approval by a majority of the school district electors voting authorizes the governing board to negotiate for and enter into a lease. The ballot shall list the school buildings or grounds for which a lease is sought. If the governing board does not enter into a lease of five or more years of the school buildings or grounds listed on the ballot within five years of the date of the election and the board continues to seek such a lease, the governing board shall call a special election to reauthorize the board to negotiate for and to enter into a lease of five or more years.

5. To accept a loan from the school capital equity fund as provided in section 15-1054, subsection F, if the amount of the loan and the district's existing bonded indebtedness exceed six per cent of the taxable property used for secondary property tax purposes determined pursuant to section 42-227.

B. No petition shall be required for the holding of the first election to be held in a joint common school district for any of the purposes specified in subsection A of this section. The notice of election required by section 15-492 shall be published in each of the counties which comprise the joint common school district. The certification of election results required by section 15-493 shall be made to the board of supervisors of the jurisdictional county.

C. When the election is called to determine whether or not bonds of the school district shall be issued and sold for the purposes enumerated in the call for the election, the question shall be submitted to the vote of the qualified electors of the school district as defined in section 15-401 and subject to the provisions of section 15-402.

D. The governing board shall order the election to be held in the manner prescribed in title 35, chapter 3, article 3. If a petition for an election has been filed with the governing board as provided in subsection A of this section, the board shall act upon the petition within sixty days by ordering the election to be held as provided in this subsection. If a school district bond election is scheduled for the same date a school district will hold an override election, the governing body shall deliver a copy of the notice of election and ballot to the county school superintendent who shall include the notice of election and ballot with the information report and ballot prepared for the override election. Mailing of the information required for both the override and bond elections shall constitute compliance with the notice provisions of this section.

E. The elections to be held pursuant to this section shall only be held on dates prescribed by section 16-204 , EXCEPT THAT ELECTIONS HELD PURSUANT TO THIS SECTION TO DECIDE WHETHER CLASS B BONDS SHALL BE ISSUED SHALL ONLY BE HELD ON THE FIRST TUESDAY AFTER THE FIRST MONDAY OF NOVEMBER .

F. The provisions of subsection A, paragraph 2 of this section shall not apply to the purchase of school sites or the construction of school buildings which are included in a plan for the use of the reserve of the capital outlay fund and that meet the criteria prescribed in section 15-342, paragraph 25.

G. F. Subsection A, paragraph 2 of this section does not apply to the sale of school property if the market value of the school property is less than fifty thousand dollars.

H. G. Bond counsel fees, financial advisory fees, printing costs and paying agent and registrar fees for bonds issued pursuant to an election under this section shall be paid from either the amount authorized by the qualified electors of the school district or current operating funds. Bond election expenses shall be paid from current operating funds only.

H. FOR ANY ELECTION CONDUCTED PURSUANT TO THIS SECTION:

1. THE BALLOT SHALL INCLUDE THE FOLLOWING STATEMENT:

THE CAPITAL IMPROVEMENTS THAT ARE PROPOSED TO BE FUNDED THROUGH THIS BOND ISSUANCE ARE TO EXCEED THE STATE STANDARDS AND ARE IN ADDITION TO MONIES PROVIDED BY THE STATE.

___________ SCHOOL DISTRICT IS PROPOSING TO ISSUE CLASS B GENERAL OBLIGATION BONDS TOTALING $__________ TO FUND CAPITAL IMPROVEMENTS OVER AND ABOVE THOSE FUNDED BY THE STATE. UNDER THE STUDENTS FIRST CAPITAL FUNDING SYSTEM, _________ SCHOOL DISTRICT IS ENTITLED TO STATE MONIES FOR BUILDING RENEWAL, NEW CONSTRUCTION AND RENOVATION OF SCHOOL BUILDINGS IN ACCORDANCE WITH STATE LAW.

2. THE BALLOT SHALL CONTAIN THE WORDS "BOND APPROVAL, YES" AND "BOND APPROVAL, NO", AND THE VOTER SHALL SIGNIFY THE VOTER'S DESIRED CHOICE.

3. AT LEAST EIGHTY-FIVE DAYS BEFORE THE ELECTION, A SCHOOL DISTRICT SHALL SUBMIT PROPOSED BALLOT LANGUAGE TO THE DIRECTOR OF THE ARIZONA LEGISLATIVE COUNCIL. THE DIRECTOR OF THE ARIZONA LEGISLATIVE COUNCIL SHALL REVIEW THE PROPOSED BALLOT LANGUAGE TO DETERMINE WHETHER THE PROPOSED BALLOT LANGUAGE COMPLIES WITH THIS SECTION. IF THE DIRECTOR OF THE ARIZONA LEGISLATIVE COUNCIL DETERMINES THAT THE PROPOSED BALLOT LANGUAGE DOES NOT COMPLY WITH THIS SECTION, THE DIRECTOR, WITHIN TEN CALENDAR DAYS OF THE RECEIPT OF THE PROPOSED BALLOT LANGUAGE, SHALL NOTIFY THE SCHOOL DISTRICT OF THE DIRECTOR'S OBJECTIONS AND THE SCHOOL DISTRICT SHALL RESUBMIT REVISED BALLOT LANGUAGE TO THE DIRECTOR FOR APPROVAL.

4. NO LATER THAN TEN DAYS BEFORE A CLASS B BOND ELECTION CONDUCTED PURSUANT TO THIS SECTION, A SCHOOL DISTRICT SHALL MAIL TO EACH QUALIFIED ELECTOR IN THE SCHOOL DISTRICT A PUBLICITY PAMPHLET. THE PUBLICITY PAMPHLET SHALL CONTAIN AT A MINIMUM, THE FOLLOWING INFORMATION:

( A ) AN EXECUTIVE SUMMARY OF THE SCHOOL DISTRICT'S MOST RECENT CAPITAL PLAN SUBMITTED TO THE SCHOOL FACILITIES BOARD.

( B ) A COMPLETE LIST OF EACH PROPOSED CAPITAL IMPROVEMENT THAT WILL BE FUNDED WITH THE PROCEEDS OF THE BONDS AND A DESCRIPTION OF THE PROPOSED COST OF EACH IMPROVEMENT, INCLUDING A SEPARATE AGGREGATION OF CAPITAL IMPROVEMENTS FOR ADMINISTRATIVE PURPOSES AS DEFINED BY THE SCHOOL FACILITIES BOARD.

( C ) THE TAX RATE ASSOCIATED WITH EACH OF THE PROPOSED CAPITAL IMPROVEMENTS AND THE ESTIMATED COST OF EACH CAPITAL IMPROVEMENT FOR THE OWNER OF A SINGLE FAMILY HOME THAT IS VALUED AT EIGHTY THOUSAND DOLLARS.

I. IF THE VOTERS APPROVE THE ISSUANCE OF SCHOOL DISTRICT CLASS B BONDS, THE SCHOOL DISTRICT SHALL NOT USE THE BOND PROCEEDS FOR ANY PURPOSES OTHER THAN THE PROPOSED CAPITAL IMPROVEMENTS LISTED IN THE PUBLICITY PAMPHLET, EXCEPT THAT UP TO TEN PER CENT OF THE BOND PROCEEDS MAY BE USED FOR GENERAL CAPITAL EXPENSES, INCLUDING COST OVERRUNS OF PROPOSED CAPITAL IMPROVEMENTS.

J. EACH SCHOOL DISTRICT THAT ISSUES BONDS UNDER THIS SECTION IS REQUIRED TO HOLD A PUBLIC MEETING EACH YEAR BETWEEN SEPTEMBER 1 AND OCTOBER 31 AT WHICH AN UPDATE OF THE PROGRESS OF CAPITAL IMPROVEMENTS FINANCED THROUGH BONDING IS DISCUSSED AND AT WHICH THE PUBLIC IS PERMITTED AN OPPORTUNITY TO COMMENT. AT A MINIMUM, THE UPDATE SHALL INCLUDE A COMPARISON OF THE CURRENT STATUS AND THE ORIGINAL PROJECTIONS ON THE CONSTRUCTION OF CAPITAL IMPROVEMENTS, THE COSTS OF CAPITAL IMPROVEMENTS AND THE COSTS OF CAPITAL IMPROVEMENTS IN PROGRESS OR COMPLETED SINCE THE PRIOR MEETING AND THE FUTURE CAPITAL BONDING PLANS OF THE SCHOOL DISTRICT. THE SCHOOL DISTRICT SHALL INCLUDE IN THE PUBLIC MEETING A DISCUSSION OF THE SCHOOL DISTRICT'S USE OF STATE CAPITAL AID AND VOTER-APPROVED CAPITAL OVERRIDES IN FUNDING CAPITAL IMPROVEMENTS, IF ANY.

Sec. 14. Section 15-902, Arizona Revised Statutes, is amended to read:

15-902 . Determination of student count

A. For a common or a unified school district in which the average daily membership through the first one hundred days in session of the current year has exceeded the average daily attendance through the first one hundred days in session of the current year by more than six per cent, the student count shall be determined by an adjusted average daily membership computed by multiplying the actual average daily attendance by one hundred six per cent.

B. For a high school district in which the average daily membership through the first one hundred days in session of the current year exceeds the average daily attendance through the first one hundred days in session of the current year by more than eight and one-half per cent, the student count shall be determined by an adjusted average daily membership computed by multiplying the actual average daily attendance by one hundred eight and one-half per cent. If the high school district which utilized adjusted average daily membership pursuant to this subsection does not qualify for equalization assistance as provided by section 15-971, the computation of additional state aid for education as provided in section 15-972 for that district shall not include in the primary property tax rate the amount of primary property taxes necessary to fund an amount computed as follows:

1. Determine the revenue control limit, capital outlay revenue limit , and UNTIL JUNE 30, 1999, THE capital levy revenue limit , AND FROM AND AFTER JUNE 30, 1999, THE SOFT CAPITAL ALLOCATION, using the adjusted average daily membership.

2. Add the limits AMOUNTS determined in paragraph 1 of this subsection.

3. Determine the revenue control limit, capital outlay revenue limit and UNTIL JUNE 30, 1999, THE capital levy revenue limit AND FROM AND AFTER JUNE 30, 1999, THE SOFT CAPITAL ALLOCATION using a student count computed by multiplying the actual average daily attendance by one hundred six per cent.

4. Add the limits AMOUNTS determined in paragraph 3 of this subsection.

5. Subtract the sum determined under paragraph 4 of this subsection from the sum determined under paragraph 2 of this subsection.

C. A school district required to utilize adjusted average daily membership as provided in this section may apply to the department of education for a further adjustment if student absences for any period of three consecutive days or more result from any of the following reasons:

1. Widespread illness.

2. Adverse weather conditions.

3. Concerted refusal by students to attend classes.

D. All student absence figures SHALL BE submitted ELECTRONICALLY BY THE SCHOOL DISTRICT ON A SCHOOL BY SCHOOL BASIS to the department of education pursuant to subsection C of this section AND shall be certified by the governing board of the school district. The department of education shall review the materials and documents submitted and may, if it determines that the absences resulted from the reasons prescribed by this section, further adjust the average daily membership figures of the school district.

E. A school district required to use adjusted average daily membership as provided in this section may apply to the department of education for a further adjustment due to absences of pupils with chronic health problems as defined in section 15-346 if the school district is providing services to the pupils during their absence from school.

F. A pupil is enrolled if the pupil is currently registered in the school district. In addition, the uniform system of financial records shall contain procedures to ensure that enrollment is determined by all school districts on a uniform basis.

G. Any determination of average daily attendance and average daily membership shall be based on the records of the superintendent of public instruction.

H. For school districts which maintain an approved year-round school year operation program, an educational program offered on the basis of a four day school week or an alternative kindergarten program offered on the basis of a three day school week, student count shall be based on a computation as prescribed by the superintendent of public instruction on the one hundred seventy-five days' equivalency of instructional time as approved by the superintendent of public instruction during which each pupil is enrolled.

I. School districts shall be required to record ELECTRONICALLY membership and attendance ON A SCHOOL BY SCHOOL BASIS for each day school is in session. Records shall be certified and forwarded to the department of education ELECTRONICALLY within twelve days after the first forty days in session and within twelve days after the first one hundred days in session.

J. Absences shall be made part of the attendance record and shall be forwarded ELECTRONICALLY BY THE SCHOOL DISTRICT ON A SCHOOL BY SCHOOL BASIS with other records to the department of education.

K. If a new school district is formed by the subdivision of an existing school district as provided in section 15-458, the new school district shall determine its student count, the approved daily route mileage and the number of eligible students transported on the basis of where pupils reside within the boundaries of the new school district when computing assistance as provided in this chapter. The school district shall determine its student count, the approved daily route mileage and the number of eligible students transported on the basis of where pupils reside within the diminished boundaries of the school district when computing a school district budget limit and assistance as provided in this chapter. The combined student count in the new districts may not exceed the student count of the school district which would have existed if the subdivision had not occurred.

Sec. 15. Section 15-903, Arizona Revised Statutes, is amended to read:

15-903 . Budget format

A. The superintendent of public instruction shall in conjunction with the auditor general prepare and prescribe a budget format to be utilized by all school districts ON A SCHOOL BY SCHOOL BASIS .

B. The budget format shall be designed to allow all school districts to plan and provide in detail for the use of available funds ON A SCHOOL BY SCHOOL BASIS . The budget format shall contain distinct sections for, but need not be limited to, maintenance and operation, debt service, special projects, capital outlay and adjacent ways. The maintenance and operation section shall include, but need not be limited to, separate subsections for regular education programs, special education programs and operational expenditures for pupil transportation. Each subsection shall clearly distinguish classroom instruction expenditures.

1. The special education program subsection shall include, but is not limited to, programs for each disability classification as defined in section 15-761 and programs for gifted, vocational and technological education, remedial education and bilingual students. The total expenditures for each of these programs shall be included on the budget form.

2. The pupil transportation subsection shall include all operational expenditures relating to the transportation of pupils, including all operational expenditures within a contract if the school district contracts for pupil transportation.

C. UNTIL JUNE 30, 1999, the capital outlay section of the budget shall include budgeted expenditures for acquisitions by purchase, lease-purchase or lease of capital items as defined in the uniform system of financial records . , including FROM AND AFTER JUNE 30, 1999, THE CAPITAL OUTLAY SECTION OF THE BUDGET SHALL INCLUDE SEPARATE SUBSECTIONS FOR UNRESTRICTED CAPITAL OUTLAY AND SOFT CAPITAL ALLOCATION. FROM AND AFTER JUNE 30, 1999, THE SOFT CAPITAL ALLOCATION SUBSECTION SHALL INCLUDE BUDGETED EXPENDITURES AS PRESCRIBED IN SECTION 15-962. THE UNRESTRICTED CAPITAL OUTLAY SUBSECTION SHALL INCLUDE BUDGETED EXPENDITURES FOR ACQUISITIONS BY PURCHASE, LEASE-PURCHASE OR LEASE OF CAPITAL ITEMS AS DEFINED IN THE UNIFORM SYSTEM OF FINANCIAL RECORDS. THESE SECTIONS AND SUBSECTIONS SHALL INCLUDE :

1. Land, buildings and improvements to land and buildings, including labor and related employee benefits costs and material costs if work is performed by school district employees.

2. Furniture, furnishings, athletic equipment and other equipment, including computer software.

3. Pupil and nonpupil transportation vehicles and equipment, including all capital expenditures within a contract if the school district contracts for pupil transportation.

4. Textbooks and related printed subject matter materials adopted by the governing board.

5. Instructional aids.

6. Library books.

7. Payment of principal and interest on bonds.

8. Repayment of monies received from the capital equity fund as provided in section 15-1054, which shall be a separate subsection.

9. FROM AND AFTER JUNE 30, 1999, SCHOOL DISTRICT ADMINISTRATION EMERGENCY NEEDS THAT ARE DIRECTLY RELATED TO PUPILS.

D. UNTIL JUNE 30, 1999, the capital outlay section of the budget shall include a reserve within the capital outlay fund. The reserve is for the accumulation of monies as provided in section 15-962. This reserve shall only include the amount to be added in the budget year and the total amount accumulated in the reserve.

E. The budget format shall contain distinct subsections for the following:

1. Special programs to improve academic achievement of pupils in kindergarten programs and grades one through three as provided in section 15-482.

2. School plant funds.

3. Capital outlay budget increases as provided in section 15-481.

4. Property taxation including the following:

(a) The primary tax rates for the school district for the current year and the budget year.

(b) The secondary tax rates FOR MAINTENANCE AND OPERATION, K-3 AND CAPITAL OVERRIDES for the school district for the current year and the budget year.

(c) THE SECONDARY TAX RATES FOR CLASS A BONDS FOR THE SCHOOL DISTRICT FOR THE CURRENT YEAR AND THE BUDGET YEAR.

(d) THE SECONDARY TAX RATES FOR CLASS B BONDS FOR THE SCHOOL DISTRICT FOR THE CURRENT YEAR AND THE BUDGET YEAR.

F. The budget format shall also contain:

1. A statement identifying proposed pupil-teacher ratios and pupil-staff ratios relating to the provision of special education services for the budget year.

2. A statement identifying the number of full-time equivalent certified employees.

3. If a governing board uses section 15-942 relating to the adjustment for rapid decline in student count, a statement identifying the actual per cent decline in student count and a statement identifying the additional allowable expenditures attributable to using the rapid decline provisions as provided in section 15-942.

G. The special projects section shall include budgeted expenditures for state special projects, including special adult projects and career education, such federal special projects as ESEA title programs, vocational education and title IV Indian education, and other special projects.

Sec. 16. Section 15-904, Arizona Revised Statutes, is amended to read:

15-904 . School district annual financial report; publication; summary; exemption

A. The governing board of each school district shall ELECTRONICALLY publish an annual financial report ON A SCHOOL BY SCHOOL BASIS for the prior fiscal year by November 15. The auditor general in conjunction with the department of education shall prescribe the format of the financial report to be utilized by school districts. The financial report shall contain budgeted and actual expenditures for the preceding fiscal year and shall be prepared and furnished through the appropriate county school superintendent by October 15, as provided in section 15-302, paragraph 6, to the superintendent of public instruction.

B. In addition to the information required in subsection A of this section, the annual financial report shall contain detailed information on the budgeted and actual expenditures from the bond building account FUND, AND FROM AND AFTER JUNE 30, 1999, THE SOFT CAPITAL ALLOCATION FUND, FROM AND AFTER JUNE 30, 1999, THE DEFICIENCIES CORRECTION FUND, FROM AND AFTER JUNE 30, 1999, THE BUILDING RENEWAL FUND AND FROM AND AFTER JUNE 30, 1999, THE NEW SCHOOL FACILITIES FUND, including but not limited to information on classified salaries, employee benefits, interest and fiscal charges, capital lease agreements, land and improvements, buildings and improvements, furniture and equipment , TECHNOLOGY and vehicles and transportation equipment for pupils. The information shall specify whether the expenditures are for renovation or for new construction, the cost per square foot, and land acquisition costs, as appropriate.

C. Except as provided in subsection D of this section, the governing board shall publish the annual financial report FOR THE SCHOOL DISTRICT ON A SCHOOL BY SCHOOL BASIS in a newspaper of general circulation within the school district or in the official newspaper of the county as defined in section 11-255 or the governing board may mail the annual financial report to each household in the school district. If the governing board chooses to publish the report in a newspaper, the size of the newspaper print shall be at least eight-point type. The cost of publication or mailing shall be a charge against the school district. The publisher's affidavit of publication shall be filed by the governing board of the school district with the superintendent of public instruction within thirty days after publication.

D. The governing board may publish or mail a summary of the annual financial report in the same manner as provided in subsection C of this section. The auditor general in conjunction with the department of education shall prescribe the form of the summary of the annual financial report for use by the governing boards.

E. The superintendent of public instruction shall compile the financial reports of the school districts ON A SCHOOL BY SCHOOL BASIS and report to the governor and the legislature on or before January 15 each year as provided in section 15-255.

F. This section does not apply to county school superintendents in the conduct of an accommodation school.

Sec. 17. Section 15-905, Arizona Revised Statutes, is amended to read:

15-905 . School district budgets; notice; adoption; aggregate budget limit; summary; adjustments

A. Not later than July 5 of each year or no later than the publication of notice of the public hearing and board meeting as required by this section, the governing board of each school district shall prepare and furnish to the superintendent of public instruction and the county school superintendent a proposed budget IN ELECTRONIC FORMAT for the budget year, which shall contain the information and be in the form as provided by the department of education. The proposed budget shall include the following:

1. The total amount of revenues from all sources that was necessary to meet the school district's budget for the current year.

2. The total amount of revenues by source that will be necessary to meet the proposed budget of the school district, excluding property taxes. The governing board shall prepare the proposed budget and a summary of the proposed budget. Both documents shall be kept on file at the school district office and shall be made available to the public upon request. The auditor general in conjunction with the department of education shall prescribe the form of the summary of the proposed budget for use by governing boards. School district governing boards may include in the proposed budget any items or amounts which are authorized by legislation filed with the secretary of state and which will become effective during the budget year. If subsequent events prevent the legislation from becoming effective, school district governing boards must reduce their budgets by the amounts budgeted pursuant to the legislation which did not become effective.

B. The governing board of each school district shall prepare a notice fixing a time not later than July 15 and designating a public place within each school district at which a public hearing and board meeting shall be held. The governing board shall present the proposed budget for consideration of the residents and the taxpayers of the school district at such hearing and meeting.

C. The governing board of each school district shall publish or mail, prior to the hearing and meeting, a copy of the proposed budget or the summary of the proposed budget and, in addition, a notice of the public hearing and board meeting no later than ten days prior to the meeting. The proposed budget and the summary of the proposed budget shall contain the percentage of increase or decrease in each budget category of the proposed budget as compared to each category of the budget for the current year. Notification shall be either by publication in a newspaper of general circulation within the school district in which the size of the newspaper print shall be at least eight-point type or by mailing the information to each household in the school district. The cost of publication or mailing shall be a charge against the school district. The publisher's affidavit of publication shall be filed by the governing board with the superintendent of public instruction within thirty days after publication. If the budget or proposed budget and notice are mailed, the board shall file an affidavit of mailing with the superintendent of public instruction within thirty days after the mailing. If a truth in taxation notice and hearing is required under section 15-905.01, the governing board may combine the notice and hearing under this section with the truth in taxation notice and hearing.

D. At the time and place fixed in the notice, the governing board shall hold the public hearing and present the proposed budget to the persons attending the hearing. Upon request of any person, the governing board shall explain the budget, and any resident or taxpayer of the school district may protest the inclusion of any item. A governing board member who has a substantial interest, as defined in section 38-502, in a specific item in the school district budget shall refrain from voting on the specific item. A governing board member may without creating a conflict of interest participate in adoption of a final budget even though the member may have substantial interest in specific items included in the budget.

E. Immediately following the public hearing the president shall call to order the governing board meeting for the purpose of adopting the budget. The governing board shall adopt the budget which shall not exceed the general budget limit , and UNTIL JUNE 30, 1999, the total capital budget limit , AND FROM AND AFTER JUNE 30, 1999, THE UNRESTRICTED CAPITAL BUDGET LIMIT OR FROM AND AFTER JUNE 30, 1999, THE SOFT CAPITAL ALLOCATION LIMIT , making such deductions as it sees fit but making no additions to the proposed budget total for maintenance and operations or capital outlay, and shall enter the budget as adopted in its minutes. Not later than July 18, the budget as finally adopted shall be filed by the governing board with the county school superintendent who shall immediately transmit a copy to the board of supervisors and a copy to the superintendent of public instruction. On or before October 30, the superintendent of public instruction shall review the budget and notify the governing board if the budget is in excess of the general budget limit , or UNTIL JUNE 30, 1999, the total capital budget limit , OR FROM AND AFTER JUNE 30, 1999, THE UNRESTRICTED CAPITAL BUDGET LIMIT OR FROM AND AFTER JUNE 30, 1999, THE SOFT CAPITAL ALLOCATION LIMIT . If the governing board receives notification that the budget is in excess of the general budget limit , or UNTIL JUNE 30, 1999, the total capital budget limit , OR FROM AND AFTER JUNE 30, 1999, THE UNRESTRICTED CAPITAL BUDGET LIMIT OR FROM AND AFTER JUNE 30, 1999, THE SOFT CAPITAL ALLOCATION LIMIT by fewer than one thousand dollars, the governing board shall adjust the budget and expenditures so as not to exceed the general budget limit , or UNTIL JUNE 30, 1999, the total capital budget limit OR FROM AND AFTER JUNE 30, 1999, THE UNRESTRICTED CAPITAL BUDGET LIMIT OR FROM AND AFTER JUNE 30, 1999, THE SOFT CAPITAL ALLOCATION LIMIT , for the current year. If the governing board receives notification that the budget is in excess of the general budget limit or UNTIL JUNE 30, 1999, the total capital budget limit OR FROM AND AFTER JUNE 30, 1999, THE UNRESTRICTED CAPITAL BUDGET LIMIT OR FROM AND AFTER JUNE 30, 1999, THE SOFT CAPITAL ALLOCATION LIMIT, by one thousand dollars or more, it shall on or before December 15, after it gives notice and holds a public meeting in a similar manner as provided in subsections C and D of this section, adopt a revised budget for the current year which shall not exceed the general budget limit , or UNTIL JUNE 30, 1999, the total capital budget limit , OR FROM AND AFTER JUNE 30, 1999, THE UNRESTRICTED CAPITAL BUDGET LIMIT OR FROM AND AFTER JUNE 30, 1999, THE SOFT CAPITAL ALLOCATION LIMIT . On or before December 18, the governing board shall file the revised budget which it adopts with the county school superintendent who shall immediately transmit a copy to the board of supervisors and a copy to the superintendent of public instruction. Procedures for adjusting expenditures or revising the budget shall be as prescribed in the uniform system of financial records.

F. The governing board of each school district may budget for expenditures within the school district budget as follows:

1. Amounts within the general budget limit, as provided in section 15-947, subsection C, may only be budgeted in the following sections of the budget:

(a) The maintenance and operation section.

(b) The capital outlay section.

2. UNTIL JUNE 30, 1999, amounts within the total capital budget limit, as provided in section 15-947, subsection D, may only be budgeted in the capital outlay section of the budget. FROM AND AFTER JUNE 30, 1999, AMOUNTS WITHIN THE UNRESTRICTED CAPITAL BUDGET LIMIT, AS PROVIDED IN SECTION 15-947, SUBSECTION D, MAY ONLY BE BUDGETED IN THE UNRESTRICTED CAPITAL OUTLAY SUBSECTION OF THE BUDGET. FROM AND AFTER JUNE 30, 1999, MONIES RECEIVED PURSUANT TO THE UNRESTRICTED CAPITAL BUDGET LIMIT SHALL BE PLACED IN THE UNRESTRICTED CAPITAL OUTLAY FUND. THE MONIES IN THE FUND ARE NOT SUBJECT TO REVERSION.

3. FROM AND AFTER JUNE 30, 1999, THE SOFT CAPITAL ALLOCATION LIMIT, AS PROVIDED IN SECTION 15-947, SUBSECTION E, MAY ONLY BE BUDGETED IN THE SOFT CAPITAL ALLOCATION SUBSECTION OF THE BUDGET.

G. The governing board may authorize the expenditure of monies budgeted within the maintenance and operation section of the budget for any subsection within the section in excess of amounts specified in the adopted budget only by action taken at a public meeting of the governing board and if the expenditures for all subsections of the section do not exceed the amount budgeted as provided in this section. UNTIL JUNE 30, 1999, the governing board may authorize the expenditure of monies to exceed the budgeted expenditures of the capital outlay section of the budget only by action taken at a public meeting of the governing board and if monies are available in the reserve.

H. The aggregate budget limit is the sum of the following:

1. The general budget limit as determined in section 15-947 for the budget year.

2. UNTIL JUNE 30, 1999, the total capital budget limit as determined in section 15-947 for the budget year AND FROM AND AFTER JUNE 30, 1999, THE UNRESTRICTED CAPITAL BUDGET LIMIT AS DETERMINED IN SECTION 15-947 FOR THE BUDGET YEAR .

3. FROM AND AFTER JUNE 30, 1999, THE SOFT CAPITAL ALLOCATION LIMIT FOR THE BUDGET YEAR AS DETERMINED IN SECTION 15-947.

3. 4. Federal assistance, excluding P.L. 81-874 monies.

I. School districts which overestimated tuition revenues as provided in section 15-947, subsection C, paragraph 2 shall adjust the general budget limit and expenditures based upon tuition revenues for attendance of nonresident pupils during the current fiscal year. School districts which underestimated tuition revenues may adjust their budgets prior to May 15 based upon tuition revenues for attendance of nonresident pupils during the current fiscal year. School districts which overestimated revenues as provided in section 15-947, subsection C, paragraph 2, subdivision (a), items (iii), (iv) and (v) and subdivision (d) shall adjust the general budget limit and expenditures based on actual revenues during the current fiscal year. School districts which underestimated such revenues may adjust their budgets before May 15 based on actual revenues during the current fiscal year. Procedures for completing adjustments shall be as prescribed in the uniform system of financial records.

J. A common school district not within a high school district whose estimated tuition charge for high school pupils exceeds the actual tuition charge for high school pupils shall adjust the general budget limit and expenditures based on the actual tuition charge. A common school district not within a high school district whose estimated tuition charge for high school pupils is less than the actual tuition charge for high school pupils may adjust its budget before May 15 based on the actual tuition charge. Procedures for completing adjustments shall be as prescribed in the uniform system of financial records. If the adjusted general budget limit requires an adjustment of state aid and if the adjustment to state aid is not made in the current year, the superintendent of public instruction shall adjust by August 15 of the succeeding fiscal year the apportionment of state aid to the school district to correct any overpayment or underpayment of state aid received during the current year.

K. The governing board may include P.L. 81-874 assistance allocated for handicapped children, children with specific learning disabilities and children residing on Indian lands which is in addition to the basic assistance as provided in 20 United States Code section 238 (d), 2, (C) and (D) when determining the general budget limit as prescribed in section 15-947, subsection C. The governing board may adjust before May 15 the budget for the current year based on any adjustments which result in increases over the amount estimated by the superintendent of public instruction for P.L. 81-874 assistance for such pupils for the fiscal year preceding the current year. The governing board shall adjust before May 15 the budget for the current year based on any adjustments which result in decreases in the amount estimated by the superintendent of public instruction for P.L. 81-874 assistance for such pupils for the fiscal year preceding the current year. Procedures for complying with the provisions of this subsection shall be as prescribed in the uniform system of financial records. For the purpose of this subsection, "P.L. 81-874 assistance" means, for the current year, an amount equal to the final determination of P.L. 81-874 assistance for the fiscal year preceding the current year as confirmed by the division of impact aid, United States department of education or, if a final determination has not been made, the amount estimated by the superintendent of public instruction as confirmed by the division of impact aid, United States department of education and, for the budget year, an amount equal to the determination of P.L. 81-874 assistance for the fiscal year preceding the budget year as estimated by the superintendent of public instruction.

L. The state board of education shall hold a hearing if expenditures by any school district exceed the general budget limit prescribed in section 15-947, subsection C, UNTIL JUNE 30, 1999, the total capital budget limit prescribed in section 15-947, subsection D, FROM AND AFTER JUNE 30, 1999, THE UNRESTRICTED CAPITAL BUDGET LIMIT, FROM AND AFTER JUNE 30, 1999, THE SOFT CAPITAL ALLOCATION LIMIT PRESCRIBED IN SECTION 15-947, SUBSECTION E, the school plant fund limits prescribed in section 15-1102, subsection B, the maintenance and operation section of the budget or the capital outlay section of the budget. If the expenditures of any school district exceed these limits or sections of the budget without authorization as provided in section 15-907, the state board of education shall reduce the state aid for equalization assistance for education for the school district computed as provided in section 15-971 during the fiscal year subsequent to the fiscal year in which the excess expenditures were made by an amount equal to the excess expenditures, except that in case of hardship to the school district, the superintendent of public instruction may approve reductions partly in the first subsequent year and partly in the second subsequent year.

M. The governing board of a school district shall reduce the general budget limit , or UNTIL JUNE 30, 1999, the total capital budget limit , OR FROM AND AFTER JUNE 30, 1999, THE UNRESTRICTED CAPITAL BUDGET LIMIT OR FROM AND AFTER JUNE 30, 1999, THE SOFT CAPITAL ALLOCATION LIMIT, for the year subsequent to the year in which the expenditures were in excess of the applicable limit or section of the budget by the amount determined in subsection L of this section, except that in case of hardship to the school district, the superintendent of public instruction may approve reductions partly in the first subsequent year and partly in the second subsequent year. The reduction in the limit is applicable to each school district which has exceeded the general budget limit, UNTIL JUNE 30, 1999, the total capital budget limit , FROM AND AFTER JUNE 30, 1999, THE UNRESTRICTED CAPITAL BUDGET LIMIT, FROM AND AFTER JUNE 30, 1999, THE SOFT CAPITAL ALLOCATION LIMIT or a section of the budget even if the reduction exceeds the state aid for equalization assistance for education for the school district.

N. Except as provided in section 15-916, no expenditure shall be made by any school district for a purpose not included in the budget or in excess of the aggregate budget limit prescribed in this section, except that if no budget has been adopted, from July 1 to July 15 the governing board may make expenditures if the total of the expenditures does not exceed ten per cent of the prior year's aggregate budget limit. Any expenditures made from July 1 to July 15 and prior to the adoption of the budget shall be included in the total expenditures for the current year. No expenditure shall be made and no debt, obligation or liability shall be incurred or created in any year for any purpose itemized in the budget in excess of the amount specified for the item irrespective of whether the school district at any time has received or has on hand funds in excess of those required to meet the expenditures, debts, obligations and liabilities provided for under the budget except expenditures from cash controlled funds as defined by the uniform system of financial records and except as provided in section 15-907 and subsection G of this section. This subsection does not prohibit any school district from prepaying insurance premiums or magazine subscriptions, or from prepaying any item which is normally prepaid in order to procure the service or to receive a discounted price for the service, as prescribed by the uniform system of financial records.

O. The governing board of a school district which is classified as a heavily impacted school district having twenty per cent or more pupils pursuant to 20 United States Code section 238(d)1(A) may determine its eligibility to increase the amount that may be included in determining the general budget limit as provided in subsection K of this section and may increase the amount as follows:

1. For fiscal year 1988-1989:

(a) Multiply one thousand ninety-four dollars by the number of handicapped children or children with specific learning disabilities, excluding children who also reside on Indian lands, reported to the division of impact aid, United States department of education in the district's application for fiscal year 1987-1988.

(b) Multiply five hundred forty-seven dollars by the number of children residing on Indian lands, excluding children who are also handicapped or also have specific learning disabilities, reported to the division of impact aid, United States department of education in the district's application for fiscal year 1987-1988.

(c) Multiply one thousand nine hundred fourteen dollars by the number of children residing on Indian lands who are also handicapped or also have specific learning disabilities reported to the division of impact aid, United States department of education in the district's application for fiscal year 1987-1988.

(d) Add the amounts determined in subdivisions (a) through (c).

(e) If the amount of P.L. 81-874 assistance as provided in subsection K of this section is less than the sum determined in subdivision (d) of this paragraph, the district is eligible to use the provisions of this subsection.

2. For budget years after 1988-1989, use the provisions of paragraph 1 of this subsection, but increase each dollar amount by the growth rate for that year as prescribed by law, subject to appropriation and use the number of children reported in the appropriate category for the current fiscal year.

3. If the district is eligible to use the provisions of this subsection, subtract the amount of P.L. 81-874 assistance determined in subsection K of this section from the sum determined in paragraph 1, subdivision (d) of this subsection. The difference is the increase in the amount that may be included in determining the general budget limit as provided in subsection K of this section, if including this amount does not increase the district's primary tax rate for the budget year. If the amount of P.L. 81-874 assistance determined in subsection K of this section is adjusted for the current year, the increase determined in this paragraph shall be recomputed using the adjusted amount and the recomputed increase shall be reported to the department of education by May 15 on a form prescribed by the department of education.

4. If a district uses the provisions of this subsection, the district is not required to adjust its budget for the current year based on adjustments in the estimated amount of P.L. 81-874 assistance as provided in subsection K of this section.

P. A school district, except for an accommodation school, which applies for P.L. 81-874 assistance during the current year may budget an amount for P.L. 81-874 administrative costs for the budget year. The amount budgeted for P.L. 81-874 administrative costs is exempt from the revenue control limit and may not exceed an amount determined for the budgeted year as follows:

1. Determine the minimum cost. The minimum cost for fiscal year 1990-1991 is two thousand three hundred forty-three dollars. For fiscal year 1991-1992 and thereafter, the minimum cost is the minimum cost for the prior year increased by the growth rate as prescribed by law, subject to appropriation.

2. Determine the hourly rate. The hourly rate for fiscal year 1990-1991 is nine dollars thirty-eight cents. For fiscal year 1991-1992 and thereafter, the hourly rate is the hourly rate for the prior year increased by the growth rate as prescribed by law, subject to appropriation.

3. Determine the P.L. 81-874 revenues available by subtracting the sum of the following AMOUNT OF P.L. 81-874 ASSISTANCE USED TO INCREASE THE GENERAL BUDGET LIMIT AS PROVIDED IN SUBSECTIONS K AND O OF THIS SECTION for the current fiscal year from the total amount of P.L. 81-874 revenues received in the current fiscal year . :

(a) The amount of the state aid reduction as prescribed in section 15-973, subsection D.

(b) The amount of P.L. 81-874 assistance used to increase the general budget limit as provided in subsections K and O of this section.

4. Determine the total number of administrative hours as follows:

(a) Determine the sum of the following:

(i) 1.00 hours for each high impact pupil who is not handicapped or does not have specific learning disabilities.

(ii) 1.25 hours for each high impact pupil who is handicapped or has specific learning disabilities.

(iii) 0.25 hours for each low impact pupil who is not handicapped or does not have specific learning disabilities.

(iv) 0.31 hours for each low impact pupil who is handicapped or has specific learning disabilities.

(b) For the purposes of this paragraph:

(i) "High impact pupil" means a pupil who resides on Indian lands or a pupil who resides on federal property or in low rent housing and whose parent is employed on federal property or low rent housing property or is on active duty in uniformed service, as provided in P.L. 81-874, section 3(a) and as reported in the application for P.L. 81-874 assistance in the current year.

(ii) "Low impact pupil" means a pupil who resides on nonfederal property and has a parent who is employed on federal property or low rent housing property or is on active duty in a uniformed service or a pupil who resides on federal property or in low rent housing and who does not have a parent who is employed on federal property or low rent housing property or is on active duty in uniformed service, as provided in P.L. 81-874, section 3(b) and as reported in the application for P.L. 81-874 assistance in the current year.

5. Multiply the total number of administrative hours determined in paragraph 4 of this subsection by the hourly rate determined in paragraph 2 of this subsection.

6. Determine the greater of the minimum cost determined in paragraph 1 of this subsection or the product determined in paragraph 5 of this subsection.

7. Add to the amount determined in paragraph 6 of this subsection the amount, if any, to be expended by the school district in the budget year through an intergovernmental agreement with other school districts or the department of education to provide P.L. 81-874 technical assistance to participating districts.

8. Determine the lesser of the amount determined in paragraph 7 of this subsection or the revenues available as determined in paragraph 3 of this subsection.

9. The amount determined in paragraph 8 of this subsection is the maximum amount which may be budgeted for P.L. 81-874 administrative costs for the budget year as provided in this subsection.

10. If the governing board underestimated the amount that may be budgeted for P.L. 81-874 administrative costs for the current year, the board may adjust the general budget limit and the budget before May 15. If the governing board overestimated the amount that may be budgeted for P.L. 81-874 ADMINISTRATIVE costs for the current year, the board shall adjust the general budget limit and the budget before May 15.

Q. If a school district governing board has adopted a budget for a fiscal year based on forms and instructions provided by the auditor general and the department of education for that fiscal year and if, as a result of the enactment or nonenactment of proposed legislation after May 1 of the previous fiscal year, the budget is based on incorrect limits, does not include items authorized by law or does not otherwise conform with law, the governing board may revise its budget at a public hearing on or before September 15 to conform with the law. If the governing board does not revise the budget on or before September 15 and if the budget includes any items not authorized by law or if the budget exceeds any limits, the governing board shall adjust or revise the budget as provided in subsection E of this section.

R. Notwithstanding subsection F of this section, beginning with fiscal year 1996-1997, a school district may budget a portion of the capital outlay revenue limit for maintenance and operation expenses in an amount that is less than the capital outlay transfer limit. The capital outlay transfer limit for the budget year is determined as follows:

1. Determine the actual amount of capital outlay revenue limit monies that the school district budgeted for maintenance and operation expenses for the current year.

2. Divide the amount in paragraph 1 of this subsection by the school district's super weighted student count for the current year.

3. Multiply the amount of the increase in the base level from the current year to the budget year by twenty-five per cent.

4. If any of the weights in section 15-943 is increased for the budget year:

(a) Determine the base support level for the budget year using the base level for the current year and the weights for the budget year.

(b) Determine the base support level for the budget year using both the base level and the weights for the current year.

(c) Subtract the amount determined in subdivision (b) of this paragraph from the amount determined in subdivision (a) of this paragraph.

(d) Multiply the amount in subdivision (c) by twenty-five per cent.

(e) Divide the amount determined in subdivision (d) of this paragraph by the super weighted student count for the budget year.

5. Add the amount determined in paragraph 3 of this subsection and the amount determined in paragraph 4, subdivision (e) of this subsection. If none of the weights in section 15-943 is increased for the budget year, use zero for the amount in paragraph 4, subdivision (e).

6. Decrease the amount determined in paragraph 2 of this subsection by the amount in paragraph 5 of this subsection, except that the difference shall not be less than zero.

7. Multiply the super weighted student count for the budget year by the amount determined in paragraph 6 of this subsection.

8. Multiply the amount determined in paragraph 5 of this subsection by the super weighted student count for the budget year.

9. Subtract the product determined in paragraph 8 of this subsection from the amount in paragraph 1 of this subsection, except that the difference shall not be less than zero.

10. The capital outlay transfer limit is the lesser of the amount determined in paragraph 7 of this subsection or the amount determined in paragraph 9 of this subsection.

S. For the purposes of subsection R of this section, "super weighted student count" means the teacher experience index or 1.00, whichever is greater, multiplied by the weighted student count as determined in section 15-943, paragraph 2.

Sec. 18. Section 15-906, Arizona Revised Statutes, is amended to read:

15-906 . Procedure for payment of liabilities payable on June 30; lapsing of funds with balance for reduction of taxes

A. Annually on or before June 30, each school district shall prepare for all funds a list of liabilities for goods received or services rendered on or before June 30 which will not be paid by June 30 of the current fiscal year.

B. Each school district having liabilities payable on June 30 shall file an advice of encumbrance with the county school superintendent, in the manner and upon a form prescribed in the uniform system of financial records. The county school superintendent shall encumber amounts as are necessary and available to pay the liabilities. Any cash balances remaining in the maintenance and operation, UNTIL JUNE 30, 1999, THE capital outlay , FROM AND AFTER JUNE 30, 1999, THE UNRESTRICTED CAPITAL OUTLAY, FROM AND AFTER JUNE 30, 1999, THE SOFT CAPITAL ALLOCATION and adjacent ways funds after encumbrances on June 30 of the current year, except monies , UNTIL JUNE 30, 1999, accumulated in the reserve of the capital outlay fund and reverted monies as provided in section 15-991.02, FROM AND AFTER JUNE 30, 1999, THAT WILL BE BUDGETED IN THE UNRESTRICTED CAPITAL OUTLAY FUND IN THE FOLLOWING FISCAL YEAR PURSUANT TO SECTION 15-947, SUBSECTION D, PARAGRAPHS 4 AND 5 AND THAT WILL BE BUDGETED IN THE SOFT CAPITAL ALLOCATION FUND IN THE FOLLOWING FISCAL YEAR PURSUANT TO SECTION 15-947, SUBSECTION E, PARAGRAPHS 2 AND 3 shall be used for reduction of school district taxes for the budget year.

C. The county school superintendent may draw warrants against the obligated in contract amounts for a period of sixty days immediately following the close of the fiscal year.

D. After expiration of the period of sixty days immediately following the close of each fiscal year, the remaining obligated in contract balance shall lapse and no further payments from the maintenance and operation, UNTIL JUNE 30, 1999, capital outlay , FROM AND AFTER JUNE 30, 1999, UNRESTRICTED CAPITAL OUTLAY, FROM AND AFTER JUNE 30, 1999, SOFT CAPITAL ALLOCATION and adjacent ways funds shall be made on any claim for expenditures of the prior fiscal year.

Sec. 19. Section 15-909, Arizona Revised Statutes, is amended to read:

15-909 . Financial provisions for accommodation schools; definition

A. An accommodation school shall compute a revenue control limit, a capital outlay revenue limit , and UNTIL JUNE 30, 1999, a capital levy revenue limit AND FROM AND AFTER JUNE 30, 1999, A SOFT CAPITAL ALLOCATION LIMIT for each fiscal year of operation.

B. For the purpose of computing a revenue control limit, a capital outlay revenue limit , and UNTIL JUNE 30, 1999, a capital levy revenue limit AND FROM AND AFTER JUNE 30, 1999, A SOFT CAPITAL ALLOCATION LIMIT, "accommodation school" means:

1. A common school district within a high school district if the school does not offer instruction in grade nine, ten, eleven or twelve or has not received permission to offer instruction in high school subjects as provided in section 15-447.

2. A unified school district if the school offers instruction in grade nine, ten, eleven or twelve and has received permission to offer instruction in high school subjects as provided in section 15-447.

C. State aid shall be apportioned as provided in section 15-973 to each county accommodation school.

Sec. 20. Section 15-910, Arizona Revised Statutes, is amended to read:

15-910 . School district budgets; excess utility costs; desegregation costs; tuition costs for bond issues; costs for registering warrants

A. The governing board of a school district may budget for excess utility costs which are specifically exempt from the revenue control limit for the school district. The uniform system of financial records shall specify expenditure items allowable as excess utility costs, which are limited to direct operational costs of heating, cooling, water and electricity, telephone communications and sanitational fees. The department of education and the auditor general shall include in the maintenance and operation section of the budget format, as provided in section 15-903, a separate line for utility expenditures and a special excess utility cost category. The special excess utility cost category shall contain budgeted expenditures for excess utility costs, determined as follows:

1. Determine the lesser of the total budgeted or total actual utility expenditures for fiscal year 1984-1985.

2. Multiply the amount in paragraph 1 of this subsection by the total percentage increase or decrease in the revenue control limit and the capital outlay revenue limit for the budget year over the revenue control limit and the capital outlay revenue limit for fiscal year 1984-1985 excluding monies available from a career ladder program or a teacher compensation program provided for in section 15-952.

3. The sum of the amounts in paragraph 1 and paragraph 2 of this subsection is the amount budgeted in the utility expenditure line.

4. Additional expenditures for utilities are budgeted in the excess utility cost category.

B. The governing board shall apply the same percentage increase or decrease allowed in the revenue control limit and the capital outlay revenue limit as provided in section 15-905, subsection E or section 15-948 to the utility expenditure line of the budget.

C. The governing board may expend from the excess utility cost category only after it has expended for utility purposes the full amount budgeted in the utility expenditure line of the budget.

D. The governing board may, after notice is given and a public meeting is held as provided in section 15-905, subsection D, revise at any time before May 15 the amount budgeted in the excess utility cost category for the current year.

E. If the revised excess utility cost category results in an expenditure of monies in excess of school district revenues for the current year, the county school superintendent shall include within the revenue estimate for the budget year monies necessary to meet the liabilities incurred by the school district in the current year in excess of revenues received for the current year.

F. If a school district receives a refund of utility expenditures or a rebate on energy saving devices or services, the refund or rebate shall be applied against utility expenditures for the current year as a reduction of the expenditures, except that the reduction of expenditures shall not exceed the amount of actual utility expenditures.

G. The governing board of a school district may budget for expenses of complying with or continuing to implement activities which were required or permitted by a court order of desegregation or administrative agreement with the United States department of education office for civil rights directed toward remediating alleged or proven racial discrimination which are specifically exempt in whole or in part from the revenue control limit and the capital outlay revenue limit. This exemption applies only to expenses incurred for activities which are begun before the termination of the court order or administrative agreement.

H. If a governing board chooses to budget monies outside of the revenue control limit as provided in subsection G of this section, the governing board may do one of the following:

1. UNTIL JUNE 30, 1999, transfer monies from the capital outlay fund to the maintenance and operation fund equal to one-third of the capital levy revenue limit or equal to any excess desegregation or compliance expenses, whichever is less, beyond the revenue control limit before June 30 of the current year. FROM AND AFTER JUNE 30, 1999, THE GOVERNING BOARD MAY USE MONIES FROM THE MAINTENANCE AND OPERATION FUND EQUAL TO ANY EXCESS DESEGREGATION OR COMPLIANCE EXPENSES BEYOND THE REVENUE CONTROL LIMIT BEFORE JUNE 30 OF THE CURRENT YEAR.

2. Notify the county school superintendent to include the cost of the excess expenses in the county school superintendent's estimate of the additional amount needed for the school district from the primary property tax as provided in section 15-991.

3. Employ the provisions of both paragraphs 1 and 2 of this subsection provided that the total amount transferred and included in the amount needed from property taxes does not exceed the total amount budgeted as prescribed in subsection J, paragraph 1 of this section.

I. The maximum amount which a governing board may budget outside of the capital outlay revenue limit as provided in subsection G of this section is twelve per cent of the maintenance and operation desegregation budget as provided in subsection J of this section. If a governing board chooses to budget monies outside of the capital outlay revenue limit as provided in subsection G of this section, the governing board may notify the county school superintendent to include the cost of the excess expenses in the county school superintendent's estimate of the additional amount needed for the school district from the primary property tax as provided in section 15-991.

J. A governing board using subsections G, H and I of this section shall:

1. Prepare and employ a separate maintenance and operation desegregation budget and capital outlay desegregation budget on a form prescribed by the superintendent of public instruction in conjunction with the auditor general. The budget format shall be designed to allow a school district to plan and provide in detail for expenditures to be incurred solely as a result of compliance with or continuing to implement activities which were required or permitted by a court order of desegregation or administrative agreement with the United States department of education office for civil rights directed toward remediating alleged or proven racial discrimination.

2. Prepare as a part of the annual financial report a detailed report of expenditures incurred solely as a result of compliance with or continuing to implement activities which were required or permitted by a court order of desegregation or administrative agreement with the United States department of education office for civil rights directed toward remediating alleged or proven racial discrimination, in a format prescribed by the auditor general in conjunction with the department of education as provided by section 15-904.

K. UNTIL JUNE 30, 1999, before the governing board transfers monies from the capital outlay fund for court-ordered desegregation or compliance costs as provided in subsection H of this section, the governing board shall prepare a detailed report on the impact of the transfer on the future acquisition of fixed assets for the school district.

L. The governing board of a school district may budget for the bond issues portion of the cost of tuition charged the district as provided in section 15-824 for the pupils attending school in another school district, except that if the district is a common school district not within a high school district, the district may only include that part of tuition which is excluded from the revenue control limit and district support level as provided in section 15-951. The bond issues portion of the cost of tuition charged is specifically exempt from the revenue control limit of the school district of residence, and the primary property tax rate set to fund this amount shall not be included in the computation of additional state aid for education as provided in section 15-972, except as provided in section 15-972, subsection E. The department of education and the auditor general shall include in the maintenance and operation section of the budget format, as provided in section 15-903, a separate category for the bond issues portion of the cost of tuition.

M. The governing board of a school district may budget for interest expenses it incurred for registering warrants drawn against a fund of the school district or net interest expense on tax anticipation notes as prescribed in section 35-465.05, subsection C for the fiscal year preceding the current year if the county treasurer pooled all school district monies for investment as provided in section 15-996 for the fiscal year preceding the current year and if the school district applied for an apportionment of state aid before the date set for the apportionment as provided in section 15-973 for the fiscal year preceding the current year. The governing board may budget an amount for interest expenses for registering warrants or issuing tax anticipation notes equal to or less than the amount of the warrant interest expense or net interest expense on tax anticipation notes as prescribed in section 35-465.05, subsection C for the fiscal year preceding the current year as provided in this subsection which is specifically exempt from the revenue control limit.

Sec. 21. Section 15-947, Arizona Revised Statutes, is amended to read:

15-947 . Revenue control limit; district support level; general budget limit; unrestricted capital budget limit; soft capital allocation limit

A. The revenue control limit for a school district is equal to the sum of the base revenue control limit determined in section 15-944 and the transportation revenue control limit determined in section 15-946.

B. The district support level for a school district is equal to the sum of the base support level determined in section 15-943 and the transportation support level determined in section 15-945.

C. The general budget limit for each school district, for each fiscal year, is the sum of the following:

1. The revenue control limit for the budget year.

2. The maintenance and operation portion of the following amounts:

(a) Amounts that are fully funded by revenues other than a levy of taxes upon the taxable property within the school district, as listed below:

(i) Amounts budgeted as the budget balance carry forward as provided in section 15-943.01.

(ii) Tuition revenues for attendance of nonresident pupils.

(iii) State assistance as provided in section 15-976.

(iv) Special education revenues as provided in section 15-825, subsection D and section 15-1204.

(v) P.L. 81-874 assistance determined for handicapped children, children with specific learning disabilities and children residing on Indian lands as provided in section 15-905, subsections K and O.

(vi) P.L. 81-874 administrative costs as provided in section 15-905, subsection P.

(vii) State assistance for excess tuition as provided in section 15-825.01.

(viii) AMOUNTS RECEIVED FROM THE STATE BOARD OF EDUCATION PURSUANT TO SECTION 15-973.01.

(b) Amounts approved pursuant to an override election as provided in section 15-481 for the applicable fiscal year.

(c) Expenditures for excess utility costs as provided in section 15-910.

(d) Amounts authorized by the county school superintendent pursuant to section 15-974, subsection C.

(e) Expenditures for complying with a court order of desegregation as provided in section 15-910.

(f) Expenditures for the bond issues portion of the cost of tuition as provided in section 15-910.

(g) Interest on registered warrants or tax anticipation notes as provided in section 15-910.

(h) Amounts budgeted for a jointly owned and operated vocational and technical TECHNOLOGICAL center as provided in section 15-910.01.

3. FROM AND AFTER JUNE 30, 1999, THE CAPITAL OUTLAY REVENUE LIMIT FOR THE BUDGET YEAR.

3. 4. Any other budget item that is budgeted in the maintenance and operation section of the budget and that is specifically exempt from the revenue control limit , OR FROM AND AFTER JUNE 30, 1999, THE CAPITAL OUTLAY REVENUE LIMIT .

D. UNTIL JUNE 30, 1999, the total capital budget limit , AND FROM AND AFTER JUNE 30, 1999, THE UNRESTRICTED CAPITAL BUDGET LIMIT, for each school district for each fiscal year is the sum of the following:

1. UNTIL JUNE 30, 1999, the capital levy revenue limit , AND FROM AND AFTER JUNE 30, 1999, THE FEDERAL IMPACT ADJUSTMENT AS DETERMINED IN SECTION 15-964, for the budget year.

2. UNTIL JUNE 30, 1999, monies accumulated in the reserve of the capital outlay fund.

3. Any other budget item that is budgeted in the capital outlay section of the budget and that is specifically exempt from the capital levy revenue limit UNTIL JUNE 30, 1999, AND FROM AND AFTER JUNE 30, 1999, THE CAPITAL OUTLAY REVENUE LIMIT .

4. UNTIL JUNE 30, 1999, the capital outlay revenue limit for the budget year.

5. The capital portion of the amounts contained in subsection C, paragraph 2 of this section.

6. UNTIL JUNE 30, 1999, any other budget item that is budgeted in the capital outlay section of the budget and that is specifically exempt from the capital outlay revenue limit.

7. FROM AND AFTER JUNE 30, 1999, THE UNEXPENDED BUDGET BALANCE IN THE SOFT CAPITAL ALLOCATION FUND FROM THE PREVIOUS FISCAL YEAR.

8. FROM AND AFTER JUNE 30, 1999, THE NET INTEREST EARNED IN THE UNRESTRICTED CAPITAL OUTLAY FUND THE PREVIOUS FISCAL YEAR.

E. FROM AND AFTER JUNE 30, 1999, THE SOFT CAPITAL ALLOCATION LIMIT FOR EACH SCHOOL DISTRICT FOR EACH FISCAL YEAR IS THE SUM OF THE FOLLOWING:

1. THE SOFT CAPITAL ALLOCATION FOR THE BUDGET YEAR.

2. THE UNEXPENDED BUDGET BALANCE IN THE SOFT CAPITAL ALLOCATION FUND FROM THE PREVIOUS FISCAL YEAR.

3. THE NET INTEREST EARNED IN THE UNRESTRICTED CAPITAL OUTLAY FUND THE PREVIOUS FISCAL YEAR.

Sec. 22. Section 15-947.01, Arizona Revised Statutes, is amended to read:

15-947.01 . Revenue control limit; general budget limit; total capital budget limit for joint technological education districts

A. The revenue control limit and district support level for a joint technological education district are equal to the base support level determined in section 15-943.02.

B. The general budget limit for each joint technological education district, for each fiscal year, is the sum of the following:

1. The revenue control limit for the budget year.

2. FROM AND AFTER JUNE 30, 1999, THE CAPITAL OUTLAY REVENUE LIMIT FOR THE BUDGET YEAR.

2. 3. Tuition revenues for attendance of nonresident pupils.

3. 4. P.L. 81-874 assistance determined for handicapped children, children with specific learning disabilities and children residing on Indian lands as provided in section 15-905, subsections K and O.

C. UNTIL JUNE 30, 1999, the total capital budget limit for each joint technological education district for each fiscal year is the sum of the following:

1. The capital outlay revenue limit for the budget year.

2. The capital levy revenue limit for the budget year .

3. Monies accumulated in the reserve of the capital outlay fund.

D. FROM AND AFTER JUNE 30, 1999, THE UNRESTRICTED CAPITAL BUDGET LIMIT FOR EACH JOINT TECHNOLOGICAL EDUCATION DISTRICT FOR THE BUDGET YEAR IS AS PROVIDED IN SECTION 15-947, SUBSECTION D.

E. FROM AND AFTER JUNE 30, 1999, THE SOFT CAPITAL ALLOCATION LIMIT FOR EACH JOINT TECHNOLOGICAL EDUCATION DISTRICT FOR THE BUDGET YEAR IS AS PROVIDED IN SECTION 15-947, SUBSECTION E.

Sec. 23. Section 15-951, Arizona Revised Statutes, is amended to read:

15-951 . Revenue control limit, capital outlay revenue limit, soft capital allocation, district support level and student count for a common school district not within a high school district

A. Notwithstanding section 15-947, the revenue control limit for a common school district not within a high school district is the sum of the following:

1. The base revenue control limit computed as prescribed in section 15-944 but excluding pupils admitted to another school district as provided in section 15-824, subsection A, paragraph 2.

2. The tuition payable for high school pupils who attend school in another school district as provided in section 15-824, subsection A, paragraph 2, including any transportation charge, except as provided in subsection H of this section.

3. The transportation revenue control limit for all pupils who reside in the district except those high school pupils transported by another district.

B. Notwithstanding subsection A of this section, for the purposes of sections 15-481, 15-482 and 15-1102, the revenue control limit for a common school district not within a high school district is the sum of the following:

1. The base revenue control limit for pupils computed as prescribed in section 15-944 but excluding pupils admitted to another school district as provided in section 15-824, subsection A, paragraph 2.

2. The transportation revenue control limit for all pupils who reside in the district except those high school pupils transported by another district.

C. Notwithstanding section 15-961, the capital outlay revenue limit for a common school district not within a high school district is the capital outlay revenue limit computed as prescribed in section 15-961 but excluding pupils who are admitted to another school district as provided in section 15-824, subsection A, paragraph 2.

D. Notwithstanding section 15-962, UNTIL JUNE 30, 1999, the capital levy revenue limit for a common school district not within a high school district is the capital levy revenue limit computed as prescribed in section 15-962 but excluding pupils who are both admitted to another school district as provided in section 15-824, subsection A, paragraph 2 and not transported by the common school district. NOTWITHSTANDING SECTION 15-962, FROM AND AFTER JUNE 30, 1999, THE SOFT CAPITAL ALLOCATION FOR A COMMON SCHOOL DISTRICT NOT WITHIN A HIGH SCHOOL DISTRICT IS THE SOFT CAPITAL ALLOCATION COMPUTED AS PRESCRIBED IN SECTION 15-962 BUT EXCLUDING PUPILS WHO ARE BOTH ADMITTED TO ANOTHER SCHOOL DISTRICT AS PROVIDED IN SECTION 15-824, SUBSECTION A, PARAGRAPH 2 AND NOT TRANSPORTED BY THE COMMON SCHOOL DISTRICT.

E. Notwithstanding section 15-947, the district support level for a common school district not within a high school district is the sum of the following:

1. The base support level computed as prescribed in section 15-943 but excluding pupils who are admitted to another school district as provided in section 15-824, subsection A, paragraph 2.

2. The tuition payable for high school pupils who are admitted to another school district as provided in section 15-824, subsection A, paragraph 2, including any transportation charge, except as provided in subsection H of this section.

3. The transportation support level for all pupils who reside in the school district except those high school pupils transported by another school district.

F. For the purpose of determining eligibility to adjust the student count as provided in section 15-942, the student count for a common school district not within a high school district is the student count for pupils in the school district less the student count for pupils enrolled in another school district as provided in section 15-824, subsection A, paragraph 2.

G. For the purpose of determining eligibility to increase the revenue control limit and district support level or recompute the revenue control limit as provided in section 15-948, the student count for a common school district not within a high school district is the student count for pupils in kindergarten programs and grades one through twelve, including pupils enrolled in another school district as provided in section 15-824, subsection A, paragraph 2.

H. The tuition amount in subsections A and E of this section shall not include amounts per student count for bond issues as prescribed by section 15-824, subsection F, paragraph 1, subdivision (c) in excess of the following:

1. One hundred fifty dollars if the pupil's school district of residence pays tuition for seven hundred fifty or fewer pupils to other school districts.

2. Two hundred dollars if the pupil's school district of residence pays tuition for one thousand or fewer, but more than seven hundred fifty pupils to other school districts.

3. The actual cost per student count if the pupil's school district of residence pays tuition for more than one thousand pupils to other school districts.

Sec. 24. Section 15-961, Arizona Revised Statutes, is amended to read:

15-961 . Capital outlay revenue limit; growth rate

A. A capital outlay revenue limit per student count is established for fiscal year 1984-1985 as follows:

1. For kindergarten programs and grades one through eight multiply one hundred fifty-five dollars by the weight which corresponds to the student count for kindergarten programs and grades one through eight for the school district as provided in section 15-943, paragraph 1, subdivision (a), column 3. For a school district with a student count of six hundred or more in kindergarten programs and grades one through eight multiply one hundred fifty-five dollars by 1.158.

2. For grades nine through twelve multiply one hundred sixty-eight dollars by the weight which corresponds to the student count for grades nine through twelve for the school district as provided in section 15-943, paragraph 1, subdivision (b), column 3. For a school district with a student count of six hundred or more in grades nine through twelve multiply one hundred sixty-eight dollars by 1.268.

3. For programs for preschool children with disabilities multiply one hundred fifty-five dollars by 1.158.

B. For fiscal year 1985-1986 and each year thereafter the capital outlay revenue limit prescribed in subsection A of this section shall be adjusted by the growth rate prescribed by law, subject to appropriation.

C. For fiscal year 1985-1986 and each year thereafter the capital outlay revenue limit for a school district shall be computed as follows:

1. Select the applicable capital outlay revenue limit or limits per student count for the school district.

2. Multiply the amount or amounts selected in paragraph 1 of this subsection by the appropriate student count of the school district. FROM AND AFTER JUNE 30, 1999, THE STUDENT COUNT OF THE SCHOOL DISTRICT SHALL NOT INCLUDE ANY PUPILS IN A CHARTER SCHOOL SPONSORED BY THE DISTRICT PURSUANT TO SECTION 15-185, SUBSECTION A, PARAGRAPH 3.

3. If a school district's student count used for the budget year is greater than one hundred five per cent of the student count used for the current year's budget, increase the adjusted capital outlay revenue limit determined in paragraph 2 of this subsection by the actual percentage increase in the school district's student count.

D. For fiscal year 1985-1986 and each year thereafter, an amount for the purchase of required textbooks and related printed subject matter materials shall be used to increase the capital outlay revenue limit for a school district as determined in subsection C, paragraph 2 or 3 of this section, whichever is applicable. For fiscal year 1985-1986, the funding level is fifty-seven dollars fifty cents. For fiscal year 1986-1987 and each year thereafter, the funding level is the funding level of the previous year adjusted by the growth rate prescribed by law, subject to appropriation. The amount to be added to the amount in subsection C, paragraph 2 or 3 of this section, whichever is applicable, to determine the capital outlay revenue limit for a school district is computed as follows:

1. For fiscal year 1985-1986, multiply the student count in grade nine by the funding level for the applicable year as prescribed in this subsection.

2. For fiscal year 1986-1987, multiply the student count in grades nine and ten by the funding level for the applicable year as prescribed in this subsection.

3. For fiscal year 1987-1988, multiply the student count in grades nine through eleven by the funding level for the applicable year as prescribed in this subsection.

4. For fiscal year 1988-1989 and each year thereafter, multiply the student count in grades nine through twelve by the funding level for the applicable year as prescribed in this subsection.

Sec. 25. Section 15-962, Arizona Revised Statutes, is amended to read:

15-962 . Capital levy revenue limit; soft capital allocation

A. UNTIL JUNE 30, 1999, a capital levy revenue limit per student count is established for fiscal year 1985-1986 , AND FROM AND AFTER JUNE 30, 1999, A SOFT CAPITAL ALLOCATION PER STUDENT COUNT IS ESTABLISHED FOR FISCAL YEAR 1999-2000, as follows:

1. For kindergarten programs and grades one through eight , UNTIL JUNE 30, 1999, multiply one hundred twenty-five dollars , AND FROM AND AFTER JUNE 30, 1999, MULTIPLY ONE HUNDRED NINETY-FOUR DOLLARS THIRTY CENTS, by the weight which corresponds to the student count for kindergarten programs and grades one through eight for the school district as provided in section 15-943, paragraph 1, subdivision (a), column 3.

2. For grades nine through twelve , UNTIL JUNE 30, 1999, multiply one hundred twenty-five dollars , AND FROM AND AFTER JUNE 30, 1999, MULTIPLY ONE HUNDRED NINETY-FOUR DOLLARS THIRTY CENTS, by the weight which corresponds to the student count as provided in section 15-943, paragraph 1, subdivision (a), column 3.

3. For a school district with a student count of six hundred or more in kindergarten programs and grades one through eight or grades nine through twelve , UNTIL JUNE 30, 1999, multiply one hundred twenty-five dollars , AND FROM AND AFTER JUNE 30, 1999, MULTIPLY ONE HUNDRED NINETY-FOUR DOLLARS THIRTY CENTS, by 1.158.

4. For programs for preschool children with disabilities , UNTIL JUNE 30, 1999, multiply one hundred twenty-five dollars , AND FROM AND AFTER JUNE 30, 1999, MULTIPLY ONE HUNDRED NINETY-FOUR DOLLARS THIRTY CENTS, by 1.158.

B. Beginning with fiscal year 1986-1987 AND UNTIL JUNE 30, 1999, the capital levy revenue limit prescribed in subsection A of this section shall be adjusted by the growth rate prescribed by law, subject to appropriation. FROM AND AFTER JUNE 30, 1999, BEGINNING WITH FISCAL YEAR 2000-2001, THE SOFT CAPITAL ALLOCATION PRESCRIBED IN SUBSECTION A OF THIS SECTION SHALL BE ADJUSTED BY THE GROWTH RATE PRESCRIBED BY LAW, SUBJECT TO APPROPRIATION.

C. Beginning with fiscal year 1985-1986 AND UNTIL JUNE 30, 1999, the capital levy revenue limit for a school district , AND FROM AND AFTER JUNE 30, 1999, BEGINNING IN FISCAL YEAR 1999-2000, THE SOFT CAPITAL ALLOCATION FOR A SCHOOL DISTRICT, is computed as follows:

1. Select the applicable capital levy revenue limits UNTIL JUNE 30, 1999, AND FROM AND AFTER JUNE 30, 1999, THE APPLICABLE SOFT CAPITAL ALLOCATION, per student count for the school district AS PROVIDED IN SUBSECTION A OF THIS SECTION .

2. Multiply the amount selected in paragraph 1 of this subsection by the appropriate student count of the school district. FROM AND AFTER JUNE 30, 1999, THE STUDENT COUNT OF THE SCHOOL DISTRICT SHALL NOT INCLUDE ANY PUPILS IN A CHARTER SCHOOL SPONSORED BY THE SCHOOL DISTRICT PURSUANT TO SECTION 15-185, SUBSECTION A, PARAGRAPH 3.

D. UNTIL JUNE 30, 1999, the governing board may accumulate monies collected as provided in this section in the reserve of the capital outlay fund. If the governing board chooses to accumulate monies in the reserve of the capital outlay fund, it shall adopt and may subsequently amend a plan for the use of the reserve that specifies how and when the monies in the reserve are to be expended. The maximum amount which may be placed in or added to the reserve in any one year shall not exceed the sum of the capital levy revenue limit for that year and the federal impact capital levy adjustment, as provided in section 15-964, for that year, and the maximum amount accumulated in the reserve in any fiscal year shall not exceed five times the capital levy revenue limit for that year, except as provided in subsection E of this section. The governing board shall report the actual amount accumulated in the reserve in the annual financial report of the school district as provided in section 15-904. Monies accumulated in the reserve of the capital outlay fund as provided in this section shall be expended only in accordance with the following:

1. A plan for the use of the reserve shall follow a standard format as prescribed in the uniform system of financial records.

2. A plan for the use of the reserve shall be adopted or amended at a public hearing on the proposed plan. No later than ten days before the hearing, the governing board shall publish a notice of the public hearing in a newspaper of general circulation within the school district or the governing board may mail the notice to each household in the school district.

3. If the governing board adopts or amends a plan for the use of the reserve that includes the construction of school buildings, excluding relocatable buildings, or the purchase of school sites at an estimated cost in excess of two hundred fifty thousand dollars for a district with a student count of at least five hundred or an estimated cost in excess of one hundred thousand dollars for a district with a student count of fewer than five hundred, the portion of the plan that includes the construction of school buildings, excluding relocatable buildings, or purchase of school sites shall not be implemented until that portion of the plan is approved by a majority of the qualified electors voting in an election called for such purpose. The election shall be conducted and the notice and ballots shall be prepared as provided in section 15-481, except that the governing board shall hold the election on a date prescribed in section 15-491, subsection E. In this paragraph, "relocatable buildings" means buildings which are designed to be relocated as defined in the uniform system of financial records and are placed on a school site which has existing school buildings.

E. UNTIL JUNE 30, 1999, if a governing board desires to accumulate monies in the reserve of the capital outlay fund in excess of the maximum amount permitted in subsection D of this section, it may petition the state board of education requesting authority to exceed the maximum amount that may be placed in or added to the reserve in a single year or to exceed the maximum amount that can be accumulated in the reserve in any fiscal year as specified in subsection D of this section. The state board of education shall hold a hearing on the petition within sixty days after receipt and shall determine whether to allow the petition, allow the petition after revision or deny the petition.

F. FROM AND AFTER JUNE 30, 1999, A SCHOOL DISTRICT SHALL RECEIVE ITS SOFT CAPITAL ALLOCATION IN THE AMOUNT DETERMINED IN THIS SECTION FROM MONIES APPROPRIATED FOR THIS PURPOSE TO THE DEPARTMENT OF EDUCATION. SOFT CAPITAL ALLOCATION MONIES SHALL ONLY BE USED FOR SHORT-TERM CAPITAL ITEMS THAT ARE REQUIRED TO MEET ACADEMIC ADEQUACY STANDARDS SUCH AS TECHNOLOGY, TEXTBOOKS, LIBRARY RESOURCES, INSTRUCTIONAL AIDS, PUPIL TRANSPORTATION VEHICLES, FURNITURE AND EQUIPMENT. SCHOOL DISTRICTS SHALL NOT USE ANY PORTION OF SOFT CAPITAL ALLOCATION MONIES FOR MAINTENANCE AND OPERATION EXPENSES. SCHOOL DISTRICTS MAY USE SOFT CAPITAL ALLOCATION TO MEET ADMINISTRATIVE SOFT CAPITAL PURPOSES AFTER COMPLYING WITH THE ADEQUACY STANDARDS PRESCRIBED IN SECTION 15-2011.

G. FROM AND AFTER JUNE 30, 1999, SCHOOL DISTRICTS SHALL ESTABLISH A DISTRICT SOFT CAPITAL ALLOCATION FUND AND SHALL USE THE MONIES ONLY FOR THE PURPOSES PRESCRIBED IN SUBSECTION F OF THIS SECTION. THE ENDING UNEXPENDED BUDGET BALANCE IN THE SCHOOL DISTRICT'S SOFT CAPITAL ALLOCATION FUND MAY BE USED IN FOLLOWING FISCAL YEARS FOR SHORT-TERM CAPITAL ITEMS. SCHOOL DISTRICTS SHALL PROVIDE TO THE SUPERINTENDENT OF PUBLIC INSTRUCTION AN ITEMIZED ACCOUNTING ON FORMS PROVIDED BY THE DEPARTMENT OF EDUCATION THAT DETAILS THE EXPENDITURES OF SOFT CAPITAL ALLOCATION MONIES AT EACH SCHOOL IN THE DISTRICT. THE SUPERINTENDENT OF PUBLIC INSTRUCTION SHALL FORWARD A COPY OF THE REPORT TO THE SCHOOL FACILITIES BOARD ESTABLISHED BY SECTION 15-2001.

F. H. A school district governing board may petition the state board of education for authority to budget and accumulate for school construction purposes a portion of the prior year's ending cash balance, after any reversion as required by section 15-991.02, not to exceed the amount of P.L. 81-874 monies which the school district was entitled to receive in the prior year, as computed by the superintendent of public instruction, if:

1. The governing board filed with the United States department of education division of impact aid an approved application for federal assistance for construction under P.L. 81-815 for the current or budget year and has been advised by the division of impact aid that no federal monies are available to fund its application.

2. The school district has a computed assessed valuation per pupil which is below the median amount computed by the superintendent of public instruction for all school districts.

3. The governing board has used any available revenues to reduce its primary tax rate to zero for any year in which it petitions to budget and accumulate monies received under P.L. 81-874 for school construction purposes.

The state board of education may grant approval to a school district governing board to annually budget and UNTIL JUNE 30, 1999, accumulate, for a period of not to exceed five years, a portion of the cash balance, after any reversion as required by section 15-991.02, not to exceed the amount of P.L. 81-874 monies which the school district was entitled to receive in the prior year as computed by the superintendent of public instruction. UNTIL JUNE 30, 1999, the monies from the cash balance shall be placed in the reserve of the capital outlay fund and are specifically exempt from the capital levy revenue limit. FROM AND AFTER JUNE 30, 1999, THE STATE BOARD OF EDUCATION MAY GRANT APPROVAL TO A SCHOOL DISTRICT GOVERNING BOARD TO ANNUALLY BUDGET IN THE UNRESTRICTED CAPITAL OUTLAY SECTION OF THE BUDGET A PORTION OF THE CASH BALANCE, NOT TO EXCEED THE AMOUNT OF P.L. 81-874 MONIES WHICH THE SCHOOL DISTRICT WAS ENTITLED TO RECEIVE IN THE PRIOR YEAR AS COMPUTED BY THE SUPERINTENDENT OF PUBLIC INSTRUCTION.

G. I. The state board of education shall not include in the aggregate expenditures of local revenues as determined in section 15-911 the amount of revenues collected pursuant to UNTIL JUNE 30, 1999, the capital levy revenue AND FROM AND AFTER JUNE 30, 1999, THE SOFT CAPITAL ALLOCATION limit. UNTIL JUNE 30, 1999, the amount of revenues collected for the capital levy revenue AND FROM AND AFTER JUNE 30, 1999, THE SOFT CAPITAL ALLOCATION limit is the capital levy as authorized by law.

Sec. 26. Section 15-962.01, Arizona Revised Statutes, is amended to read:

15-962.01 . Capital outlay revenue limit and soft capital allocation for joint technological education districts

A. The capital outlay revenue limit for a joint technological education district shall be the amount for students in grades nine through twelve for districts with a student count of six hundred or more as prescribed in section 15-961.

B. UNTIL JUNE 30, 1999, the capital levy revenue limit AND FROM AND AFTER JUNE 30, 1999, THE SOFT CAPITAL ALLOCATION for a joint technological education district shall be the amount for students in grades nine through twelve for districts with a student count of six hundred or more as prescribed in section 15-962.

C. FROM AND AFTER JUNE 30, 1999, JOINT TECHNOLOGICAL EDUCATION DISTRICTS SHALL ESTABLISH A DISTRICT SOFT CAPITAL ALLOCATION FUND AND SHALL USE THE MONIES ONLY FOR THE PURPOSES PRESCRIBED IN SECTION 15-962, SUBSECTION F. THE ENDING UNEXPENDED BUDGET BALANCE IN THE DISTRICT'S SOFT CAPITAL ALLOCATION FUND MAY BE USED IN FOLLOWING FISCAL YEARS FOR SHORT-TERM CAPITAL ITEMS. DISTRICTS SHALL PROVIDE TO THE SUPERINTENDENT OF PUBLIC INSTRUCTION AN ITEMIZED ACCOUNTING ON FORMS PROVIDED BY THE DEPARTMENT OF EDUCATION THAT DETAILS THE EXPENDITURES OF SOFT CAPITAL ALLOCATION MONIES AT EACH SCHOOL IN THE JOINT TECHNOLOGICAL EDUCATION DISTRICT. THE SUPERINTENDENT OF PUBLIC INSTRUCTION SHALL FORWARD A COPY OF THE REPORT TO THE SCHOOL FACILITIES BOARD ESTABLISHED BY SECTION 15-2001.

Sec. 27. Section 15-963, Arizona Revised Statutes, is amended to read:

15-963 . Capital levy adjustment and capital transportation adjustment for small school districts

A. A school district may apply to the state board of education for UNTIL JUNE 30, 1999, a capital levy adjustment AND FROM AND AFTER JUNE 30, 1999, A CAPITAL TRANSPORTATION ADJUSTMENT for the purchase of a transportation vehicle if the district meets all of the following requirements:

1. Has a student count of fewer than six hundred in kindergarten programs and grades one through twelve.

2. Transports as eligible students at least one-third of the total student count of the school district.

3. Has an approved daily route mileage per eligible student transported of more than 1.0, computed as prescribed in section 15-945, subsection A, paragraph 4.

B. If a school district receives a capital levy OR TRANSPORTATION adjustment as provided in this section, UNTIL JUNE 30, 1999, the capital levy revenue limit AND FROM AND AFTER JUNE 30, 1999, THE SOFT CAPITAL ALLOCATION for that district shall be equal to the capital levy revenue limit OR THE SOFT CAPITAL ALLOCATION determined as prescribed in section 15-962 plus any additional amount approved by the state board of education.

C. The state board of education may grant UNTIL JUNE 30, 1999, a capital levy adjustment AND FROM AND AFTER JUNE 30, 1999, A CAPITAL TRANSPORTATION ADJUSTMENT to a school district which meets the qualifications prescribed in subsection A of this section, except that the total amount of all additional amounts approved as capital levy OR TRANSPORTATION adjustments for all school districts for a fiscal year shall not exceed twenty per cent of the total amount which a county may budget for that fiscal year in all small district service program funds as provided in section 15-365, subsection F.

Sec. 28. Section 15-964, Arizona Revised Statutes, is amended to read:

15-964 . Federal impact capital levy adjustment; federal impact adjustment

A. UNTIL JUNE 30, 1999, the governing board of a school district may compute a federal impact capital levy adjustment which is exempt from the capital levy revenue limit AND FROM AND AFTER JUNE 30, 1999, THE GOVERNING BOARD OF A SCHOOL DISTRICT MAY COMPUTE A FEDERAL IMPACT ADJUSTMENT TO THE UNRESTRICTED CAPITAL BUDGET LIMIT . The maximum amount of the federal impact capital levy adjustment OR THE FEDERAL IMPACT ADJUSTMENT is the sum of the following:

1. Twenty-five per cent of the monies received from forest reserve funds by the school district in the prior fiscal year as provided in section 41-736.

2. For a school district that is not an accommodation school, the lesser of:

(a) Twenty-five per cent of the P.L. 81-874 revenues received in the prior fiscal year.

(b) The total amount of P.L. 81-874 revenues received in the prior fiscal year minus the sum of the following:

(i) UNTIL JUNE 30, 1999, the amount of the state aid reduction as prescribed in section 15-973, subsection D for the prior fiscal year.

(ii) The amount of P.L. 81-874 assistance used to increase the general budget limit as provided in section 15-905, subsections K and O for the prior fiscal year.

(iii) The amount budgeted for P.L. 81-874 administrative costs as provided in section 15-905, subsection P , for the current year.

B. UNTIL JUNE 30, 1999, the federal impact capital levy adjustment , AND FROM AND AFTER JUNE 30, 1999, THE FEDERAL IMPACT ADJUSTMENT, shall only be budgeted and expended for new construction or major renovation of buildings.

C. UNTIL JUNE 30, 1999, the governing board may not compute a federal impact capital levy adjustment for any year in which it budgets or accumulates monies for school construction as provided in section 15-962, subsection F H . FROM AND AFTER JUNE 30, 1999, THE GOVERNING BOARD MAY NOT COMPUTE A FEDERAL IMPACT ADJUSTMENT FOR ANY YEAR IN WHICH IT BUDGETS AS PROVIDED IN SECTION 15-962, SUBSECTION H.

D. UNTIL JUNE 30, 1999, if the governing board underestimated the amount of the federal impact capital levy adjustment for the current year, the board may adjust the total capital budget limit and the budget before May 15. UNTIL JUNE 30, 1999, if the board overestimated the amount of the adjustment for the current year, the board shall adjust the total capital budget limit and the budget before May 15. FROM AND AFTER JUNE 30, 1999, IF THE GOVERNING BOARD UNDERESTIMATED THE AMOUNT OF THE FEDERAL IMPACT ADJUSTMENT FOR THE CURRENT YEAR, THE BOARD MAY ADJUST THE UNRESTRICTED CAPITAL BUDGET LIMIT AND THE BUDGET BEFORE MAY 15. FROM AND AFTER JUNE 30, 1999, IF THE BOARD OVERESTIMATED THE AMOUNT OF THE FEDERAL IMPACT ADJUSTMENT FOR THE CURRENT YEAR, THE BOARD SHALL ADJUST THE UNRESTRICTED CAPITAL BUDGET LIMIT AND THE BUDGET BEFORE MAY 15.

Sec. 29. Section 15-971, Arizona Revised Statutes, is amended to read:

15-971 . Determination of equalization assistance payments from county and state funds for school districts

A. Equalization assistance for education is computed by determining the total of the following:

1. The lesser of a school district's revenue control limit or district support level as determined in section 15-947 or 15-951.

2. The capital outlay revenue limit of a school district as determined in section 15-951 or 15-961.

3. UNTIL JUNE 30, 1999, the capital levy revenue limit of a school district as determined in section 15-951 or 15-962 , OR FROM AND AFTER JUNE 30, 1999, THE SOFT CAPITAL ALLOCATION OF A SCHOOL DISTRICT AS DETERMINED IN SECTION 15-951 OR 15-962 .

B. From the total of the amounts determined in subsection A of this section subtract:

1. The amount that would be produced by levying a qualifying tax rate of two dollars twenty cents per one hundred dollars assessed valuation in a high school district or in a common school district within a high school district which does not offer instruction in high school subjects as provided in section 15-447.

2. The amount that would be produced by levying a qualifying tax rate of four dollars forty cents per one hundred dollars assessed valuation in a unified school district, in a common school district not within a high school district or in a common school district within a high school district which offers instruction in high school subjects as provided in section 15-447. The qualifying tax rate shall be applied in the following manner:

(a) For the purposes of the amount determined in subsection A, paragraph 1 of this section:

(i) Determine separately the percentage that the weighted student count in preschool programs for handicapped children, kindergarten programs and grades one through eight and the weighted student count in grades nine through twelve is to the weighted student count determined in subtotal A as provided in section 15-943, paragraph 2, subdivision (a).

(ii) Apply the percentages determined in item (i) of this subdivision to the amount determined in subsection A, paragraph 1 of this section.

(b) For the purposes of the amounts determined in subsection A, paragraphs 2 and 3 of this section determine separately the amount of the capital outlay revenue limit , and UNTIL JUNE 30, 1999, the amount of the capital levy revenue limit , AND FROM AND AFTER JUNE 30, 1999, THE AMOUNT OF THE SOFT CAPITAL ALLOCATION, attributable to the student count in preschool programs for handicapped children, kindergarten programs and grades one through eight and grades nine through twelve.

(c) From the amounts determined in subdivisions (a) and (b) of this paragraph subtract the levy which would be produced by a qualifying tax rate of two dollars twenty cents per one hundred dollars assessed valuation. If the qualifying tax rate generates a levy which is in excess of the total determined in subsection A of this section, the school district shall not be eligible for equalization assistance. In this subsection "assessed valuation" includes the values used to determine voluntary contributions collected pursuant to title 9, chapter 4, article 3 and title 48, chapter 1, article 8.

3. The amount that would be produced by levying a qualifying tax rate in a joint vocational and technological education district, which shall be five cents per one hundred dollars assessed valuation unless the joint legislative tax committee adjusts the rate to a lower rate. Any adjustment shall be made not later than the Friday preceding the second Monday of August and shall be calculated so that any additional state aid received by the joint district is roughly equal to the decrease in state aid from the school districts which are a part of the joint district.

4. The amount of government property lease excise tax monies that were distributed to the district pursuant to section 42-1905 during the preceding fiscal year.

C. County aid for equalization assistance for education shall be computed as follows:

1. Determine the total equalization assistance for all school districts in the county as provided in subsections A and B of this section.

2. Determine the total amount of county aid collected for all school districts in the county as provided in section 15-994.

3. UNTIL JUNE 30, 1999, determine the total amount of ending cash balance reverted from all school districts in the county as provided in section 15-991.02.

4. UNTIL JUNE 30, 1999, add the amounts determined in paragraphs 2 and 3 of this subsection.

5. UNTIL JUNE 30, 1999, divide the amount determined in paragraph 4 of this subsection , AND FROM AND AFTER JUNE 30, 1999, DIVIDE THE AMOUNT DETERMINED IN PARAGRAPH 2 OF THIS SUBSECTION, by the amount determined in paragraph 1 of this subsection.

6. Multiply the amount determined in subsections A and B of this section by the quotient determined in paragraph 5 of this subsection for each school district.

7. The amount determined in paragraph 6 of this subsection shall be the county aid for equalization assistance for education for a school district.

D. State aid for equalization assistance for education for a school district shall be computed as follows:

1. Determine the equalization assistance for education for a school district as provided in subsections A and B of this section.

2. For each county, determine the levy that would be produced by the tax rate for equalization assistance for education prescribed in section 15-994, subsection A.

3. For each county, determine the total amount to be paid from monies collected from the tax levy for equalization assistance for education into the small district service program fund as prescribed by section 15-365 and into the detention center education fund as prescribed by section 15-913.

4. Subtract the amount determined in paragraph 3 of this subsection from the amount determined in paragraph 2 of this subsection.

5. UNTIL JUNE 30, 1999, for each county, determine the total amount of ending cash balance reversion, as verified by the superintendent of public instruction, from all school districts in the county as provided in section 15-991.02.

6. UNTIL JUNE 30, 1999, add the amounts determined in paragraphs 4 and 5 of this subsection.

7. UNTIL JUNE 30, 1999, prorate the amount determined in paragraph 6 of this subsection , AND FROM AND AFTER JUNE 30, 1999, PRORATE THE AMOUNT DETERMINED IN PARAGRAPH 4 OF THIS SUBSECTION, to each school district in the county as prescribed by subsection C of this section.

8. Subtract the amount determined in paragraph 7 of this subsection from the amount determined in paragraph 1 of this subsection.

E. Equalization assistance for education shall be paid from appropriations for that purpose to the school districts as provided in section 15-973.

F. A school district shall comply with the program and staff standards promulgated as provided in section 15-781.01, subsection D, paragraph 11 and report expenditures on approved vocational and technological education programs in the annual financial report according to uniform guidelines prescribed by the uniform system of financial records to be entitled to receive the additional weight for state aid purposes given to vocational and technological education programs as provided in section 15-943 computed with reference to the number of vocational and technological education students enrolled in the programs.

G. The additional weight for state aid purposes given to special education as provided in section 15-943 shall be given to school districts only if special education programs comply with the provisions of chapter 7, article 4 of this title and the conditions and standards prescribed by the superintendent of public instruction pursuant to rules of the state board of education for pupil identification and placement pursuant to sections 15-766 and 15-767.

H. In addition to general fund appropriations, all income , FROM AND AFTER JUNE 30, 1999, AFTER THE SUBTRACTIONS PRESCRIBED IN SECTION 37-521, SUBSECTION B, PARAGRAPHS 1 AND 2, derived from the permanent state school fund for the benefit of common and high school education and receipts for such purpose from any other source are appropriated for state aid to schools as provided in this section.

I. The total amount of state monies that may be spent in any fiscal year for state equalization assistance shall not exceed the amount appropriated or authorized by section 35-173 for that purpose. This section shall not be construed to impose a duty on an officer, agent or employee of this state to discharge a responsibility or to create any right in a person or group if the discharge or right would require an expenditure of state monies in excess of the expenditure authorized by legislative appropriation for that specific purpose.

Sec. 30. Section 15-973, Arizona Revised Statutes, is amended to read:

15-973 . Apportionment of funds; expenditure limitation

A. The state board of education shall apportion state aid from appropriations made for such purpose to the several counties on the basis of state aid entitlement for the school districts in each county. No allowance shall be made for nonresident alien children nor for wards of the United States for whom tuition is paid, but attendance of a student in a school of a county adjoining the county of his residence outside the state under a certificate of educational convenience as provided by section 15-825 shall be deemed to be enrollment in the school of the county or school district of his residence.

B. Apportionments shall be made as follows:

1. On July 15, one-twelfth of the total amount to be apportioned during the fiscal year.

2. On September 15, one-twelfth of the total amount to be apportioned during the fiscal year.

3. On October 15, one-twelfth of the total amount to be apportioned during the fiscal year.

4. On December 15, one-twelfth of the total amount to be apportioned during the fiscal year.

5. On January 15, one-twelfth of the total amount to be apportioned during the fiscal year.

6. On February 15, one-twelfth of the total amount to be apportioned during the fiscal year.

7. On March 15, one-twelfth of the total amount to be apportioned during the fiscal year.

8. On April 15, one-sixth of the total amount to be apportioned during the fiscal year.

9. On May 15, one-sixth of the total amount to be apportioned during the fiscal year.

10. On June 15, one-twelfth of the total amount to be apportioned during the fiscal year, except that if the total amount of monies available to make the payment is less than the amount of the payment, a portion of the June 15 payment may be delayed no later than June 30 to allow for the receipt of income from the permanent state common school fund.

The superintendent of public instruction shall furnish to the county treasurer and the county school superintendent an abstract of the apportionment and shall certify the apportionment to the department of administration, which shall draw its warrant in favor of the county treasurer of each county for the amount apportioned. Upon receipt of the warrant the county treasurer shall notify the county school superintendent of the amount, together with any other monies standing to the credit of such school district in the county school fund.

C. Notwithstanding the provisions of subsection B of this section, if sufficient appropriated funds are available and on a showing by a school district that additional state monies are necessary for current expenses, an apportionment or part of an apportionment of state aid may be paid to the school district prior to the date set for such apportionment by subsection B of this section. After the first forty days in session of the current year a school district may request additional state monies to fund the increased state aid due to anticipated student growth through the first one hundred days in session of the current year as provided in section 15-948. In no event shall a school district have received more than three-fourths of its total apportionment before April 15 of the fiscal year. Early payments pursuant to this subsection must be approved by the state treasurer, the director of the department of administration and the superintendent of public instruction. If the computation of state aid for an accommodation school is based on P.L. 81-874 monies to be received in the current year pursuant to section 15-974, subsection A, paragraph 2, the maximum early payment to an accommodation school shall be determined using an estimate of the P.L. 81-874 monies to be received during the fiscal year.

D. UNTIL JUNE 30, 1999, at such time and as provided by federal law or regulation, state aid shall be reduced as follows:

1. The superintendent of public instruction shall compute the amount of monies which each school district is eligible to receive under P.L. 81-874, less P.L. 81-874 monies for children with disabilities, children with specific learning disabilities and children residing on Indian lands which are in addition to the basic assistance as provided in 20 United States Code section 238 (d) 2 (C) and (D), and for which monies have been appropriated.

2. The superintendent of public instruction shall deduct from state aid for each school district which is eligible to receive monies under P.L. 81-874 and for which monies are appropriated as provided in paragraph 1 of this subsection the lesser of:

(a) The maximum allowed by law or regulation.

(b) The amount computed as follows:

(i) For fiscal year 1982-1983, twenty-five per cent of the amount computed in paragraph 1 of this subsection.

(ii) For fiscal year 1983-1984, fifty per cent of the amount computed in paragraph 1 of this subsection.

(iii) For fiscal year 1984-1985, seventy-five per cent of the amount computed in paragraph 1 of this subsection.

(iv) Beginning with fiscal year 1985-1986, ninety-five per cent of the amount computed in paragraph 1 of this subsection.

3. The reduction in state aid shall be made from equalization assistance as prescribed in section 15-971 or from additional state aid as prescribed in section 15-972 during the fiscal year following the fiscal year in which the monies are received. The superintendent of public instruction shall make additional adjustments in state aid for allowable deductions which were not made in any previous fiscal year which is not more than five years earlier than the year in which the adjustments are made. The superintendent of public instruction shall give the school district prior notice of the intention to make the additional adjustments and may distribute the adjustments over more than one year after considering the effects of the adjustments on the school district.

E. FROM AND AFTER JUNE 30, 1999, the superintendent of public instruction shall NOT annually make application to the federal government to utilize P.L. 81-874 monies as prescribed in subsection D of this section IN DETERMINING THE APPORTIONMENT PRESCRIBED IN THIS SECTION .

F. UNTIL JUNE 30, 1999, the provisions of subsection D of this section shall not apply to accommodation schools.

G. UNTIL JUNE 30, 1999, section 15-964 does not affect the amount which may be deducted as provided in subsection D of this section.

H. If a school district which is eligible to receive monies pursuant to this article is unable to meet a scheduled payment on any lawfully incurred long-term obligation for debt service as provided in section 15-1022, the county treasurer shall use any amount distributed pursuant to this section to make the payment. The county treasurer shall keep a record of all the instances in which a payment is made pursuant to this subsection. Any monies subsequently collected by the district to make the scheduled payment shall be used to replace the amount diverted pursuant to this subsection. When determining the total amount to be funded by a levy of secondary taxes upon property within the school district for the following fiscal year, the county board of supervisors shall add to the amounts budgeted to be expended during the following fiscal year an amount equal to the total of all payments pursuant to this subsection during the current fiscal year which were not repaid during the current year.

I. The total amount of state monies that may be spent in any fiscal year by the state board of education for apportionment of state aid for education shall not exceed the amount appropriated or authorized by section 35-173 for that purpose. This section shall not be construed to impose a duty on an officer, agent or employee of this state to discharge a responsibility or to create any right in a person or group if the discharge or right would require an expenditure of state monies in excess of the expenditure authorized by legislative appropriation for that specific purpose.

Sec. 31. Section 15-974, Arizona Revised Statutes, is amended to read:

15-974 . Equalization assistance for education for accommodation schools; definition

A. Equalization assistance for education for accommodation schools shall be computed as follows:

1. Determine the total of the lesser of an accommodation school's revenue control limit or district support level as determined in section 15-947, an accommodation school's capital outlay revenue limit as determined in section 15-961 , and UNTIL JUNE 30, 1999, an accommodation school's capital levy revenue limit , OR FROM AND AFTER JUNE 30, 1999, AN ACCOMMODATION SCHOOL'S SOFT CAPITAL ALLOCATION, as determined in section 15-962.

2. From the amount determined in paragraph 1 of this subsection subtract the monies received from P.L. 81-874 for the prior fiscal year if the amount to be received in the current fiscal year is equal to or greater than the amount received in the prior fiscal year. If the amount to be received during the current fiscal year is less than the amount received in the prior fiscal year, the subtraction shall be determined as follows:

(a) Subtract the amount to be received in the current fiscal year, adjusting the final payment to reflect actual receipts during the fiscal year.

(b) If additional P.L. 81-874 monies are received after the computation of the last payment of state aid but before the end of the fiscal year, the amount received late shall be subtracted from the equalization assistance for the following fiscal year, except that the total amount reduced pursuant to subdivision (a) of this paragraph and this subdivision shall not exceed the amount of P.L. 81-874 monies received in the prior year.

3. Equalization assistance for an accommodation school shall be the amount determined in paragraph 2 of this subsection.

B. Equalization assistance for education for accommodation schools shall be paid from appropriations for that purpose to the school districts as provided in section 15-973.

C. When an accommodation school has a positive total cash balance at the end of a fiscal year in its maintenance and operation and UNTIL JUNE 30, 1999, capital outlay funds after reducing the combined cash balance by the amount in the reserve of the capital outlay fund, the county school superintendent of the county in which the accommodation school is located may authorize an addition to the accommodation school's revenue control limit as provided in section 15-947, subsection A for the following fiscal year. The county school superintendent may not authorize an addition that exceeds the lesser of the ending cash balance less the amount budgeted for the budget balance carry forward as provided in section 15-943.01 or ten per cent of the revenue control limit of the accommodation school. If an accommodation school has a cash balance in excess of the amount needed to fund the budget balance carry forward, the addition authorized pursuant to this subsection and the items listed in section 15-947, subsection C, paragraphs 5, 8 and 11 for the following fiscal year, the remaining cash balance shall be used to reduce the amount of state aid for equalization assistance for education for the accommodation school as provided in section 15-971, subsection D for the following year.

D. The provisions of subsection C of this section shall not apply to an accommodation school with a student count of one hundred twenty-five or less in kindergarten programs and grades one through eight or to an accommodation school which offers instruction in grades nine, ten, eleven or twelve and which has a student count of one hundred or less in grades nine through twelve.

E. For the purpose of this section, "monies received from P.L. 81-874" means total P.L. 81-874 monies less P.L. 81-874 monies for handicapped children, children with specific learning disabilities and children residing on Indian lands which are in addition to the basic assistance as provided in 20 United States Code section 238, subsection (d), paragraph 2, clauses (C) and (D).

Sec. 32. Repeal

Section 15-991.02 , Arizona Revised Statutes, is repealed.

Sec. 33. Section 15-996, Arizona Revised Statutes, is amended to read:

15-996 . Duties of county treasurer relating to school district's monies

The county treasurer shall:

1. Receive and hold all school district monies and keep a separate account for each school district and for the special county school reserve fund. The county treasurer may maintain separate accounts for each fund of a school district or the county treasurer may maintain only two accounts for each school district's monies in addition to the funds provided for in sections 15-1024 , and 15-1025 , 15-2021, 15-2031 AND 15-2041 . If only two accounts are maintained, the first account shall consist of maintenance and operation, UNTIL JUNE 30, 1999, capital outlay , FROM AND AFTER JUNE 30, 1999, UNRESTRICTED CAPITAL OUTLAY, FROM AND AFTER JUNE 30, 1999, SOFT CAPITAL ALLOCATION and adjacent ways monies and the second account shall consist of federal and state grant monies and all other monies.

2. Pool school district monies for investment except as provided in sections 15-1024 and 15-1025. Interest earned on the monies pooled for investment shall be apportioned at least quarterly to the appropriate school district based on an average monthly balance as prescribed in the uniform system of accounting for county treasurers as provided in section 41-1279.21.

3. Notwithstanding section 11-605, register warrants only as follows:

(a) If separate accounts are maintained for each fund, warrants may only be registered on the maintenance and operation, UNTIL JUNE 30, 1999, capital outlay, FROM AND AFTER JUNE 30, 1999, UNRESTRICTED CAPITAL OUTLAY, FROM AND AFTER JUNE 30, 1999, SOFT CAPITAL ALLOCATION and adjacent ways accounts and only if the total cash balance of all three accounts is insufficient to pay the warrants.

(b) If the county treasurer maintains only two accounts as provided in paragraph 1 of this section:

(i) The county treasurer may register warrants only on the first account and only if the balance of that account is insufficient to pay the warrants.

(ii) The county treasurer may honor warrants for any federal or state grant fund with a negative balance as long as the total balance in the second account is positive. If the second account total balance is negative the warrant for a federal or state grant fund shall be charged to the maintenance and operation fund. Any interest charged to the federal or state grant fund as a result of a negative balance that is in excess of interest earned on the fund shall be transferred to the maintenance and operation fund at the end of the fiscal year or the end of the grant year. If a federal or state grant fund has a negative balance at the end of the fiscal year or grant year, sufficient expenditures shall be transferred to the maintenance and operation fund to eliminate the negative balance.

4. Notify the county school superintendent by the fifteenth day of each calendar month of the month end balances of each school district account.

5. Pay warrants issued by the county school superintendent and duly endorsed by the person entitled to receive the monies.

6. BEGINNING FROM AND AFTER JUNE 30, 1999, ON EACH PROPERTY TAX BILL AND EACH PROPERTY TAX STATEMENT PREPARED, SEPARATELY STATE AND IDENTIFY BY NAME EACH SCHOOL DISTRICT'S PRIMARY PROPERTY TAX RATE, THE SECONDARY PROPERTY TAX RATE THAT IS ASSOCIATED WITH OVERRIDES, THE SECONDARY PROPERTY TAX RATE THAT IS ASSOCIATED WITH CLASS A BONDS AND THE SECONDARY PROPERTY TAX RATE THAT IS ASSOCIATED WITH CLASS B BONDS. FOR PURPOSES OF THIS PARAGRAPH, "CLASS A BONDS" AND "CLASS B BONDS" HAVE THE SAME MEANINGS PRESCRIBED IN SECTION 15-101.

Sec. 34. Section 15-1021, Arizona Revised Statutes, is amended to read:

15-1021 . Limitation on bonded indebtedness; limitation on authorization and issuance of bonds

A. UNTIL DECEMBER 31, 1999, a school district may issue CLASS A bonds for the purposes specified in this section and chapter 4, article 5 of this title to an amount in the aggregate, including the existing indebtedness, not exceeding fifteen per cent of the taxable property used for secondary property tax purposes, as determined pursuant to section 42-227, within a school district as ascertained by the last assessment of state and county taxes previous to issuing the bonds.

B. FROM AND AFTER DECEMBER 31, 1998, A SCHOOL DISTRICT MAY ISSUE CLASS B BONDS FOR THE PURPOSES SPECIFIED IN THIS SECTION AND CHAPTER 4, ARTICLE 5 OF THIS TITLE TO AN AMOUNT IN THE AGGREGATE, INCLUDING THE EXISTING CLASS B INDEBTEDNESS, NOT EXCEEDING FIVE PER CENT OF THE TAXABLE PROPERTY USED FOR SECONDARY PROPERTY TAX PURPOSES, AS DETERMINED PURSUANT TO SECTION 42-227 WITHIN A SCHOOL DISTRICT AS ASCERTAINED BY THE LAST ASSESSMENT OF STATE AND COUNTY TAXES PREVIOUS TO ISSUING THE BONDS, OR ONE THOUSAND FIVE HUNDRED DOLLARS PER STUDENT COUNT AS DETERMINED PURSUANT TO SECTION 15-902, WHICHEVER AMOUNT IS GREATER. A SCHOOL DISTRICT SHALL NOT ISSUE CLASS B BONDS UNTIL THE PROCEEDS OF ANY CLASS A BONDS ISSUED BY THE SCHOOL DISTRICT HAVE BEEN OBLIGATED IN CONTRACT. THE TOTAL AMOUNT OF CLASS A AND CLASS B BONDS ISSUED BY A SCHOOL DISTRICT SHALL NOT EXCEED THE DEBT LIMITATIONS PRESCRIBED IN ARTICLE IX, SECTION 8, CONSTITUTION OF ARIZONA.

B. C. UNTIL DECEMBER 31, 1999, a unified school district, as defined under article IX, section 8.1, Constitution of Arizona, may issue CLASS A bonds for the purposes specified in this section and chapter 4, article 5 of this title to an amount in the aggregate, including the existing indebtedness, not exceeding thirty per cent of the taxable property used for secondary property tax purposes, as determined pursuant to section 42-227, within a unified school district as ascertained by the last assessment of state and county taxes previous to issuing the bonds.

D. FROM AND AFTER DECEMBER 31, 1998, A UNIFIED SCHOOL DISTRICT, AS DEFINED UNDER ARTICLE IX, SECTION 8.1, CONSTITUTION OF ARIZONA, MAY ISSUE CLASS B BONDS FOR THE PURPOSES SPECIFIED IN THIS SECTION AND CHAPTER 4, ARTICLE 5 OF THIS TITLE TO AN AMOUNT IN THE AGGREGATE, INCLUDING THE EXISTING INDEBTEDNESS, NOT EXCEEDING TEN PER CENT OF THE TAXABLE PROPERTY USED FOR SECONDARY TAX PURPOSES, AS DETERMINED PURSUANT TO SECTION 42-227 WITHIN A SCHOOL DISTRICT AS ASCERTAINED BY THE LAST ASSESSMENT OF STATE AND COUNTY TAXES PREVIOUS TO ISSUING THE BONDS, OR ONE THOUSAND FIVE HUNDRED DOLLARS PER STUDENT COUNT AS DETERMINED PURSUANT TO SECTION 15-902, WHICHEVER AMOUNT IS GREATER. A UNIFIED SCHOOL DISTRICT SHALL NOT ISSUE CLASS B BONDS UNTIL THE PROCEEDS OF ANY CLASS A BONDS ISSUED BY THE UNIFIED SCHOOL DISTRICT HAVE BEEN OBLIGATED IN CONTRACT. THE TOTAL AMOUNT OF CLASS A AND CLASS B BONDS ISSUED BY A UNIFIED SCHOOL DISTRICT SHALL NOT EXCEED THE DEBT LIMITATIONS PRESCRIBED IN ARTICLE IX, SECTION 8.1, CONSTITUTION OF ARIZONA.

C. E. No bonds authorized to be issued by an election held before July 1, 1980 may be issued after July 1, 1985, or after a date ten years from the date of the election, whichever is earlier, unless also authorized to be issued by an election held after July 1, 1980. No bonds authorized to be issued by an election held after July 1, 1980 may be issued more than six years after the date of the election , EXCEPT THAT CLASS A BONDS SHALL NOT BE ISSUED AFTER DECEMBER 31, 1999 .

D. F. CLASS A bond proceeds shall not be expended for items whose useful life is less than the average life of the bonds issued, except that bond proceeds shall not be expended for items whose useful life is less than five years.

G. CLASS B BOND PROCEEDS SHALL NOT BE EXPENDED FOR SOFT CAPITAL ITEMS OR OTHER ITEMS WHOSE USEFUL LIFE IS LESS THAN THE AVERAGE USEFUL LIFE OF THE BONDS ISSUED, EXCEPT THAT BOND PROCEEDS SHALL NOT BE EXPENDED FOR ITEMS WHOSE USEFUL LIFE IS LESS THAN FIVE YEARS.

E. H. Notwithstanding subsection D SUBSECTIONS F AND G of this section, bond proceeds may be expended for purchasing pupil transportation vehicles whose useful life is less than the average life of the bonds issued.

F. This section does not affect bonds issued prior to July 1, 1980. This section does not affect the voted authorization for bonds authorized to be issued at an election held before July 1, 1980, and such bonds may be issued and sold after the date in the manner and upon the terms and conditions as provided by laws in effect prior to July 1, 1980, subject to the limitations contained in subsection C of this section.

Sec. 35. Title 15, chapter 9, article 7, Arizona Revised Statutes, is amended by adding section 15-1023.01, to read:

15-1023.01 . Municipal property corporation financing prohibited; definition

A. EXCEPT AS PROVIDED IN SUBSECTION C, A SCHOOL DISTRICT SHALL NOT DIRECTLY OR INDIRECTLY PLEDGE ITS FULL FAITH AND CREDIT NOR INCUR ANY DIRECT OR INDIRECT OBLIGATION OF ANY KIND AGAINST OR PAY SCHOOL DISTRICT REVENUES TO A MUNICIPAL PROPERTY CORPORATION OR A SPECIAL DISTRICT UNDER TITLE 48 AS A MEANS OF FINANCING THE ACQUISITION OR CONSTRUCTION OF SCHOOL CAPITAL FACILITIES.

B. THIS SECTION DOES NOT APPLY TO ANY VALID OBLIGATION INITIALLY INCURRED BY A SCHOOL DISTRICT ON OR BEFORE DECEMBER 31, 1998.

C. A SCHOOL DISTRICT MAY PLEDGE SCHOOL DISTRICT REVENUES TO A MUNICIPAL PROPERTY CORPORATION OR A SPECIAL DISTRICT UNDER TITLE 48 FOR THE PURPOSE OF CONSTRUCTING TEACHER HOUSING FACILITIES.

D. FOR PURPOSES OF THIS SECTION, "MUNICIPAL PROPERTY CORPORATION" MEANS A CORPORATION ORGANIZED BY OR AT THE DIRECTION OF A CITY, TOWN OR SCHOOL DISTRICT TO CONSTRUCT AND OWN A CAPITAL FACILITY THAT THE SCHOOL DISTRICT PLEDGES TO LEASE OR LEASE-PURCHASE AND FINANCE WITH SCHOOL DISTRICT REVENUES.

Sec. 36. Section 15-1102, Arizona Revised Statutes, is amended to read:

15-1102 . Disposition of proceeds from sale or lease of school property; school plant monies; payment of bonded indebtedness; school building start-up monies; definition

A. The governing board, or the superintendent or chief administrative officer with the approval of the governing board, may expend the proceeds from the sale or lease of school property for the payment of any outstanding bonded indebtedness of the school district or for the reduction of school district taxes.

B. A common school or high school district which has an outstanding bonded indebtedness of seven per cent of the current year's assessed valuation or less or a unified school district which has an outstanding bonded indebtedness of fourteen per cent of the current year's assessed valuation or less may expend the proceeds from the sale or lease of school property for maintenance and operation or capital outlay, subject to the following limitations:

1. During the period that proceeds from the sale or lease of school property are used for capital outlay, the school district shall not call an override election to exceed the capital outlay revenue limit, except that during the last year of that period the school district may authorize an override election to exceed the capital outlay revenue limit beginning with the following year.

2. The total sum of the proceeds from the sale of school property BEFORE JULY 1, 1998 or the lease of school property for more than one year expended for maintenance and operation shall not exceed fifteen per cent of the revenue control limit as provided in section 15-947, subsection A in any year of which ten per cent may be used without voter approval and an additional five per cent may be used if the additional amount is approved by a majority of the qualified electors voting in an election called for such purposes. The election shall be conducted and notice and ballots shall be prepared as provided in section 15-481. PROCEEDS FROM THE SALE OF SCHOOL PROPERTY FROM AND AFTER JUNE 30, 1998 SHALL NOT BE EXPENDED FOR MAINTENANCE AND OPERATION.

3. In any fiscal year in which a district utilizes budget increases as authorized in section 15-481, subsection E or F or section 15-482 or utilizes the proceeds from the sale of school property BEFORE JULY 1, 1998 or the lease of school property for more than one year for maintenance and operation or any combination of these provisions, the total amount of these increases which may be expended is equal to fifteen per cent of the revenue control limit for that year as provided in section 15-947, subsection A, provided that the following maximum amount is attributable to the use of any one provision:

(a) Fifteen per cent of the revenue control limit when using the proceeds from the sale BEFORE JULY 1, 1998 or lease of school property for maintenance and operation as provided in this section.

(b) Ten per cent of the revenue control limit when using a budget increase as provided in section 15-481, subsection E or F, or both.

(c) Five per cent of the revenue control limit when using a budget increase as provided in section 15-482.

C. A common school or high school district which has an outstanding bonded indebtedness of greater than seven per cent of the current year's assessed valuation or a unified school district which has an outstanding bonded indebtedness of greater than fourteen per cent of the current year's assessed valuation may expend the proceeds from the lease or sale of school property AS FOLLOWS:

1. For maintenance and operation or capital outlay. The amount for maintenance and operation from the lease of school property THE EXPENDITURE may not exceed the lesser of the limit in subsection B, paragraph 2 or 3 of this section or the amount of the proceeds from the lease of school property multiplied by .25.

2. The amount For capital outlay , THE EXPENDITURE OF THE PROCEEDS:

(a) From the sale of school property may not exceed the amount of the proceeds from the sale of school property, multiplied by .62. The amount for maintenance and operation from the sale of school property may not exceed the amount of the proceeds from the sale of school and operation property, not including the sale of portable classroom facilities, multiplied by .05.

(b) FROM THE LEASE OF SCHOOL PROPERTY IS NOT LIMITED.

D. The governing board, or the superintendent or chief administrative officer with the approval of the governing board, shall promptly deposit monies received for and derived from the sale or lease of school property with the county treasurer who shall establish two THREE school plant funds, one fund for monies received from the sale BEFORE JULY 1, 1998 or lease of school property for more than one year , ONE FUND FOR MONIES RECEIVED FROM THE SALE OF SCHOOL PROPERTY FROM AND AFTER JUNE 30, 1998 and one fund for monies received from the lease of school property for one year or less. The county treasurer shall credit the deposits to the respective school plant fund of the respective school district. Monies placed to the credit of the school plant funds may be expended as provided in this section. The school plant funds are continuing funds not subject to reversion.

E. Notwithstanding subsection C of this section, the governing board, or the superintendent or chief administrative officer with the approval of the governing board, may expend the proceeds from the sale BEFORE JULY 1, 1998 or lease of school property for the additional maintenance and operations expenses incurred as the result of operating on a year-round school year operation basis pursuant to section 15-855. The amount that the governing board, superintendent or chief administrative officer may expend for a year-round school year operation, as provided in this subsection, is limited to the actual maintenance and operations costs incurred as the result of the year-round school year operation as documented in the school district's budget as provided in section 15-855. A governing board, superintendent or chief administrative officer that utilizes the provisions of this subsection is subject to all other limitations prescribed in this section regarding the expenditure of proceeds from the sale BEFORE JULY 1, 1998 or lease of school property.

F. Notwithstanding subsections B and D of this section, if the school district electors approve the sale of school property and the use of the proceeds for the purchase of school sites or the construction, improvement or furnishing of school buildings, the proceeds from the sale shall be put in a separate fund for use for the approved purpose as prescribed by the uniform system of financial records. This fund is a continuing fund not subject to reversion, except that after ten years any unexpended monies shall be put in the school plant fund for use as prescribed in this section.

G. Proceeds from sales by condemnation or sales under threat of condemnation may be deposited with the county treasurer for deposit in the condemnation fund or the school plant fund of the school district. The condemnation fund is a continuing fund not subject to reversion, except that after ten years any unspent monies shall be placed in the school plant fund to be used as prescribed in this section. The governing board, or the superintendent or chief administrative officer with the approval of the governing board, may apply the proceeds in the condemnation fund to:

1. The payment of any outstanding bonded indebtedness of the school district which is payable from the levy of taxes upon property within the school district.

2. Construct, acquire, improve, repair or furnish school buildings or sites after notice and A hearing pursuant to section 15-962, subsection D .

H. Proceeds from a right-of-way settlement shall be deposited with the county treasurer for deposit in the condemnation fund of the school district. The governing board, or the superintendent or chief administrative officer with the approval of the governing board, shall apply such proceeds in the condemnation fund to construct, acquire, improve, repair or furnish school buildings or sites after notice and A hearing pursuant to section 15-962, subsection D .

I. Notwithstanding subsections A and B of this section, if a school district receives monies from the sale or lease of a portable classroom facility, the school district may deposit up to fifty per cent of the proceeds from the sale or lease in a school building start-up fund. Monies placed in the school building start-up fund shall be used for the construction of new school buildings. A school district's school building start-up fund is a continuing fund and is not subject to reversion.

I. FOR PURPOSES OF THIS SECTION, "CAPITAL OUTLAY" MEANS UNRESTRICTED CAPITAL OUTLAY AS PRESCRIBED IN SECTION 15-903, SUBSECTION C.

Sec. 37. Section 15-1103, Arizona Revised Statutes, is amended to read:

15-1103 . Insurance proceeds fund; disposition of proceeds

A. Monies received for and derived from insurance losses shall be deposited with the county treasurer who shall credit the deposits to the insurance proceeds fund of the respective school district. The insurance proceeds fund of a school district is a continuing fund not subject to reversion.

B. The governing board, or the superintendent or chief administrative officer with the approval of the governing board, may apply the proceeds from insurance recoveries to the payment of any outstanding bonded indebtedness of the school district which is payable from the levy of taxes upon property within the school district.

C. The governing board, or the superintendent or chief administrative officer with the approval of the governing board, may apply the proceeds of insurance recoveries to construct, acquire, improve, repair or furnish school buildings after notice and A hearing pursuant to section 15-962, subsection D .

Sec. 38. Section 15-1107, Arizona Revised Statutes, is amended to read:

15-1107 . Litigation recovery fund; disposition of proceeds

A. Monies received for and derived from settlement of legal controversies or from recovery of costs, attorney fees or damages by a school district in litigation by or against the school district shall be deposited with the county treasurer who shall credit the deposits to the litigation recovery fund of the school district. The litigation recovery fund is a continuing fund which is not subject to reversion.

B. If a school district receives monies as provided in subsection A of this section for the purpose of replacing or repairing school buildings or other school property, the governing board, or the superintendent or chief administrative officer with the approval of the governing board, may only apply the proceeds to:

1. Pay any outstanding bonded indebtedness of the school district which is payable from the levy of taxes on property within the school district.

2. Construct, acquire, improve, repair or furnish school buildings after notice and A hearing pursuant to section 15-962, subsection D .

3. Replace or repair the school property other than school buildings.

C. Except as provided in subsection B of this section , the governing board, or the superintendent or chief administrative officer with the approval of the governing board, may apply the proceeds of litigation recoveries to procure legal services or for the costs of litigation.

Sec. 39. Title 15, Arizona Revised Statutes, is amended by adding chapter 16, to read:

chapter 16 School capital finance

article 1. School facilities board

15-2001 . School facilities board; conflict of interest; classification

A. THE SCHOOL FACILITIES BOARD IS ESTABLISHED CONSISTING OF THE FOLLOWING MEMBERS WHO SHALL BE APPOINTED BY THE GOVERNOR PURSUANT TO SECTION 38-211 IN SUCH A MANNER AS TO PROVIDE FOR APPROXIMATE GEOGRAPHIC BALANCE AND APPROXIMATE BALANCE BETWEEN PUBLIC AND PRIVATE MEMBERS:

1. ONE MEMBER WHO IS AN ELECTED MEMBER OF A SCHOOL DISTRICT GOVERNING BOARD WITH KNOWLEDGE AND EXPERIENCE IN THE AREA OF FINANCE.

2. ONE PRIVATE CITIZEN WHO REPRESENTS AN ORGANIZATION OF TAXPAYERS.

3. ONE MEMBER WITH KNOWLEDGE AND EXPERIENCE IN SCHOOL CONSTRUCTION.

4. ONE MEMBER WHO IS A REGISTERED PROFESSIONAL ARCHITECT AND WHO HAS CURRENT KNOWLEDGE AND EXPERIENCE IN SCHOOL ARCHITECTURE.

5. ONE MEMBER WITH KNOWLEDGE AND EXPERIENCE IN SCHOOL FACILITIES MANAGEMENT IN A PUBLIC SCHOOL SYSTEM.

6. ONE MEMBER WITH KNOWLEDGE AND EXPERIENCE IN DEMOGRAPHICS.

7. ONE MEMBER WHO IS A TEACHER AND WHO CURRENTLY PROVIDES CLASSROOM INSTRUCTION.

8. ONE MEMBER WHO IS A REGISTERED PROFESSIONAL ENGINEER AND WHO HAS CURRENT KNOWLEDGE AND EXPERIENCE IN SCHOOL ENGINEERING.

9. ONE MEMBER WHO IS AN OWNER OR OFFICER OF A PRIVATE BUSINESS.

B. IN ADDITION TO THE MEMBERS APPOINTED PURSUANT TO SUBSECTION A OF THIS SECTION, THE SUPERINTENDENT OF PUBLIC INSTRUCTION OR THE SUPERINTENDENT'S DESIGNEE SHALL SERVE AS AN ADVISORY NONVOTING MEMBER OF THE SCHOOL FACILITIES BOARD.

C. THE GOVERNOR SHALL APPOINT A CHAIRPERSON PURSUANT TO SECTION 38-211 FROM MEMBERS APPOINTED PURSUANT TO SUBSECTION A OF THIS SECTION.

D. MEMBERS OF THE SCHOOL FACILITIES BOARD SERVE FOUR YEAR TERMS. THE SCHOOL FACILITIES BOARD SHALL MEET AS OFTEN AS THE MEMBERS DEEM NECESSARY. A MAJORITY OF THE MEMBERS CONSTITUTES A QUORUM FOR THE TRANSACTION OF BUSINESS.

E. THE UNEXCUSED ABSENCE OF A MEMBER FOR MORE THAN THREE CONSECUTIVE MEETINGS IS JUSTIFICATION FOR REMOVAL BY A MAJORITY VOTE OF THE BOARD. IF THE MEMBER IS REMOVED, NOTICE SHALL BE GIVEN OF THE REMOVAL PURSUANT TO SECTION 38-292.

F. THE GOVERNOR SHALL FILL A VACANCY BY APPOINTMENT OF A QUALIFIED PERSON AS PROVIDED IN SUBSECTION A OF THIS SECTION.

G. MEMBERS OF THE BOARD WHO ARE EMPLOYED BY GOVERNMENT ENTITIES ARE NOT ELIGIBLE TO RECEIVE COMPENSATION. MEMBERS OF THE BOARD WHO ARE NOT EMPLOYED BY GOVERNMENT ENTITIES ARE ENTITLED TO PAYMENT OF ONE HUNDRED FIFTY DOLLARS FOR EACH MEETING ATTENDED, PRORATED FOR PARTIAL DAYS SPENT FOR EACH MEETING, UP TO TWO THOUSAND FIVE HUNDRED DOLLARS EACH YEAR. ALL MEMBERS ARE ELIGIBLE FOR REIMBURSEMENT OF EXPENSES PURSUANT TO TITLE 38, CHAPTER 4, ARTICLE 2. THESE EXPENSES AND THE PAYMENT OF COMPENSATION ARE PAYABLE TO A MEMBER FROM MONIES APPROPRIATED TO THE BOARD FROM THE NEW SCHOOL FACILITIES FUND.

H. MEMBERS OF THE SCHOOL FACILITIES BOARD ARE SUBJECT TO TITLE 38, CHAPTER 3, ARTICLE 8. A MEMBER OR EMPLOYEE OF THE SCHOOL FACILITIES BOARD SHALL NOT HAVE A DIRECT OR INDIRECT FINANCIAL INTEREST IN ANY PROPERTY PURCHASED, FACILITY CONSTRUCTED OR CONTRACT FINANCED WITH MONIES MADE AVAILABLE BY THE BOARD OR ANY OTHER PUBLIC MONIES. A VIOLATION OF THIS SUBSECTION IS A CLASS 1 MISDEMEANOR.

15-2002 . Powers and duties; executive director; staffing; report

A. THE SCHOOL FACILITIES BOARD SHALL:

1. MAKE ASSESSMENTS OF SCHOOL FACILITIES AND EQUIPMENT DEFICIENCIES PURSUANT TO SECTION 15-2021 AND APPROVE THE DISTRIBUTION OF GRANTS AS APPROPRIATE.

2. DEVELOP A DATA BASE FOR ADMINISTERING THE BUILDING RENEWAL FORMULA PRESCRIBED IN SECTION 15-2031 AND ADMINISTER THE DISTRIBUTION OF MONIES TO SCHOOL DISTRICTS FOR BUILDING RENEWAL.

3. INSPECT SCHOOL BUILDINGS AT LEAST ONCE EVERY FIVE YEARS TO ENSURE COMPLIANCE WITH THE BUILDING ADEQUACY STANDARDS PRESCRIBED IN SECTION 15-2011 WITH RESPECT TO CONSTRUCTION OF NEW BUILDINGS AND MAINTENANCE OF EXISTING BUILDINGS.

4. REVIEW AND APPROVE STUDENT POPULATION PROJECTIONS SUBMITTED BY SCHOOL DISTRICTS TO DETERMINE TO WHAT EXTENT SCHOOL DISTRICTS ARE ENTITLED TO MONIES TO CONSTRUCT NEW FACILITIES PURSUANT TO SECTION 15-2041. THE BOARD SHALL MAKE A DETERMINATION AS TO ADMINISTRATIVE COMPLETION WITHIN ONE MONTH OF THE RECEIPT OF AN APPLICATION BY A SCHOOL DISTRICT FOR MONIES FROM THE NEW SCHOOL FACILITIES FUND. THE BOARD SHALL MAKE A FINAL DETERMINATION WITHIN SIX MONTHS OF THE RECEIPT OF AN APPLICATION BY A SCHOOL DISTRICT FOR MONIES FROM THE NEW SCHOOL FACILITIES FUND.

5. CERTIFY THAT PLANS FOR NEW SCHOOL FACILITIES MEET THE BUILDING ADEQUACY STANDARDS PRESCRIBED IN SECTION 15-2011.

6. PROVIDE TECHNICAL SUPPORT TO SCHOOL DISTRICTS AS REQUESTED BY SCHOOL DISTRICTS IN CONNECTION WITH THE CONSTRUCTION OF NEW SCHOOL FACILITIES AND THE MAINTENANCE OF EXISTING SCHOOL FACILITIES.

7. DEVELOP PROTOTYPICAL ELEMENTARY AND HIGH SCHOOL DESIGNS. THE BOARD SHALL REVIEW THE DESIGN DIFFERENCES BETWEEN THE SCHOOLS WITH THE HIGHEST ACADEMIC PRODUCTIVITY SCORES AND THE SCHOOLS WITH THE LOWEST ACADEMIC PRODUCTIVITY SCORES. THE BOARD SHALL ALSO REVIEW THE RESULTS OF A VALID AND RELIABLE SURVEY OF PARENT QUALITY RATING IN THE HIGHEST PERFORMING SCHOOLS AND THE LOWEST PERFORMING SCHOOLS IN THIS STATE. THE SURVEY OF PARENT QUALITY RATING SHALL BE ADMINISTERED BY THE DEPARTMENT OF EDUCATION. THE BOARD SHALL CONSIDER THE DESIGN ELEMENTS OF THE SCHOOLS WITH THE HIGHEST ACADEMIC PRODUCTIVITY SCORES AND PARENT QUALITY RATINGS IN THE DEVELOPMENT OF ELEMENTARY AND HIGH SCHOOL DESIGNS. THE BOARD SHALL DEVELOP SEPARATE SCHOOL DESIGNS FOR ELEMENTARY, MIDDLE AND HIGH SCHOOLS WITH VARYING PUPIL CAPACITIES.

8. DEVELOP APPLICATION FORMS, REPORTING FORMS AND PROCEDURES TO CARRY OUT THE REQUIREMENTS OF THIS ARTICLE.

9. REVIEW AND APPROVE OR REJECT REQUESTS SUBMITTED BY SCHOOL DISTRICTS TO TAKE ACTIONS PURSUANT TO SECTION 15-341, SUBSECTION E.

10. SUBMIT AN ANNUAL REPORT BY DECEMBER 15 TO THE SPEAKER OF THE HOUSE OF REPRESENTATIVES, THE PRESIDENT OF THE SENATE, THE SUPERINTENDENT OF PUBLIC INSTRUCTION, THE DEPARTMENT OF LIBRARY, ARCHIVES AND PUBLIC RECORDS AND THE GOVERNOR THAT INCLUDES THE FOLLOWING INFORMATION:

(a) A DETAILED DESCRIPTION OF THE AMOUNT OF MONIES DISTRIBUTED BY THE SCHOOL FACILITIES BOARD IN THE PREVIOUS FISCAL YEAR.

(b) A LIST OF EACH CAPITAL PROJECT THAT RECEIVED MONIES FROM THE SCHOOL FACILITIES BOARD DURING THE PREVIOUS FISCAL YEAR, A BRIEF DESCRIPTION OF EACH PROJECT THAT WAS FUNDED AND A SUMMARY OF THE BOARD'S REASONS FOR THE DISTRIBUTION OF MONIES FOR THE PROJECT.

(c) A SUMMARY OF THE FINDINGS AND CONCLUSIONS OF THE BUILDING MAINTENANCE INSPECTIONS CONDUCTED PURSUANT TO THIS ARTICLE DURING THE PREVIOUS FISCAL YEAR.

(d) A SUMMARY OF THE FINDINGS OF COMMON DESIGN ELEMENTS AND CHARACTERISTICS OF THE HIGHEST PERFORMING SCHOOLS AND THE LOWEST PERFORMING SCHOOLS BASED ON ACADEMIC PRODUCTIVITY INCLUDING THE RESULTS OF THE PARENT QUALITY RATING SURVEY.

(e) FOR THE PURPOSES OF THIS PARAGRAPH, "ACADEMIC PRODUCTIVITY" MEANS ACADEMIC YEAR ADVANCEMENT PER CALENDAR YEAR AS MEASURED WITH STUDENT-LEVEL DATA USING THE STATEWIDE NATIONALLY STANDARDIZED NORM-REFERENCED ACHIEVEMENT TEST.

11. BY DECEMBER 1 OF EACH FISCAL YEAR, REPORT TO THE JOINT COMMITTEE ON CAPITAL REVIEW THE ESTIMATED AMOUNTS NECESSARY TO FULFILL THE REQUIREMENTS OF SECTIONS 15-2021, 15-2031 AND 15-2041 FOR THE FOLLOWING FISCAL YEAR. NO LATER THAN JANUARY 1 OF EACH YEAR, THE BOARD SHALL INSTRUCT THE STATE TREASURER AS TO THE AMOUNTS UNDER THE TRANSACTION PRIVILEGE TAX TO BE CREDITED IN EQUAL QUARTERLY INSTALLMENTS FOR THE FOLLOWING STATE FISCAL YEAR. THE BOARD SHALL PROVIDE COPIES OF BOTH REPORTS TO THE PRESIDENT OF THE SENATE, THE SPEAKER OF THE HOUSE OF REPRESENTATIVES AND THE GOVERNOR.

12. ADOPT MINIMUM SCHOOL FACILITY ADEQUACY GUIDELINES TO PROVIDE THE MINIMUM QUALITY AND QUANTITY SCHOOL BUILDINGS AND THE FACILITIES AND EQUIPMENT NECESSARY AND APPROPRIATE TO ENABLE PUPILS TO ACHIEVE THE EDUCATIONAL GOALS OF THE ARIZONA STATE SCHOOLS FOR THE DEAF AND THE BLIND. THE SCHOOL FACILITIES BOARD SHALL ESTABLISH MINIMUM SCHOOL FACILITY ADEQUACY GUIDELINES APPLICABLE TO THE ARIZONA STATE SCHOOLS FOR THE DEAF AND THE BLIND BY JANUARY 31, 2000.

B. THE SCHOOL FACILITIES BOARD MAY CONTRACT FOR PRIVATE SERVICES IN COMPLIANCE WITH THE PROCUREMENT PRACTICES PRESCRIBED IN TITLE 41, CHAPTER 23.

C. THE GOVERNOR SHALL APPOINT AN EXECUTIVE DIRECTOR OF THE SCHOOL FACILITIES BOARD PURSUANT TO SECTION 38-211. THE EXECUTIVE DIRECTOR IS ELIGIBLE TO RECEIVE COMPENSATION AS DETERMINED PURSUANT TO SECTION 38-611 AND MAY HIRE AND FIRE NECESSARY STAFF AS APPROVED BY THE LEGISLATURE IN THE BUDGET. THE EXECUTIVE DIRECTOR SHALL HAVE DEMONSTRATED COMPETENCY IN SCHOOL FINANCE, FACILITIES DESIGN OR FACILITIES MANAGEMENT, EITHER IN PRIVATE BUSINESS OR GOVERNMENT SERVICE. THE EXECUTIVE DIRECTOR SERVES AT THE PLEASURE OF THE GOVERNOR. THE STAFF OF THE SCHOOL FACILITIES BOARD IS EXEMPT FROM TITLE 41, CHAPTER 4, ARTICLES 5 AND 6. THE EXECUTIVE DIRECTOR:

1. SHALL ANALYZE APPLICATIONS FOR MONIES SUBMITTED TO THE BOARD BY SCHOOL DISTRICTS.

2. SHALL ASSIST THE BOARD IN DEVELOPING FORMS AND PROCEDURES FOR THE DISTRIBUTION AND REVIEW OF APPLICATIONS AND THE DISTRIBUTION OF MONIES TO SCHOOL DISTRICTS.

3. MAY REVIEW OR AUDIT, OR BOTH, THE EXPENDITURE OF MONIES BY A SCHOOL DISTRICT FOR DEFICIENCIES CORRECTIONS, BUILDING RENEWAL AND NEW SCHOOL FACILITIES.

4. SHALL ASSIST THE BOARD IN THE PREPARATION OF THE BOARD'S ANNUAL REPORT.

5. SHALL RESEARCH AND PROVIDE REPORTS ON ISSUES OF GENERAL INTEREST TO THE BOARD.

6. MAY AID SCHOOL DISTRICTS IN THE DEVELOPMENT OF REASONABLE AND COST-EFFECTIVE SCHOOL DESIGNS IN ORDER TO AVOID STATEWIDE DUPLICATED EFFORTS AND UNWARRANTED EXPENDITURES IN THE AREA OF SCHOOL DESIGN.

7. MAY ASSIST SCHOOL DISTRICTS IN FACILITATING THE DEVELOPMENT OF MULTIJURISDICTIONAL FACILITIES.

8. SHALL ASSIST THE BOARD IN ANY OTHER APPROPRIATE MATTER OR METHOD AS DIRECTED BY THE MEMBERS OF THE BOARD.

9. SHALL ESTABLISH PROCEDURES TO ENSURE COMPLIANCE WITH THE NOTICE AND HEARING REQUIREMENTS PRESCRIBED IN SECTION 15-905.

10. MAY EXPEDITE ANY REQUEST FOR FUNDS IN WHICH THE LOCAL MATCH WAS NOT OBTAINED FOR A PROJECT THAT RECEIVED PRELIMINARY APPROVAL BY THE STATE BOARD FOR SCHOOL CAPITAL FACILITIES.

11. SHALL EXPEDITE ANY REQUEST FOR FUNDS IN WHICH THE SCHOOL DISTRICT GOVERNING BOARD SUBMITS AN APPLICATION THAT SHOWS AN IMMEDIATE NEED FOR A NEW SCHOOL FACILITY.

D. WHEN APPROPRIATE, THE SCHOOL FACILITIES BOARD SHALL REVIEW AND USE THE STATEWIDE SCHOOL FACILITIES INVENTORY AND NEEDS ASSESSMENT CONDUCTED BY THE JOINT COMMITTEE ON CAPITAL REVIEW AND ISSUED IN JULY, 1995.

E. THE SCHOOL FACILITIES BOARD SHALL CONTRACT WITH ONE OR MORE PRIVATE BUILDING INSPECTORS TO COMPLETE AN INITIAL ASSESSMENT OF SCHOOL FACILITIES AND EQUIPMENT DEFINED PURSUANT TO SECTION 15-2021 AND TO INSPECT EACH SCHOOL BUILDING IN THIS STATE AT LEAST ONCE EVERY FIVE YEARS TO ENSURE COMPLIANCE WITH SECTION 15-2011. A COPY OF THE INSPECTION REPORT, TOGETHER WITH ANY RECOMMENDATIONS FOR BUILDING MAINTENANCE, SHALL BE PROVIDED TO THE SCHOOL FACILITIES BOARD AND THE GOVERNING BOARD OF THE SCHOOL DISTRICT.

F. THE SCHOOL FACILITIES BOARD MAY CONSIDER APPROPRIATE COMBINATIONS OF FACILITIES OR USES IN MAKING ASSESSMENTS OF AND CURING DEFICIENCIES PURSUANT TO SUBSECTION A, PARAGRAPH 1 OF THIS SECTION AND IN CERTIFYING PLANS FOR NEW SCHOOL FACILITIES PURSUANT TO SUBSECTION A, PARAGRAPH 5 OF THIS SECTION.

G. THE BOARD SHALL NOT AWARD ANY MONIES TO FUND NEW FACILITIES THAT ARE FINANCED BY CLASS A BONDS THAT ARE ISSUED BY THE SCHOOL DISTRICT.

15-2003 . Capital reserve fund

A. A CAPITAL RESERVE FUND IS ESTABLISHED CONSISTING OF MONIES THAT ARE CREDITED TO THE FUND FROM THE NEW SCHOOL FACILITIES FUND ESTABLISHED BY SECTION 15-2041, SUBSECTION A.

B. THE SCHOOL FACILITIES BOARD SHALL ADMINISTER THE FUND. ON NOTICE FROM THE SCHOOL FACILITIES BOARD, THE STATE TREASURER SHALL INVEST AND REINVEST MONIES IN THE FUND AS PROVIDED BY SECTION 35-313, AND MONIES EARNED ON INVESTMENTS SHALL BE CREDITED TO THE CAPITAL RESERVE FUND.

C. MONIES IN THE CAPITAL RESERVE FUND ARE SUBJECT TO LEGISLATIVE APPROPRIATION ONLY TO THE DEFICIENCIES CORRECTION FUND ESTABLISHED BY SECTION 15-2021 OR THE NEW SCHOOL FACILITIES FUND ESTABLISHED BY SECTION 15-2041.

article 2. building adequacy standards

15-2011 . Minimum school facility adequacy requirements; definition

A. THE SCHOOL FACILITIES BOARD SHALL, AS DETERMINED AND PRESCRIBED IN THIS CHAPTER, PROVIDE FUNDING TO SCHOOL DISTRICTS FOR NEW CONSTRUCTION AS THE PROJECTED NUMBER OF PUPILS IN THE DISTRICT WILL FILL THE EXISTING SCHOOL FACILITIES AND REQUIRE MORE PUPIL SPACE.

B. SCHOOL BUILDINGS IN A SCHOOL DISTRICT ARE ADEQUATE IF ALL OF THE FOLLOWING REQUIREMENTS ARE MET:

1. THE BUILDINGS CONTAIN SUFFICIENT AND APPROPRIATE SPACE AND EQUIPMENT THAT COMPLY WITH THE MINIMUM SCHOOL FACILITY GUIDELINES ESTABLISHED PURSUANT TO SUBSECTION E OF THIS SECTION. THE STATE SHALL NOT FUND FACILITIES FOR ELECTIVE COURSES THAT REQUIRE THE SCHOOL DISTRICT FACILITIES TO EXCEED MINIMUM SCHOOL FACILITY ADEQUACY REQUIREMENTS. THE SCHOOL FACILITIES BOARD SHALL DETERMINE WHETHER A SCHOOL BUILDING MEETS THE REQUIREMENTS OF THIS PARAGRAPH BY ANALYZING THE TOTAL SQUARE FOOTAGE THAT IS AVAILABLE FOR EACH PUPIL IN CONJUNCTION WITH THE NEED FOR SPECIALIZED SPACES AND EQUIPMENT.

2. THE BUILDINGS ARE IN COMPLIANCE WITH FEDERAL, STATE AND LOCAL BUILDING AND FIRE CODES AND LAWS THAT ARE APPLICABLE TO THE PARTICULAR BUILDING. AN EXISTING SCHOOL BUILDING IS NOT REQUIRED TO COMPLY WITH CURRENT REQUIREMENTS FOR NEW BUILDINGS UNLESS THIS COMPLIANCE IS SPECIFICALLY MANDATED BY LAW OR BY THE BUILDING OR FIRE CODE OF THE JURISDICTION WHERE THE BUILDING IS LOCATED.

3. THE BUILDING SYSTEMS, INCLUDING ROOFS, PLUMBING, TELEPHONE SYSTEMS, ELECTRICAL SYSTEMS, HEATING SYSTEMS AND COOLING SYSTEMS, ARE IN WORKING ORDER AND ARE CAPABLE OF BEING PROPERLY MAINTAINED.

4. THE BUILDINGS ARE STRUCTURALLY SOUND.

C. THE STANDARDS THAT SHALL BE USED BY THE SCHOOL FACILITIES BOARD TO DETERMINE WHETHER A SCHOOL BUILDING MEETS THE MINIMUM ADEQUATE GROSS SQUARE FOOTAGE REQUIREMENTS ARE AS FOLLOWS:

1. FOR A SCHOOL DISTRICT THAT PROVIDES INSTRUCTION TO PUPILS IN PROGRAMS FOR PRESCHOOL CHILDREN WITH DISABILITIES, KINDERGARTEN PROGRAMS AND GRADES ONE THROUGH SIX, EIGHTY SQUARE FEET PER PUPIL IN PROGRAMS FOR PRESCHOOL CHILDREN WITH DISABILITIES, KINDERGARTEN PROGRAMS AND GRADES ONE THROUGH SIX.

2. FOR A SCHOOL DISTRICT THAT PROVIDES INSTRUCTION TO UP TO EIGHT HUNDRED PUPILS IN GRADES SEVEN AND EIGHT, EIGHTY-FOUR SQUARE FEET PER PUPIL IN GRADES SEVEN AND EIGHT.

3. FOR A SCHOOL DISTRICT THAT PROVIDES INSTRUCTION TO MORE THAN EIGHT HUNDRED PUPILS IN GRADES SEVEN AND EIGHT, EIGHTY SQUARE FEET PER PUPIL IN GRADES SEVEN AND EIGHT OR SIXTY-SEVEN THOUSAND TWO HUNDRED SQUARE FEET, WHICHEVER IS MORE.

4. FOR A SCHOOL DISTRICT THAT PROVIDES INSTRUCTION TO UP TO FOUR HUNDRED PUPILS IN GRADES NINE THROUGH TWELVE, ONE HUNDRED TWENTY-FIVE SQUARE FEET PER PUPIL IN GRADES NINE THROUGH TWELVE.

5. FOR A SCHOOL DISTRICT THAT PROVIDES INSTRUCTION TO MORE THAN FOUR HUNDRED AND UP TO ONE THOUSAND PUPILS IN GRADES NINE THROUGH TWELVE, ONE HUNDRED TWENTY SQUARE FEET PER PUPIL IN GRADES NINE THROUGH TWELVE OR FIFTY THOUSAND SQUARE FEET, WHICHEVER IS MORE.

6. FOR A SCHOOL DISTRICT THAT PROVIDES INSTRUCTION TO MORE THAN ONE THOUSAND AND UP TO ONE THOUSAND EIGHT HUNDRED PUPILS IN GRADES NINE THROUGH TWELVE, ONE HUNDRED TWELVE SQUARE FEET PER PUPIL IN GRADES NINE THROUGH TWELVE OR ONE HUNDRED TWENTY THOUSAND SQUARE FEET, WHICHEVER IS MORE.

7. FOR A SCHOOL DISTRICT THAT PROVIDES INSTRUCTION TO MORE THAN ONE THOUSAND EIGHT HUNDRED PUPILS IN GRADES NINE THROUGH TWELVE, NINETY-FOUR SQUARE FEET PER PUPIL IN GRADES NINE THROUGH TWELVE OR TWO HUNDRED ONE THOUSAND SIX HUNDRED SQUARE FEET, WHICHEVER IS MORE.

D. THE SCHOOL FACILITIES BOARD MAY MODIFY THE SQUARE FOOTAGE REQUIREMENTS PRESCRIBED IN SUBSECTION B OF THIS SECTION OR MODIFY THE AMOUNT OF MONIES AWARDED TO CURE THE SQUARE FOOTAGE DEFICIENCY PURSUANT TO THIS SECTION FOR PARTICULAR SCHOOL DISTRICTS BASED ON EXTRAORDINARY CIRCUMSTANCES FOR ANY OF THE FOLLOWING CONSIDERATIONS:

1. THE NUMBER OF PUPILS SERVED BY THE SCHOOL DISTRICT.

2. GEOGRAPHIC FACTORS.

3. GRADE CONFIGURATIONS OTHER THAN THOSE PRESCRIBED IN SUBSECTION B OF THIS SECTION.

E. IN MEASURING THE SQUARE FOOTAGE PER PUPIL REQUIREMENTS OF SUBSECTION B OF THIS SECTION, THE SCHOOL FACILITIES BOARD SHALL:

1. USE THE MOST RECENT ONE HUNDREDTH DAY AVERAGE DAILY MEMBERSHIP.

2. FOR EACH SCHOOL, USE THE LESSER OF EITHER:

( a) TOTAL GROSS SQUARE FOOTAGE.

( b ) STUDENT CAPACITY MULTIPLIED BY THE APPROPRIATE SQUARE FOOTAGE PER PUPIL PRESCRIBED BY SUBSECTION C OF THIS SECTION.

3. CONSIDER THE TOTAL SPACE AVAILABLE IN ALL SCHOOLS IN USE IN THE SCHOOL DISTRICT, EXCEPT THAT THE SCHOOL FACILITIES BOARD SHALL ALLOW AN EXCLUSION OF THE SQUARE FOOTAGE FOR CERTAIN SCHOOLS AND THE PUPILS WITHIN THE SCHOOLS' BOUNDARIES IF THE SCHOOL DISTRICT DEMONSTRATES UNUSUAL OR EXCESSIVE BUSING OF PUPILS OR UNUSUAL ATTENDANCE BOUNDARY CHANGES BETWEEN SCHOOLS TO THE BOARD'S SATISFACTION.

4. COMPUTE THE GROSS SQUARE FOOTAGE OF ALL BUILDINGS BY MEASURING FROM EXTERIOR WALL TO EXTERIOR WALL. BUILDINGS USED SOLELY FOR DISTRICT ADMINISTRATION, STORAGE OF VEHICLES AND OTHER NONACADEMIC PURPOSES SHALL BE EXCLUDED FROM THE GROSS SQUARE FOOTAGE.

5. INCLUDE ALL PORTABLE AND MODULAR BUILDINGS.

6. INCLUDE IN THE GROSS SQUARE FOOTAGE NEW CONSTRUCTION FUNDED WHOLLY OR PARTIALLY BY THE SCHOOL FACILITIES BOARD BASED ON THE SQUARE FOOTAGE FUNDED BY THE SCHOOL FACILITIES BOARD. IF THE NEW CONSTRUCTION IS TO EXCEED THE SQUARE FOOTAGE FUNDED BY THE SCHOOL FACILITIES BOARD, THEN THE EXCESS SQUARE FOOTAGE SHALL NOT BE INCLUDED IN THE GROSS SQUARE FOOTAGE.

F. THE SCHOOL FACILITIES BOARD SHALL ADOPT RULES ESTABLISHING MINIMUM SCHOOL FACILITY ADEQUACY GUIDELINES NO LATER THAN APRIL 30, 1999. THE EXECUTIVE DIRECTOR OF THE SCHOOL FACILITIES BOARD SHALL REPORT MONTHLY TO THE JOINT COMMITTEE ON CAPITAL REVIEW ON THE PROGRESS OF THE DEVELOPMENT OF THE PROPOSED RULES ESTABLISHING THE GUIDELINES. THE JOINT COMMITTEE ON CAPITAL REVIEW SHALL REVIEW THE PROPOSED GUIDELINES BEFORE THE SCHOOL FACILITIES BOARD ADOPTS THE RULES TO ESTABLISH THE MINIMUM SCHOOL FACILITY ADEQUACY GUIDELINES. THE GUIDELINES SHALL PROVIDE THE MINIMUM QUALITY AND QUANTITY OF SCHOOL BUILDINGS AND FACILITIES AND EQUIPMENT NECESSARY AND APPROPRIATE TO ENABLE PUPILS TO ACHIEVE THE ACADEMIC STANDARDS PURSUANT TO SECTION 15-203, SUBSECTION A, PARAGRAPHS 12 AND 13 AND SECTIONS 15-701 AND 15-701.01. AT A MINIMUM, THE SCHOOL FACILITIES BOARD SHALL ADDRESS ALL OF THE FOLLOWING IN DEVELOPING THESE GUIDELINES:

1. SCHOOL SITES.

2. CLASSROOMS.

3. LIBRARIES AND MEDIA CENTERS, OR BOTH.

4. CAFETERIAS.

5. AUDITORIUMS, MULTIPURPOSE ROOMS OR OTHER MULTIUSE SPACE.

6. TECHNOLOGY.

7. TRANSPORTATION.

8. FACILITIES FOR SCIENCE, ARTS AND PHYSICAL EDUCATION.

9. OTHER FACILITIES AND EQUIPMENT THAT ARE NECESSARY AND APPROPRIATE TO ACHIEVE THE ACADEMIC STANDARDS PRESCRIBED PURSUANT TO SECTION 15-203, SUBSECTION A, PARAGRAPHS 12 AND 13 AND SECTIONS 15-701 AND 15-701.01.

10. APPROPRIATE COMBINATIONS OF FACILITIES OR USES LISTED IN THIS SECTION.

G. THE BOARD SHALL CONSIDER THE FACILITIES AND EQUIPMENT OF THE SCHOOLS WITH THE HIGHEST ACADEMIC PRODUCTIVITY SCORES, AS PRESCRIBED IN SECTION 15-2002, SUBSECTION A, PARAGRAPH 10, SUBDIVISION (e) , AND THE HIGHEST PARENT QUALITY RATINGS IN THE ESTABLISHMENT OF THE GUIDELINES.

H. THE SCHOOL FACILITIES BOARD MAY CONSIDER APPROPRIATE COMBINATIONS OF FACILITIES OR USES IN MAKING ASSESSMENTS OF AND CURING EXISTING DEFICIENCIES PURSUANT TO SUBSECTION A, PARAGRAPH 1 OF THIS SECTION AND IN CERTIFYING PLANS FOR NEW SCHOOL FACILITIES PURSUANT TO SUBSECTION A, PARAGRAPH 5.

I. FOR PURPOSES OF THIS SECTION, "STUDENT CAPACITY" MEANS THE CAPACITY ADJUSTED TO INCLUDE ANY ADDITIONS TO OR DELETIONS OF SPACE, INCLUDING MODULAR OR PORTABLE BUILDINGS AT THE SCHOOL. THE SCHOOL FACILITIES BOARD SHALL DETERMINE THE STUDENT CAPACITY FOR EACH SCHOOL IN CONJUNCTION WITH EACH SCHOOL DISTRICT, RECOGNIZING EACH SCHOOL'S ALLOCATION OF SPACE AS OF JULY 1, 1998 TO ACHIEVE THE ACADEMIC STANDARDS PRESCRIBED PURSUANT TO SECTION 15-203, SUBSECTION A, PARAGRAPHS 12 AND 13 AND SECTIONS 15-701 AND 15-701.01.

article 3. deficiencies correction

15-2021 . Deficiencies correction fund

A. A DEFICIENCIES CORRECTION FUND IS ESTABLISHED CONSISTING OF MONIES APPROPRIATED BY THE LEGISLATURE AND MONIES CREDITED TO THE FUND PURSUANT TO SECTION 42-1342 OR 42-5030.01. THE SCHOOL FACILITIES BOARD SHALL ADMINISTER THE FUND AND DISTRIBUTE MONIES TO SCHOOL DISTRICTS FOR THE PURPOSE OF CORRECTING EXISTING DEFICIENCIES. MONIES IN THE FUND ARE CONTINUOUSLY APPROPRIATED AND ARE EXEMPT FROM THE PROVISIONS OF SECTION 35-190 RELATING TO LAPSING OF APPROPRIATIONS.

B. SCHOOL DISTRICTS ARE ELIGIBLE FOR MONIES FROM THE DEFICIENCIES CORRECTION FUND FOR EITHER OF THE FOLLOWING PURPOSES:

1. TO CORRECT ANY SQUARE FOOTAGE DEFICIENCY PURSUANT TO SECTION 15-2011. SCHOOL DISTRICTS SHALL SUBMIT A SUMMARY NOTICE ON A FORM PRESCRIBED BY THE SCHOOL FACILITIES BOARD THAT THE SCHOOL DISTRICT BELIEVES IT HAS A SQUARE FOOTAGE DEFICIENCY PURSUANT TO SECTION 15-2011, SUBSECTION C TO THE SCHOOL FACILITIES BOARD BY DECEMBER 1, 1998. IF THE SCHOOL DISTRICT EXCEEDS THE STANDARD BY TEN PER CENT OR MORE, THE SCHOOL DISTRICT MAY BE REQUIRED TO PAY FOR THE COST OF AN ON-SITE SPACE ASSESSMENT BY THE SCHOOL FACILITIES BOARD. BY JUNE 30, 1999, THE SCHOOL FACILITIES BOARD SHALL ASSESS ALL ALLEGED SQUARE FOOTAGE DEFICIENCIES FROM THE SCHOOL DISTRICT NOTICES.

2. TO CORRECT QUALITY DEFICIENCIES BASED ON THE DISTRICT'S INABILITY TO COMPLY WITH THE MINIMUM SCHOOL FACILITY ADEQUACY REQUIREMENTS ESTABLISHED IN AND PURSUANT TO SECTION 15-2011. THIS STATE SHALL NOT CORRECT QUALITY DEFICIENCIES PURSUANT TO THIS PARAGRAPH FOR ELECTIVE COURSES THAT REQUIRE THE SCHOOL DISTRICT FACILITIES TO EXCEED BUILDING ADEQUACY STANDARDS. SCHOOL DISTRICTS SHALL SUBMIT A SUMMARY NOTICE ON A FORM PRESCRIBED BY THE SCHOOL FACILITIES BOARD THAT THE SCHOOL DISTRICT HAS A QUALITY DEFICIENCY NEED TO THE SCHOOL FACILITIES BOARD BY AUGUST 1, 1999.

C. THE SCHOOL FACILITIES BOARD SHALL CALCULATE THE AMOUNT OF DISTRIBUTION BASED ON THE SQUARE FOOTAGE PRESCRIBED IN SECTION 15-2011, SUBSECTION C AND THE COST PER SQUARE FOOT BASED ON THE AMOUNTS PRESCRIBED IN SECTION 15-2041, SUBSECTION D, PARAGRAPH 3, SUBDIVISION ( c) .

D. THE SCHOOL FACILITIES BOARD MAY DISTRIBUTE MONIES FOR NEW CONSTRUCTION TO A SCHOOL DISTRICT IF THE BOARD DETERMINES AFTER ITS ASSESSMENT THAT THE NEW CONSTRUCTION IS MORE COST-EFFECTIVE THAN CORRECTING THE DEFICIENCIES IN THE EXISTING SCHOOL BUILDING OR BUILDINGS.

E. THE SCHOOL FACILITIES BOARD SHALL DISTRIBUTE MONIES TO SCHOOL DISTRICTS FROM THE DEFICIENCIES CORRECTION FUND IN AN AMOUNT APPROVED BY THE BOARD. THE SCHOOL FACILITIES BOARD SHALL REVIEW AND AWARD MONIES TO CORRECT DEFICIENCIES PURSUANT TO THIS SECTION BY JUNE 30, 2001 AND SHALL ENSURE THAT SCHOOL DISTRICTS CORRECT DEFICIENCIES PURSUANT TO THIS SECTION BY JUNE 30, 2003.

F. SCHOOL DISTRICTS THAT RECEIVE MONIES FROM THE DEFICIENCIES CORRECTION FUND SHALL ESTABLISH A SCHOOL DISTRICT DEFICIENCIES CORRECTION FUND AND SHALL USE THE MONIES IN THE SCHOOL DISTRICT DEFICIENCIES CORRECTION FUND ONLY FOR THE PURPOSES PRESCRIBED IN THIS SECTION. ENDING CASH BALANCES IN A SCHOOL DISTRICT'S DEFICIENCIES CORRECTION FUND MAY BE USED IN FOLLOWING FISCAL YEARS ONLY FOR THE PURPOSES PRESCRIBED IN THIS SECTION. EACH SCHOOL DISTRICT THAT RECEIVES MONIES FROM THE DEFICIENCIES CORRECTION FUND SHALL ANNUALLY REPORT THE EXPENDITURES IN THE PREVIOUS FISCAL YEAR TO THE SCHOOL FACILITIES BOARD BY OCTOBER 15 AND PROVIDE AN ACCOUNTING OF THE MONIES REMAINING IN THE DEFICIENCIES CORRECTION FUND AT THE END OF THE PREVIOUS FISCAL YEAR. THE SCHOOL FACILITIES BOARD SHALL SUBMIT A REPORT TO THE LEGISLATURE AND THE DEPARTMENT OF LIBRARY, ARCHIVES AND PUBLIC RECORDS BY DECEMBER 15, 1999 THAT INCLUDES A DETAILED COST ESTIMATE OF THE MONIES THAT WILL NEED TO BE APPROPRIATED TO CORRECT THE EXISTING DEFICIENCIES OF ALL SCHOOLS IN THIS STATE BY JUNE 30, 2003. THIS STATE SHALL ANNUALLY APPROPRIATE MONIES TO THE DEFICIENCIES CORRECTION FUND ESTABLISHED IN THIS SECTION IN ORDER TO CORRECT EXISTING DEFICIENCIES OF ALL SCHOOLS IN THIS STATE BY JUNE 30, 2003. article 4. building renewal

15-2031 . Building renewal fund; definition

A. A BUILDING RENEWAL FUND IS ESTABLISHED CONSISTING OF MONIES APPROPRIATED BY THE LEGISLATURE AND MONIES CREDITED TO THE FUND PURSUANT TO SECTION 42-1342 OR 42-5030.01. THE SCHOOL FACILITIES BOARD SHALL ADMINISTER THE FUND AND DISTRIBUTE MONIES TO SCHOOL DISTRICTS FOR THE PURPOSE OF MAINTAINING THE ADEQUACY OF EXISTING SCHOOL FACILITIES. MONIES IN THE FUND ARE CONTINUOUSLY APPROPRIATED AND ARE EXEMPT FROM THE PROVISIONS OF SECTION 35-190 RELATING TO LAPSING OF APPROPRIATIONS.

B. THE SCHOOL FACILITIES BOARD SHALL INVENTORY AND INSPECT ALL SCHOOL BUILDINGS IN THIS STATE IN ORDER TO DEVELOP A DATA BASE TO ADMINISTER THE BUILDING RENEWAL FORMULA. THE DATA BASE SHALL INCLUDE THE STUDENT CAPACITY OF THE BUILDING AS DETERMINED BY THE SCHOOL FACILITIES BOARD. THE BOARD SHALL DISTRIBUTE MONIES FROM THE BUILDING RENEWAL FUND TO SCHOOL DISTRICTS IN AN AMOUNT COMPUTED PURSUANT TO SUBSECTION G OF THIS SECTION. A SCHOOL DISTRICT THAT RECEIVES MONIES FROM THE BUILDING RENEWAL FUND SHALL USE THE MONIES PRIMARILY FOR ANY BUILDINGS IN THE DATA BASE DEVELOPED OR CREATED UNDER SUBSECTION D OF THIS SECTION AND SECONDLY FOR ANY OTHER BUILDINGS OWNED BY THE SCHOOL DISTRICT FOR ANY OF THE FOLLOWING:

1. MAJOR RENOVATIONS AND REPAIRS OF A BUILDING.

2. UPGRADING SYSTEMS AND AREAS THAT WILL MAINTAIN OR EXTEND THE USEFUL LIFE OF THE BUILDING.

3. INFRASTRUCTURE COSTS.

C. MONIES RECEIVED FROM THE BUILDING RENEWAL FUND SHALL NOT BE USED FOR ANY OF THE FOLLOWING PURPOSES:

1. NEW CONSTRUCTION.

2. REMODELING INTERIOR SPACE FOR AESTHETIC OR PREFERENTIAL REASONS.

3. EXTERIOR BEAUTIFICATION.

4. DEMOLITION.

5. THE PURCHASE OF SOFT CAPITAL ITEMS PURSUANT TO SECTION 15-962, SUBSECTION F.

6. ROUTINE MAINTENANCE.

D. THE SCHOOL FACILITIES BOARD SHALL MAINTAIN THE BUILDING RENEWAL DATA BASE AND USE THE DATA BASE FOR THE COMPUTATION OF THE BUILDING RENEWAL FORMULA DISTRIBUTIONS. THE BOARD SHALL ENSURE THAT THE DATA BASE IS UPDATED ON AT LEAST AN ANNUAL BASIS TO REFLECT CHANGES IN THE AGES AND VALUE OF SCHOOL BUILDINGS. THE FACILITIES LISTED IN THE DATA BASE SHALL INCLUDE ONLY THOSE BUILDINGS THAT ARE OWNED BY SCHOOL DISTRICTS THAT ARE REQUIRED TO MEET ACADEMIC STANDARDS. EACH SCHOOL DISTRICT SHALL REPORT TO THE SCHOOL FACILITIES BOARD NO LATER THAN SEPTEMBER 1 OF EACH YEAR THE NUMBER AND TYPE OF SCHOOL BUILDINGS OWNED BY THE DISTRICT, THE SQUARE FOOTAGE OF EACH BUILDING, THE AGE OF EACH BUILDING, THE NATURE OF ANY RENOVATIONS COMPLETED AND THE COST OF ANY RENOVATIONS COMPLETED. THE SCHOOL FACILITIES BOARD MAY REVIEW OR AUDIT, OR BOTH, TO CONFIRM THE INFORMATION SUBMITTED BY A SCHOOL DISTRICT. THE BOARD SHALL ADJUST THE AGE OF EACH SCHOOL FACILITY IN THE DATA BASE WHENEVER A BUILDING IS SIGNIFICANTLY UPGRADED OR REMODELED. THE AGE OF A BUILDING THAT HAS BEEN SIGNIFICANTLY UPGRADED OR REMODELED SHALL BE RECOMPUTED AS FOLLOWS:

1. DIVIDE THE COST OF THE RENOVATION BY THE BUILDING CAPACITY VALUE OF THE BUILDING DETERMINED IN SUBSECTION G, PARAGRAPH 3 OF THIS SECTION.

2. MULTIPLY THE QUOTIENT DETERMINED IN PARAGRAPH 1 OF THIS SUBSECTION BY THE CURRENTLY LISTED AGE OF THE BUILDING IN THE DATA BASE.

3. SUBTRACT THE PRODUCT DETERMINED IN PARAGRAPH 2 OF THIS SUBSECTION FROM THE CURRENTLY LISTED AGE OF THE BUILDING IN THE DATA BASE, ROUNDED TO THE NEAREST WHOLE NUMBER.

E. THE SCHOOL FACILITIES BOARD SHALL SUBMIT AN ANNUAL REPORT TO THE PRESIDENT OF THE SENATE, THE SPEAKER OF THE HOUSE OF REPRESENTATIVES, THE DEPARTMENT OF LIBRARY, ARCHIVES AND PUBLIC RECORDS AND THE GOVERNOR BY OCTOBER 1 THAT INCLUDES THE COMPUTATION OF THE AMOUNT OF MONIES TO BE DISTRIBUTED FROM THE BUILDING RENEWAL FUND FOR THE CURRENT FISCAL YEAR. THE JOINT COMMITTEE ON CAPITAL REVIEW SHALL REVIEW THE SCHOOL FACILITIES BOARD'S CALCULATION OF THE BUILDING RENEWAL FUND DISTRIBUTIONS. AFTER THE JOINT COMMITTEE ON CAPITAL REVIEW REVIEWS THE DISTRIBUTIONS COMPUTED BY THE SCHOOL FACILITIES BOARD, THE SCHOOL FACILITIES BOARD SHALL DISTRIBUTE THE MONIES APPROPRIATED BY THE LEGISLATURE FROM THE BUILDING RENEWAL FUND TO SCHOOL DISTRICTS IN TWO EQUAL INSTALLMENTS IN NOVEMBER AND MAY OF EACH YEAR.

F. SCHOOL DISTRICTS THAT RECEIVE MONIES FROM THE BUILDING RENEWAL FUND SHALL ESTABLISH A DISTRICT BUILDING RENEWAL FUND AND SHALL USE THE MONIES IN THE DISTRICT BUILDING RENEWAL FUND ONLY FOR THE PURPOSES PRESCRIBED IN SUBSECTION B OF THIS SECTION. ENDING CASH BALANCES IN A SCHOOL DISTRICT'S BUILDING RENEWAL FUND MAY BE USED IN FOLLOWING FISCAL YEARS FOR BUILDING RENEWAL PURSUANT TO SUBSECTION B OF THIS SECTION. BY OCTOBER 15 OF EACH YEAR, EACH SCHOOL DISTRICT SHALL REPORT TO THE SCHOOL FACILITIES BOARD THE PROJECTS FUNDED AT EACH SCHOOL IN THE PREVIOUS FISCAL YEAR WITH MONIES FROM THE BUILDING RENEWAL FUND AND SHALL PROVIDE AN ACCOUNTING OF THE MONIES REMAINING IN THE BUILDING RENEWAL FUND AT THE END OF THE PREVIOUS FISCAL YEAR.

G. NOTWITHSTANDING ANY OTHER PROVISION OF THIS CHAPTER, IF A SCHOOL DISTRICT CONVERTS SPACE THAT IS LISTED IN THE DATA BASE MAINTAINED PURSUANT TO THIS SECTION TO SPACE THAT WILL BE USED FOR ADMINISTRATIVE PURPOSES, THE SCHOOL DISTRICT IS RESPONSIBLE FOR ANY COSTS ASSOCIATED WITH THE CONVERSION, MAINTENANCE AND REPLACEMENT OF THAT SPACE. THE BUILDING RENEWAL AMOUNT FOR EACH SCHOOL BUILDING SHALL BE COMPUTED AS FOLLOWS:

1. DIVIDE THE AGE OF THE BUILDING AS COMPUTED PURSUANT TO SUBSECTION D OF THIS SECTION BY ONE THOUSAND TWO HUNDRED SEVENTY-FIVE OR, IN THE CASE OF MODULAR OR PORTABLE BUILDINGS, BY TWO HUNDRED TEN.

2. MULTIPLY THE QUOTIENT DETERMINED IN PARAGRAPH 1 OF THIS SUBSECTION BY 0.67.

3. DETERMINE THE BUILDING CAPACITY VALUE AS FOLLOWS:

(a) MULTIPLY THE STUDENT CAPACITY OF THE BUILDING BY THE PER STUDENT SQUARE FOOT DESIGN CAPACITY ESTABLISHED BY SECTION 15-2041.

(b) MULTIPLY THE PRODUCT DETERMINED IN SUBDIVISION (a) OF THIS PARAGRAPH BY THE PER SQUARE FOOT COST ESTABLISHED BY SECTION 15-2041.

4. MULTIPLY THE PRODUCT DETERMINED IN PARAGRAPH 2 OF THIS SUBSECTION BY THE PRODUCT DETERMINED IN PARAGRAPH 3, SUBDIVISION (b) OF THIS SUBSECTION.

H. IF THE SCHOOL FACILITIES BOARD DETERMINES THAT A SCHOOL DISTRICT HAS SPENT MONIES FROM THE BUILDING RENEWAL FUND FOR PURPOSES OTHER THAN THOSE PRESCRIBED IN SUBSECTION B OF THIS SECTION, THE SCHOOL FACILITIES BOARD SHALL NOTIFY THE SUPERINTENDENT OF PUBLIC INSTRUCTION. NOTWITHSTANDING ANY OTHER LAW, THE SUPERINTENDENT OF PUBLIC INSTRUCTION SHALL WITHHOLD A CORRESPONDING AMOUNT FROM THE MONIES THAT WOULD OTHERWISE BE DUE THE SCHOOL DISTRICT UNDER THE CAPITAL OUTLAY REVENUE LIMIT UNTIL THESE MONIES ARE REPAID.

I. FOR PURPOSES OF THIS SECTION, "STUDENT CAPACITY" HAS THE SAME MEANING PRESCRIBED IN SECTION 15-2011, SUBSECTION I.

article 5. new school facilities

15-2041 . New school facilities fund; capital plan

A. A NEW SCHOOL FACILITIES FUND IS ESTABLISHED CONSISTING OF MONIES APPROPRIATED BY THE LEGISLATURE AND MONIES CREDITED TO THE FUND PURSUANT TO SECTION 42-1342 OR 42-5030.01. THE SCHOOL FACILITIES BOARD SHALL ADMINISTER THE FUND AND DISTRIBUTE MONIES, AS A CONTINUING APPROPRIATION, TO SCHOOL DISTRICTS FOR THE PURPOSE OF CONSTRUCTING NEW SCHOOL FACILITIES. ON JUNE 30 OF EACH FISCAL YEAR, THE STATE TREASURER SHALL CREDIT ANY UNOBLIGATED IN CONTRACT MONIES IN THE NEW SCHOOL FACILITIES FUND TO THE CAPITAL RESERVE FUND ESTABLISHED BY SECTION 15-2003.

B. THE SCHOOL FACILITIES BOARD SHALL PRESCRIBE A UNIFORM FORMAT FOR USE BY THE SCHOOL DISTRICT GOVERNING BOARD IN DEVELOPING AND ANNUALLY UPDATING A CAPITAL PLAN THAT CONSISTS OF EACH OF THE FOLLOWING:

1. ENROLLMENT PROJECTIONS FOR THE NEXT FIVE YEARS FOR ELEMENTARY SCHOOLS AND EIGHT YEARS FOR MIDDLE AND HIGH SCHOOLS, INCLUDING A DESCRIPTION OF THE METHODS USED TO MAKE THE PROJECTIONS.

2. A DESCRIPTION OF NEW SCHOOLS OR ADDITIONS TO EXISTING SCHOOLS NEEDED TO MEET THE BUILDING ADEQUACY STANDARDS PRESCRIBED IN SECTION 15-2011. THE DESCRIPTION SHALL INCLUDE:

(a) THE GRADE LEVELS AND THE TOTAL NUMBER OF PUPILS THAT THE SCHOOL OR ADDITION IS INTENDED TO SERVE.

(b) THE YEAR IN WHICH IT IS NECESSARY FOR THE SCHOOL OR ADDITION TO BEGIN OPERATIONS.

(c) A TIMELINE THAT SHOWS THE PLANNING AND CONSTRUCTION PROCESS FOR THE SCHOOL OR ADDITION.

3. LONG-TERM PROJECTIONS OF THE NEED FOR LAND FOR NEW SCHOOLS.

4. ANY OTHER NECESSARY INFORMATION REQUIRED BY THE SCHOOL FACILITIES BOARD TO EVALUATE A SCHOOL DISTRICT'S CAPITAL PLAN.

C. IF THE CAPITAL PLAN INDICATES A NEED FOR A NEW SCHOOL OR AN ADDITION TO AN EXISTING SCHOOL WITHIN THE NEXT FOUR YEARS OR A NEED FOR LAND WITHIN THE NEXT TEN YEARS, THE SCHOOL DISTRICT SHALL SUBMIT ITS PLAN TO THE SCHOOL FACILITIES BOARD AND SHALL REQUEST MONIES FROM THE NEW SCHOOL FACILITIES FUND FOR THE NEW CONSTRUCTION OR LAND. MONIES PROVIDED FOR LAND SHALL BE IN ADDITION TO ANY MONIES PROVIDED PURSUANT TO SUBSECTION D OF THIS SECTION.

D. THE SCHOOL FACILITIES BOARD SHALL DISTRIBUTE MONIES FROM THE NEW SCHOOL FACILITIES FUND AS FOLLOWS:

1. THE SCHOOL FACILITIES BOARD SHALL REVIEW AND EVALUATE THE ENROLLMENT PROJECTIONS AND EITHER APPROVE THE PROJECTIONS AS SUBMITTED OR REVISE THE PROJECTIONS. IN DETERMINING NEW CONSTRUCTION REQUIREMENTS, THE SCHOOL FACILITIES BOARD SHALL DETERMINE THE NET NEW GROWTH OF PUPILS THAT WILL REQUIRE ADDITIONAL SQUARE FOOTAGE THAT EXCEEDS THE BUILDING ADEQUACY STANDARDS PRESCRIBED IN SECTION 15-2011.

2. IF THE APPROVED PROJECTIONS INDICATE THAT ADDITIONAL SPACE WILL NOT BE NEEDED WITHIN THE NEXT TWO YEARS FOR ELEMENTARY SCHOOLS OR THREE YEARS FOR MIDDLE OR HIGH SCHOOLS IN ORDER TO MEET THE BUILDING ADEQUACY STANDARDS PRESCRIBED IN SECTION 15-2011, THE REQUEST SHALL BE HELD FOR CONSIDERATION BY THE SCHOOL FACILITIES BOARD FOR POSSIBLE FUTURE FUNDING AND THE SCHOOL DISTRICT SHALL ANNUALLY SUBMIT AN UPDATED PLAN UNTIL THE ADDITIONAL SPACE IS NEEDED.

3. IF THE APPROVED PROJECTIONS INDICATE THAT ADDITIONAL SPACE WILL BE NEEDED WITHIN THE NEXT TWO YEARS FOR ELEMENTARY SCHOOLS OR THREE YEARS FOR MIDDLE OR HIGH SCHOOLS IN ORDER TO MEET THE BUILDING ADEQUACY STANDARDS PRESCRIBED IN SECTION 15-2011, THE SCHOOL FACILITIES BOARD SHALL PROVIDE AN AMOUNT AS FOLLOWS:

(a) DETERMINE THE NUMBER OF PUPILS REQUIRING ADDITIONAL SQUARE FOOTAGE TO MEET BUILDING ADEQUACY STANDARDS. THIS AMOUNT FOR ELEMENTARY SCHOOLS SHALL NOT BE LESS THAN THE NUMBER OF NEW PUPILS FOR WHOM SPACE WILL BE NEEDED IN THE NEXT YEAR AND SHALL NOT EXCEED THE NUMBER OF NEW PUPILS FOR WHOM SPACE WILL BE NEEDED IN THE NEXT FIVE YEARS. THIS AMOUNT FOR MIDDLE AND HIGH SCHOOLS SHALL NOT BE LESS THAN THE NUMBER OF NEW PUPILS FOR WHOM SPACE WILL BE NEEDED IN THE NEXT FOUR YEARS AND SHALL NOT EXCEED THE NUMBER OF NEW PUPILS FOR WHOM SPACE WILL BE NEEDED IN THE NEXT EIGHT YEARS.

(b) MULTIPLY THE NUMBER OF PUPILS DETERMINED IN SUBDIVISION (a) OF THIS PARAGRAPH BY THE SQUARE FOOTAGE PER PUPIL. THE SQUARE FOOTAGE PER PUPIL IS NINETY SQUARE FEET PER PUPIL FOR PRESCHOOL CHILDREN WITH DISABILITIES, KINDERGARTEN PROGRAMS AND GRADES ONE THROUGH SIX, ONE HUNDRED SQUARE FEET FOR GRADES SEVEN AND EIGHT, ONE HUNDRED THIRTY-FOUR SQUARE FEET FOR A SCHOOL DISTRICT THAT PROVIDES INSTRUCTION IN GRADES NINE THROUGH TWELVE FOR FEWER THAN ONE THOUSAND EIGHT HUNDRED PUPILS AND ONE HUNDRED TWENTY-FIVE SQUARE FEET FOR A SCHOOL DISTRICT THAT PROVIDES INSTRUCTION IN GRADES NINE THROUGH TWELVE FOR AT LEAST ONE THOUSAND EIGHT HUNDRED PUPILS. THE TOTAL NUMBER OF PUPILS IN GRADES NINE THROUGH TWELVE IN THE DISTRICT SHALL DETERMINE THE SQUARE FOOTAGE FACTOR TO USE FOR NET NEW PUPILS. THE SCHOOL FACILITIES BOARD MAY MODIFY THE SQUARE FOOTAGE REQUIREMENTS PRESCRIBED IN THIS SUBDIVISION FOR PARTICULAR SCHOOLS BASED ON ANY OF THE FOLLOWING FACTORS:

(i) THE NUMBER OF PUPILS SERVED OR PROJECTED TO BE SERVED BY THE SCHOOL DISTRICT.

(ii) GEOGRAPHIC FACTORS.

(iii) GRADE CONFIGURATIONS OTHER THAN THOSE PRESCRIBED IN THIS SUBDIVISION.

(iv) COMPLIANCE WITH MINIMUM SCHOOL FACILITY ADEQUACY REQUIREMENTS ESTABLISHED PURSUANT TO SECTION 15-2011.

(c) MULTIPLY THE PRODUCT OBTAINED IN SUBDIVISION (b) OF THIS PARAGRAPH BY THE COST PER SQUARE FOOT. THE BASE COST PER SQUARE FOOT IS NINETY DOLLARS FOR PRESCHOOL CHILDREN WITH DISABILITIES, KINDERGARTEN PROGRAMS AND GRADES ONE THROUGH SIX, NINETY-FIVE DOLLARS FOR GRADES SEVEN AND EIGHT AND ONE HUNDRED TEN DOLLARS FOR GRADES NINE THROUGH TWELVE. THE COST PER SQUARE FOOT SHALL BE ADJUSTED ANNUALLY FOR CONSTRUCTION MARKET CONSIDERATIONS BASED ON AN INDEX IDENTIFIED OR DEVELOPED BY THE JOINT LEGISLATIVE BUDGET COMMITTEE. THE SCHOOL FACILITIES BOARD SHALL MULTIPLY THE COST PER SQUARE FOOT BY 1.05 FOR ANY SCHOOL DISTRICT LOCATED IN A RURAL AREA. THE SCHOOL FACILITIES BOARD MAY MODIFY THE BASE COST PER SQUARE FOOT PRESCRIBED IN THIS SUBDIVISION FOR PARTICULAR SCHOOLS BASED ON GEOGRAPHIC CONDITIONS OR SITE CONDITIONS. FOR PURPOSES OF THIS SUBDIVISION, "RURAL AREA" MEANS AN AREA OUTSIDE A THIRTY-FIVE MILE RADIUS OF A BOUNDARY OF A MUNICIPALITY WITH A POPULATION OF MORE THAN FIFTY THOUSAND PERSONS ACCORDING TO THE MOST RECENT UNITED STATES DECENNIAL CENSUS.

(d) ONCE THE SCHOOL DISTRICT GOVERNING BOARD OBTAINS APPROVAL FROM THE SCHOOL FACILITIES BOARD FOR NEW FACILITY CONSTRUCTION FUNDS, ADDITIONAL PORTABLE OR MODULAR SQUARE FOOTAGE CREATED FOR THE EXPRESS PURPOSE OF PROVIDING TEMPORARY SPACE FOR PUPILS UNTIL THE COMPLETION OF THE NEW FACILITY SHALL NOT BE INCLUDED BY THE SCHOOL FACILITIES BOARD FOR THE PURPOSE OF NEW CONSTRUCTION FUNDING CALCULATIONS. ON COMPLETION OF THE NEW FACILITY CONSTRUCTION PROJECT, IF THE PORTABLES OR MODULARS CONTINUE IN USE, THEN THE PORTABLES OR MODULARS WILL BE INCLUDED AS PRESCRIBED BY THIS CHAPTER.

E. MONIES FOR ARCHITECTURAL AND ENGINEERING FEES SHALL BE DISTRIBUTED ON THE COMPLETION OF THE ANALYSIS BY THE SCHOOL FACILITIES BOARD OF THE SCHOOL DISTRICT'S REQUEST. AFTER RECEIVING MONIES PURSUANT TO THIS SUBSECTION, THE SCHOOL DISTRICT SHALL SUBMIT A DESIGN DEVELOPMENT PLAN FOR THE SCHOOL OR ADDITION TO THE SCHOOL FACILITIES BOARD BEFORE ANY MONIES FOR CONSTRUCTION ARE DISTRIBUTED. IF THE SCHOOL DISTRICT'S REQUEST MEETS THE BUILDING ADEQUACY STANDARDS, THE SCHOOL FACILITIES BOARD MAY REVIEW AND COMMENT ON THE DISTRICT'S PLAN WITH RESPECT TO THE EFFICIENCY AND EFFECTIVENESS OF THE PLAN IN MEETING STATE SQUARE FOOTAGE AND FACILITY STANDARDS BEFORE DISTRIBUTING THE REMAINDER OF THE MONIES. THE SCHOOL FACILITIES BOARD MAY DECLINE TO FUND THE PROJECT IF THE SQUARE FOOTAGE IS NO LONGER REQUIRED DUE TO REVISED ENROLLMENT PROJECTIONS.

F. THE SCHOOL FACILITIES BOARD SHALL DISTRIBUTE THE MONIES NEEDED FOR LAND FOR NEW SCHOOLS SO THAT LAND MAY BE PURCHASED AT A PRICE THAT IS LESS THAN OR EQUAL TO FAIR MARKET VALUE AND IN ADVANCE OF THE CONSTRUCTION OF THE NEW SCHOOL. THE PROCEEDS DERIVED THROUGH THE SALE OF ANY LAND PURCHASED OR PARTIALLY PURCHASED WITH MONIES PROVIDED BY THE SCHOOL FACILITIES BOARD SHALL BE RETURNED TO THE STATE FUND FROM WHICH IT WAS APPROPRIATED AND TO ANY OTHER PARTICIPATING ENTITY ON A PROPORTIONAL BASIS. IF A SCHOOL DISTRICT ACQUIRES REAL PROPERTY BY DONATION AT AN APPROPRIATE SCHOOL SITE APPROVED BY THE SCHOOL FACILITIES BOARD, THE SCHOOL FACILITIES BOARD SHALL DISTRIBUTE AN AMOUNT EQUAL TO TWENTY PER CENT OF THE FAIR MARKET VALUE OF THE DONATED REAL PROPERTY THAT CAN BE USED FOR ACADEMIC PURPOSES. THE SCHOOL DISTRICT SHALL PLACE THE MONIES IN THE UNRESTRICTED CAPITAL OUTLAY FUND AND INCREASE THE UNRESTRICTED CAPITAL OUTLAY LIMIT BY THE AMOUNT OF MONIES PLACED IN THE FUND. MONIES DISTRIBUTED UNDER THIS SUBSECTION SHALL BE DISTRIBUTED FROM THE NEW SCHOOL FACILITIES FUND. CONSTRUCTION MONIES MAY BE DISTRIBUTED AS NEEDED BY THE SCHOOL FACILITIES BOARD UP TO THREE YEARS IN ADVANCE FOR MIDDLE SCHOOLS AND HIGH SCHOOLS AND UP TO TWO YEARS IN ADVANCE FOR ELEMENTARY SCHOOLS.

G. IN ADDITION TO DISTRIBUTIONS TO SCHOOL DISTRICTS BASED ON PUPIL GROWTH PROJECTIONS, A SCHOOL DISTRICT MAY SUBMIT AN APPLICATION TO THE SCHOOL FACILITIES BOARD FOR MONIES FROM THE NEW SCHOOL FACILITIES FUND IF ONE OR MORE SCHOOL BUILDINGS HAVE OUTLIVED THEIR USEFUL LIFE. IF THE SCHOOL FACILITIES BOARD DETERMINES THAT THE SCHOOL DISTRICT NEEDS TO BUILD A NEW SCHOOL BUILDING FOR THESE REASONS, THE SCHOOL FACILITIES BOARD SHALL REMOVE THE SQUARE FOOTAGE COMPUTATIONS THAT REPRESENT THE BUILDING FROM THE COMPUTATION OF THE SCHOOL DISTRICT'S TOTAL SQUARE FOOTAGE FOR PURPOSES OF THIS SECTION. IF THE SQUARE FOOTAGE RECOMPUTATION REFLECTS THAT THE SCHOOL DISTRICT NO LONGER MEETS BUILDING ADEQUACY STANDARDS, THE SCHOOL DISTRICT QUALIFIES FOR A DISTRIBUTION OF MONIES FROM THE NEW SCHOOL CONSTRUCTION FORMULA IN AN AMOUNT DETERMINED PURSUANT TO SUBSECTION D OF THIS SECTION. BUILDINGS REMOVED FROM A SCHOOL DISTRICT'S TOTAL SQUARE FOOTAGE PURSUANT TO THIS SUBSECTION SHALL NOT BE INCLUDED IN THE COMPUTATION OF MONIES FROM THE BUILDING RENEWAL FUND ESTABLISHED BY SECTION 15-2031. THE SCHOOL FACILITIES BOARD MAY MODIFY THE BASE COST PER SQUARE FOOT PRESCRIBED IN THIS SUBSECTION UNDER EXTRAORDINARY CIRCUMSTANCES FOR GEOGRAPHIC FACTORS OR SITE CONDITIONS.

H. SCHOOL DISTRICTS THAT RECEIVE MONIES FROM THE NEW SCHOOL FACILITIES FUND SHALL ESTABLISH A DISTRICT NEW SCHOOL FACILITIES FUND AND SHALL USE THE MONIES IN THE DISTRICT NEW SCHOOL FACILITIES FUND ONLY FOR THE PURPOSES PRESCRIBED IN THIS SECTION. BY OCTOBER 15 OF EACH YEAR, EACH SCHOOL DISTRICT SHALL REPORT TO THE SCHOOL FACILITIES BOARD THE PROJECTS FUNDED AT EACH SCHOOL IN THE PREVIOUS FISCAL YEAR WITH MONIES FROM THE NEW SCHOOL FACILITIES FUND AND SHALL PROVIDE AN ACCOUNTING OF THE MONIES REMAINING IN THE NEW SCHOOL FACILITIES FUND AT THE END OF THE PREVIOUS FISCAL YEAR.

I. IF A SCHOOL DISTRICT HAS SURPLUS MONIES RECEIVED FROM THE NEW SCHOOLS FACILITIES FUND, THE SCHOOL DISTRICT MAY USE THE SURPLUS MONIES FOR ANY OTHER CAPITAL PURPOSE.

article 6. state school facilities revenue bonds

15-2051 . Authorization of state school facilities revenue bonds

A. SUBJECT TO ANNUAL AUTHORIZATION BY THE LEGISLATURE, THE SCHOOL FACILITIES BOARD MAY ISSUE NEGOTIABLE REVENUE BONDS PURSUANT TO THIS ARTICLE. BONDS MAY BE ISSUED UNDER THIS ARTICLE IN A PRINCIPAL AMOUNT NOT EXCEEDING TWO HUNDRED MILLION DOLLARS IN A FISCAL YEAR TO:

1. PROVIDE MONIES TO PAY THE COST OF:

( a ) ACQUIRING REAL PROPERTY AND CONSTRUCTING NEW SCHOOL FACILITIES AS PROVIDED BY SECTION 15-2041.

( b ) BOND RELATED EXPENSES INCLUDING ANY EXPENSES INCURRED BY THE SCHOOL FACILITIES BOARD TO ISSUE AND ADMINISTER ITS BONDS INCLUDING UNDERWRITING FEES AND COSTS, TRUSTEE FEES, FINANCIAL CONSULTANT FEES, PRINTING AND ADVERTISING COSTS, PAYING AGENT FEES, TRANSFER AGENT FEES, LEGAL, ACCOUNTING, FEASIBILITY CONSULTANT AND OTHER PROFESSIONAL FEES AND EXPENSES, BOND INSURANCE OR OTHER CREDIT ENHANCEMENTS OR LIQUIDITY FACILITIES, ATTORNEY AND ACCOUNTING FEES AND EXPENSES RELATED TO CREDIT ENHANCEMENT, BOND INSURANCE OR LIQUIDITY ENHANCEMENT, REMARKETING FEES, RATING AGENCY FEES AND COSTS, TRAVEL AND TELEPHONE EXPENSES AND ALL OTHER FEES CONSIDERED NECESSARY BY THE SCHOOL FACILITIES BOARD IN ORDER TO MARKET AND ADMINISTER THE BONDS.

2. FULLY OR PARTIALLY FUND ANY RESERVES OR SINKING ACCOUNTS ESTABLISHED BY THE BOND RESOLUTION.

B. THE SCHOOL FACILITIES BOARD SHALL AUTHORIZE THE BONDS BY RESOLUTION. THE RESOLUTION SHALL PRESCRIBE:

1. THE FIXED OR VARIABLE RATE OR RATES OF INTEREST, THE DATE OR DATES ON WHICH INTEREST IS PAYABLE AND THE DENOMINATIONS OF THE BONDS.

2. THE DATE OR DATES OF THE BONDS AND MATURITY, WITHIN TEN YEARS AFTER THE DATE OF ISSUANCE.

3. THE FORM OF THE BONDS.

4. THE MANNER OF EXECUTING THE BONDS.

5. THE MEDIUM AND PLACE OF PAYMENT.

6. THE TERMS OF REDEMPTION, WHICH MAY PROVIDE FOR A PREMIUM FOR EARLY REDEMPTION.

C. THE BONDS ISSUED PURSUANT TO THIS ARTICLE SHALL BE KNOWN AS STATE SCHOOL FACILITIES REVENUE BONDS.

15-2052 . Issuance and sale of revenue bonds; notice

A. THE SCHOOL FACILITIES BOARD SHALL ISSUE THE BONDS IN THE NUMBER AND AMOUNT PROVIDED IN THE RESOLUTION.

B. THE SCHOOL FACILITIES BOARD SHALL PUBLISH A NOTICE OF ITS INTENTION TO ISSUE BONDS UNDER THIS ARTICLE FOR AT LEAST FIVE CONSECUTIVE DAYS IN A NEWSPAPER OF GENERAL CIRCULATION PUBLISHED IN THIS STATE. THE LAST DAY OF PUBLICATION SHALL BE AT LEAST TEN DAYS BEFORE THE BONDS ARE ISSUED. THE NOTICE SHALL STATE THE AMOUNT OF THE BONDS TO BE SOLD AND THE INTENDED DATE OF ISSUANCE. A COPY OF THE NOTICE SHALL BE HAND DELIVERED OR SENT BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO THE DIRECTOR OF THE DEPARTMENT OF ADMINISTRATION ON OR BEFORE THE LAST DAY OF PUBLICATION.

C. THE BONDS SHALL BE SOLD AT PUBLIC OR PRIVATE SALE AT THE PRICE AND ON THE TERMS PRESCRIBED IN THE RESOLUTION AT, ABOVE OR BELOW PAR.

D. THE PROCEEDS OF THE SALE OF THE BONDS SHALL BE DEPOSITED IN THE REVENUE BOND PROCEEDS FUND ESTABLISHED PURSUANT TO SECTION 15-2053.

15-2053 . Revenue bond proceeds fund; use for new school facilities

A. IF THE SCHOOL FACILITIES BOARD ISSUES REVENUE BONDS UNDER THIS ARTICLE, THE BOARD SHALL ESTABLISH A REVENUE BOND PROCEEDS FUND CONSISTING OF THE NET PROCEEDS RECEIVED FROM THE SALE OF THE BONDS.

B. THE SCHOOL FACILITIES BOARD MAY USE MONIES IN THE REVENUE BOND PROCEEDS FUND ONLY FOR NEW SCHOOL FACILITIES IN THE MANNER PRESCRIBED BY ARTICLE 5 OF THIS CHAPTER. MONIES IN THE REVENUE BOND PROCEEDS FUND ARE EXEMPT FROM LAPSING UNDER SECTION 35-190.

C. THE STATE TREASURER OR BOND TRUSTEE SHALL ADMINISTER AND ACCOUNT FOR THE REVENUE BOND PROCEEDS FUND.

15-2054 . Revenue bond debt service fund

A. THE SCHOOL FACILITIES BOARD SHALL ESTABLISH A REVENUE BOND DEBT SERVICE FUND CONSISTING OF MONIES RECEIVED BY THE SCHOOL FACILITIES BOARD PURSUANT TO SECTIONS 37-521 AND 42-5030.01.

B. MONIES IN THE REVENUE BOND DEBT SERVICE FUND MAY BE USED ONLY FOR THE PURPOSES AUTHORIZED BY THIS ARTICLE.

C. THE STATE TREASURER OR BOND TRUSTEE SHALL ADMINISTER AND ACCOUNT FOR THE REVENUE BOND DEBT SERVICE FUND.

15-2055 . Securing principal and interest

IN CONNECTION WITH ISSUING BONDS AUTHORIZED BY THIS ARTICLE AND TO SECURE THE PRINCIPAL AND INTEREST ON THE BONDS, THE SCHOOL FACILITIES BOARD BY RESOLUTION MAY:

1. SEGREGATE THE REVENUE BOND DEBT SERVICE FUND INTO ONE OR MORE ACCOUNTS AND SUBACCOUNTS AND PROVIDE THAT BONDS ISSUED UNDER THIS ARTICLE MAY BE SECURED BY A LIEN ON ALL OR PART OF THE MONIES PAID INTO THE REVENUE BOND DEBT SERVICE FUND OR INTO ANY ACCOUNT OR SUBACCOUNT IN THE FUND.

2. PROVIDE THAT THE BONDS ISSUED UNDER THIS ARTICLE ARE SECURED BY A FIRST LIEN ON THE MONIES PAID INTO THE REVENUE BOND DEBT SERVICE FUND AS PROVIDED BY SECTION 37-521, SUBSECTION B, PARAGRAPH 1 AND SECTION 42-5030.01, SUBSECTION A, AND PLEDGE AND ASSIGN TO OR IN TRUST FOR THE BENEFIT OF THE HOLDER OR HOLDERS OF THE BONDS ALL OR PART OF THE MONIES IN THE REVENUE BOND DEBT SERVICE FUND OR AN ACCOUNT OR SUBACCOUNT AS IS NECESSARY TO SECURE AND PAY THE PRINCIPAL, THE INTEREST AND ANY PREMIUM ON THE BONDS AS THEY COME DUE.

3. ESTABLISH PRIORITIES AMONG BONDHOLDERS BASED ON CRITERIA ADOPTED BY THE BOARD.

4. SET ASIDE, REGULATE AND DISPOSE OF RESERVES AND SINKING ACCOUNTS.

5. PRESCRIBE THE PROCEDURE, IF ANY, BY WHICH THE TERMS OF ANY CONTRACT WITH BONDHOLDERS MAY BE AMENDED OR ABROGATED, THE AMOUNT OF BONDS THE HOLDERS OF WHICH MUST CONSENT TO AND THE MANNER IN WHICH THE CONSENT MAY BE GIVEN.

6. PROVIDE FOR PAYMENT OF BOND RELATED EXPENSES FROM THE PROCEEDS OF THE SALE OF THE BONDS OR OTHER REVENUES AUTHORIZED BY THIS ARTICLE AND AVAILABLE TO THE BOARD.

7. PROVIDE FOR THE SERVICES OF TRUSTEES, COTRUSTEES, AGENTS AND CONSULTANTS AND OTHER SPECIALIZED SERVICES WITH RESPECT TO THE BONDS.

8. TAKE ANY OTHER ACTION THAT IN ANY WAY MAY AFFECT THE SECURITY AND PROTECTION OF THE BONDS OR INTEREST ON THE BONDS.

9. REFUND ANY BONDS ISSUED BY THE BOARD, IF THESE BONDS ARE SECURED FROM THE SAME SOURCE OF REVENUES AS THE BONDS AUTHORIZED BY THIS ARTICLE, BY ISSUING NEW BONDS.

10. ISSUE BONDS PARTLY TO REFUND OUTSTANDING BONDS AND PARTLY FOR ANY OTHER PURPOSE CONSISTENT WITH THIS ARTICLE.

15-2056 . Lien of pledge

A. ANY PLEDGE MADE UNDER THIS ARTICLE IS VALID AND BINDING FROM THE TIME WHEN THE PLEDGE IS MADE.

B. THE MONIES SO PLEDGED AND RECEIVED BY THE BOARD TO BE PLACED IN THE REVENUE BOND DEBT SERVICE FUND ARE IMMEDIATELY SUBJECT TO THE LIEN OF THE PLEDGE WITHOUT ANY FUTURE PHYSICAL DELIVERY OR FURTHER ACT. ANY LIEN OF ANY PLEDGE IS VALID AND BINDING AGAINST ALL PARTIES THAT HAVE CLAIMS OF ANY KIND AGAINST THE BOARD, REGARDLESS OF WHETHER THE PARTIES HAVE NOTICE OF THE LIEN. THE OFFICIAL RESOLUTION OR TRUST INDENTURE OR ANY INSTRUMENT BY WHICH THIS PLEDGE IS CREATED, WHEN ADOPTED BY THE BOARD, IS NOTICE TO ALL CONCERNED OF THE CREATION OF THE PLEDGE, AND THOSE INSTRUMENTS NEED NOT BE RECORDED IN ANY OTHER PLACE TO PERFECT THE PLEDGE.

15-2057 . Bond purchase; cancellation

THE SCHOOL FACILITIES BOARD MAY PURCHASE BONDS FOR CANCELLATION OUT OF ANY MONIES AVAILABLE FOR THE PURCHASE, AT A PRICE OF NOT MORE THAN EITHER OF THE FOLLOWING:

1. IF THE BONDS ARE REDEEMABLE AT THE TIME OF THE PURCHASE, THE APPLICABLE REDEMPTION PRICE PLUS ACCRUED INTEREST TO THE NEXT INTEREST PAYMENT DATE ON THE BONDS.

2. IF THE BONDS ARE NOT REDEEMABLE AT THE TIME OF THE PURCHASE, THE APPLICABLE REDEMPTION PRICE ON THE FIRST DATE AFTER THE PURCHASE ON WHICH THE BONDS BECOME SUBJECT TO REDEMPTION PLUS ACCRUED INTEREST TO THAT DATE.

15-2058 . Cancellation of unsold revenue bonds; hearing

A. IF A REVENUE BOND ISSUE REMAINS UNSOLD FOR SIX MONTHS AFTER BEING OFFERED FOR SALE, THE SCHOOL FACILITIES BOARD MAY CANCEL THE UNSOLD BONDS.

B. THE SCHOOL FACILITIES BOARD SHALL FIX A TIME FOR A HEARING ON THE PROPOSED CANCELLATION OF THE UNSOLD BONDS. THE SCHOOL FACILITIES BOARD SHALL GIVE NOTICE OF THE TIME, PLACE AND SUBJECT OF THE HEARING. THE NOTICE SHALL BE PUBLISHED FOR TEN DAYS BEFORE THE HEARING IN A NEWSPAPER OF GENERAL CIRCULATION.

C. AT THE TIME AND PLACE DESIGNATED IN THE NOTICE THE SCHOOL FACILITIES BOARD SHALL HEAR REASONS FOR OR AGAINST THE PROPOSED CANCELLATION OF THE UNSOLD BONDS. IF THE SCHOOL FACILITIES BOARD CONSIDERS IT TO BE IN THIS STATE'S BEST INTERESTS, IT SHALL ORDER THE UNSOLD BONDS TO BE CANCELED, AND THE BONDS AND THE VOTE BY WHICH THEY WERE AUTHORIZED TO BE ISSUED ARE THEN VOID.

15-2059 . Payment of revenue bonds

A. THE REVENUE BONDS SHALL BE PAID SOLELY FROM MONIES FROM THE REVENUE BOND DEBT SERVICE FUND ESTABLISHED BY SECTION 15-2054 AND OTHER MONIES THAT ARE CREDITED TO THE REVENUE BOND DEBT SERVICE FUND.

B. THE STATE TREASURER OR THE PAYING AGENT FOR THE REVENUE BONDS SHALL CANCEL ALL REVENUE BONDS WHEN PAID.

15-2060 . Investment of monies in revenue bond proceeds fund

A. AS PROVIDED BY SECTION 15-2062, THE SCHOOL FACILITIES BOARD MAY AUTHORIZE THE STATE TREASURER OR BOND TRUSTEE TO INVEST MONIES IN THE REVENUE BOND PROCEEDS FUND ESTABLISHED BY SECTION 15-2053.

B. THE ORDER DIRECTING AN INVESTMENT SHALL STATE A SPECIFIED TIME WHEN THE PROCEEDS FROM THE SALE OF THE BONDS WILL BE USED. THE STATE TREASURER SHALL MAKE THE INVESTMENT IN SUCH A WAY AS TO MATURE AT THE SPECIFIED DATE.

C. ALL MONIES EARNED AS INTEREST OR OTHERWISE DERIVED FROM THE INVESTMENT OF THE MONIES IN THE REVENUE BOND PROCEEDS FUND SHALL BE CREDITED TO THE REVENUE BOND DEBT SERVICE FUND ESTABLISHED BY SECTION 15-2054.

15-2061 . Investment of monies in the revenue bond debt service fund

A. THE SCHOOL FACILITIES BOARD MAY AUTHORIZE THE STATE TREASURER OR BOND TRUSTEE TO INVEST AND REINVEST ANY MONIES IN THE REVENUE BOND DEBT SERVICE FUND AS PROVIDED BY SECTION 15-2062.

B. ALL MONIES EARNED AS INTEREST OR OTHERWISE DERIVED FROM THE INVESTMENT OF THE MONIES IN THE REVENUE BOND DEBT SERVICE FUND SHALL BE CREDITED TO THAT FUND.

15-2062 . Authorized investments of fund monies

A. AT THE DIRECTION OF THE SCHOOL FACILITIES BOARD, THE STATE TREASURER OR BOND TRUSTEE MAY INVEST OR REINVEST MONIES IN EITHER THE REVENUE BOND PROCEEDS FUND OR REVENUE DEBT SERVICE FUND IN ANY OF THE FOLLOWING:

1. UNITED STATES TREASURY OBLIGATIONS.

2. CONSOLIDATED FARM LOAN BONDS.

3. OBLIGATIONS ISSUED BY THE FEDERAL INTERMEDIATE CREDIT BANKS OR BY BANKS FOR COOPERATIVES ON THE AUTHORITY OF THE FARM CREDIT ACT OF 1933.

4. ANY OTHER OBLIGATIONS GUARANTEED BY THE UNITED STATES GOVERNMENT.

5. ANY INVESTMENTS AUTHORIZED BY ANY OTHER AGENCIES OF THE UNITED STATES GOVERNMENT THAT ARE AUTHORIZED FOR USE TO SECURE PUBLIC DEPOSITS.

6. STATE, COUNTY OR MUNICIPAL BONDS ISSUED IN THIS STATE ON WHICH THE PAYMENTS OF INTEREST HAVE NOT BEEN DEFERRED.

B. THE PURCHASE OF THE SECURITIES SHALL BE MADE BY THE STATE TREASURER OR BOND TRUSTEE ON AUTHORITY OF A RESOLUTION OF THE BOARD. THE TREASURER OR BOND TRUSTEE SHALL ACT AS CUSTODIAN OF ALL SECURITIES PURCHASED. THE SECURITIES MAY BE SOLD ON AN ORDER OF THE BOARD.

15-2063 . Audit

A. THE SCHOOL FACILITIES BOARD SHALL CAUSE AN ANNUAL AUDIT TO BE MADE OF THE REVENUE BOND PROCEEDS FUND ESTABLISHED IN SECTION 15-2053 AND THE REVENUE BOND DEBT SERVICE FUND ESTABLISHED IN SECTION 15-2054, INCLUDING ALL ACCOUNTS AND SUBACCOUNTS IN THE FUNDS. A CERTIFIED PUBLIC ACCOUNTANT SHALL CONDUCT THE AUDIT WITHIN NINETY DAYS AFTER THE END OF THE FISCAL YEAR.

B. THE SCHOOL FACILITIES BOARD SHALL IMMEDIATELY FILE A CERTIFIED COPY OF THE AUDIT WITH THE AUDITOR GENERAL. THE AUDITOR GENERAL MAY MAKE ANY FURTHER AUDITS AND EXAMINATIONS THAT ARE NECESSARY AND TAKE APPROPRIATE ACTION RELATING TO THE AUDIT OR EXAMINATION PURSUANT TO TITLE 41, CHAPTER 7, ARTICLE 10.1. IF THE AUDITOR GENERAL TAKES NO OFFICIAL ACTION WITHIN THIRTY DAYS AFTER THE AUDIT IS FILED, THE AUDIT IS CONSIDERED TO BE SUFFICIENT.

C. THE SCHOOL FACILITIES BOARD SHALL PAY NEGOTIATED AND APPROVED FEES AND COSTS OF THE CERTIFIED PUBLIC ACCOUNTANT AND AUDITOR GENERAL UNDER THIS SECTION FROM THE REVENUE BOND DEBT SERVICE FUND ESTABLISHED BY SECTION 15-2054.

15-2064 . Characteristics of bonds; negotiable; exemption from taxation; obligation; legal investments

A. BONDS ISSUED UNDER THIS ARTICLE ARE FULLY NEGOTIABLE WITHIN THE MEANING AND FOR ALL PURPOSES OF THE UNIFORM COMMERCIAL CODE, SUBJECT ONLY TO ANY PROVISIONS FOR REGISTRATION, REGARDLESS OF WHETHER THE BONDS ACTUALLY CONSTITUTE NEGOTIABLE INSTRUMENTS UNDER THE UNIFORM COMMERCIAL CODE.

B. THE BONDS, THEIR TRANSFER AND THE INCOME FROM THE BONDS ARE AT ALL TIMES FREE FROM TAXATION IN THIS STATE.

C. BONDS ISSUED UNDER THIS ARTICLE:

1. ARE OBLIGATIONS OF THE BOARD. THE MEMBERS OF THE BOARD AND PERSONS EXECUTING THE BONDS ARE NOT PERSONALLY LIABLE FOR PAYMENT OF THE BONDS.

2. ARE PAYABLE ONLY ACCORDING TO THEIR TERMS.

3. ARE NOT GENERAL, SPECIAL OR OTHER OBLIGATIONS OF THIS STATE.

4. DO NOT CONSTITUTE A DEBT OF THIS STATE.

5. ARE NOT ENFORCEABLE AGAINST THIS STATE NOR IS PAYMENT OF THE BONDS ENFORCEABLE OUT OF ANY MONIES OTHER THAN THE REVENUE PLEDGED AND ASSIGNED TO, OR IN TRUST FOR THE BENEFIT OF, THE HOLDER OR HOLDERS OF THE BONDS.

6. ARE SECURITIES IN WHICH PUBLIC OFFICERS AND BODIES OF THIS STATE AND OF MUNICIPALITIES AND POLITICAL SUBDIVISIONS OF THIS STATE, ALL COMPANIES, ASSOCIATIONS AND OTHER PERSONS CARRYING ON AN INSURANCE BUSINESS, ALL FINANCIAL INSTITUTIONS, INVESTMENT COMPANIES AND OTHER PERSONS CARRYING ON A BANKING BUSINESS, ALL FIDUCIARIES AND ALL OTHER PERSONS WHO ARE AUTHORIZED TO INVEST IN GOVERNMENT OBLIGATIONS MAY PROPERLY AND LEGALLY INVEST.

7. ARE SECURITIES THAT MAY BE DEPOSITED WITH PUBLIC OFFICERS OR BODIES OF THIS STATE AND MUNICIPALITIES AND POLITICAL SUBDIVISIONS OF THIS STATE FOR PURPOSES THAT REQUIRE THE DEPOSIT OF GOVERNMENT BONDS OR OBLIGATIONS.

15-2065 . Effect of changing circumstances on bonds; agreement of state

A. BONDS ISSUED UNDER THIS ARTICLE REMAIN VALID AND BINDING OBLIGATIONS OF THE BOARD NOTWITHSTANDING THAT BEFORE THE DELIVERY OF THE BONDS ANY OF THE PERSONS WHOSE SIGNATURES APPEAR ON THE BONDS CEASE TO BE MEMBERS OF THE SCHOOL FACILITIES BOARD.

B. AN AMENDMENT OF ANY PROVISION OF THIS ARTICLE DOES NOT DIMINISH OR IMPAIR THE VALIDITY OF BONDS ISSUED UNDER THIS ARTICLE OR THE REMEDIES AND RIGHTS OF BONDHOLDERS.

C. THIS STATE PLEDGES TO AND AGREES WITH THE HOLDERS OF THE BONDS AUTHORIZED BY THIS ARTICLE THAT THIS STATE WILL NOT LIMIT, ALTER OR IMPAIR THE RIGHTS AND REMEDIES OF THE BONDHOLDERS, UNTIL ALL BONDS ISSUED UNDER THIS ARTICLE, TOGETHER WITH INTEREST ON THE BONDS, INTEREST ON ANY UNPAID INSTALLMENTS OF PRINCIPAL OR INTEREST AND ALL COSTS AND EXPENSES IN CONNECTION WITH ANY ACTION OR PROCEEDINGS BY OR ON BEHALF OF THE BONDHOLDERS, ARE FULLY MET AND DISCHARGED. THE BOARD, AS AGENT FOR THIS STATE, MAY INCLUDE THIS PLEDGE AND UNDERTAKING IN ITS RESOLUTIONS AND INDENTURES AUTHORIZING AND SECURING THE BONDS.

15-2066 . Validity of bonds; certification by attorney general

A. THIS ARTICLE CONSTITUTES FULL AUTHORITY FOR AUTHORIZING AND ISSUING BONDS WITHOUT REFERENCE TO ANY OTHER LAW OF THIS STATE. NO OTHER LAW WITH REGARD TO AUTHORIZING OR ISSUING OBLIGATIONS OR THAT IN ANY WAY IMPEDES OR RESTRICTS PERFORMING THE ACTS AUTHORIZED BY THIS ARTICLE MAY BE CONSTRUED TO APPLY TO ANY PROCEEDINGS TAKEN OR ACTS DONE PURSUANT TO THIS ARTICLE.

B. THE VALIDITY OF BONDS ISSUED UNDER THIS ARTICLE DOES NOT DEPEND ON AND IS NOT AFFECTED BY THE LEGALITY OF ANY PROCEEDING RELATING TO ANY ACTION BY THE SCHOOL FACILITIES BOARD IN GRANTING OR LENDING MONIES OR THE ACQUISITION, CONSTRUCTION OR IMPROVEMENT OF ANY FACILITY PAID WITH MONIES PROVIDED BY THE BOARD.

C. THE SCHOOL FACILITIES BOARD MAY SUBMIT TO THE ATTORNEY GENERAL REVENUE BONDS TO BE ISSUED UNDER THIS ARTICLE AFTER ALL PROCEEDINGS FOR AUTHORIZING THE BONDS HAVE BEEN COMPLETED. WITHIN FIFTEEN DAYS AFTER SUBMISSION, THE ATTORNEY GENERAL SHALL EXAMINE THE BONDS AND PASS ON THE VALIDITY OF THE BONDS AND THE REGULARITY OF THE PROCEEDINGS. IF THE BONDS AND PROCEEDINGS COMPLY WITH THE CONSTITUTION OF ARIZONA AND THIS ARTICLE, AND IF THE BONDS WHEN DELIVERED AND PAID FOR WILL CONSTITUTE BINDING AND LEGAL OBLIGATIONS OF THE BOARD, THE ATTORNEY GENERAL SHALL CERTIFY IN SUBSTANCE THAT THE BONDS ARE ISSUED ACCORDING TO THE CONSTITUTION AND LAWS OF THIS STATE. THE CERTIFICATE SHALL ALSO STATE THAT THE BONDS ARE ALSO VALIDLY SECURED BY THE OBLIGATION TO TRANSFER MONIES FROM DESIGNATED SOURCES OF REVENUE, INCLUDING INCOME ON THE PERMANENT STATE SCHOOL FUND ESTABLISHED BY SECTION 37-521, TO COVER ANY INSUFFICIENCIES.

D. THE BONDS SHALL RECITE THAT THEY ARE REGULARLY ISSUED PURSUANT TO THIS ARTICLE. THAT RECITAL, TOGETHER WITH THE CERTIFICATION BY THE ATTORNEY GENERAL UNDER SUBSECTION C OF THIS SECTION, CONSTITUTES PRIMA FACIE EVIDENCE OF THE LEGALITY AND VALIDITY OF THE BONDS. FROM AND AFTER THE SALE AND DELIVERY OF THE BONDS, THEY ARE INCONTESTABLE BY THE SCHOOL FACILITIES BOARD OR THIS STATE.

Sec. 40. Section 37-521, Arizona Revised Statutes, as amended by Laws 1996, fifth special session, chapter 8, section 14, is amended to read:

37-521 . Permanent state school fund; composition; use

A. The permanent state school fund shall consist of:

1. The proceeds of all lands granted to the state by the United States for the support of common schools.

2. All property which accrues to the state by escheat or forfeiture.

3. All property donated for the benefit of the common schools, unless the terms of the donation otherwise provide.

4. All unclaimed shares and dividends of any corporation incorporated under the laws of this state.

5. The proceeds of sale of timber, mineral, gravel or other natural products or property from school lands and state lands other than those granted for specific purposes.

6. The residue of the lands granted for payment of the bonds and accrued interest issued by Maricopa, Pima, Yavapai and Coconino counties, after the purpose of the grant has been satisfied, and the five per cent of the proceeds of sales of public lands lying within this state sold by the United States subsequent to admission of this state into the union, as granted by the enabling act.

B. The fund shall be and remain a perpetual fund, the interest of which only, together with the monies derived from the rental of the lands and property, including interest and accrued rent for that year credited pursuant to section 37-295, shall be used AS FOLLOWS :

1. FROM AND AFTER JUNE 30, 1999, IF THERE ARE OUTSTANDING STATE SCHOOL FACILITIES REVENUE BONDS PURSUANT TO TITLE 15, CHAPTER 16, ARTICLE 6, THE STATE TREASURER SHALL CREDIT TO THE STATE SCHOOL FACILITIES REVENUE BOND DEBT SERVICE FUND ESTABLISHED IN SECTION 15-2054 THE AMOUNT THAT IS NECESSARY TO SERVICE THE OBLIGATION OF ISSUED AND OUTSTANDING STATE SCHOOL FACILITIES REVENUE BONDS.

2. FROM AND AFTER JUNE 30, 1999, IF THERE ARE NO OUTSTANDING STATE SCHOOL FACILITIES REVENUE BONDS PURSUANT TO TITLE 15, CHAPTER 16, ARTICLE 6 OR IF THE AMOUNT OF MONIES AVAILABLE UNDER THIS SUBSECTION EXCEEDS THE AMOUNT REQUIRED UNDER PARAGRAPH 1 OF THIS SUBSECTION, THE MONIES ARE SUBJECT TO LEGISLATIVE APPROPRIATION TO THE NEW SCHOOL FACILITIES FUND ESTABLISHED BY SECTION 15-2041.

3. FROM AND AFTER JUNE 30, 1999, IF THE AMOUNT OF MONIES AVAILABLE UNDER THIS SUBSECTION EXCEEDS THE AMOUNT REQUIRED UNDER PARAGRAPHS 1 AND 2 OF THIS SUBSECTION, THE REMAINING AMOUNT SHALL BE USED AS PROVIDED IN SECTION 15-971, SUBSECTION H.

C. Beginning with fiscal year 1996-1997, Of the interest and accrued rental proceeds accumulated pursuant to this section, the first thirty million dollars shall be deposited each fiscal year in the school capital equity fund established by section 15-1053, except that if the tax system is restructured to provide an alternative method to meet school district capital needs, the annual allocation shall be discontinued.

Sec. 41. Repeal

Section 37-521 , Arizona Revised Statutes, as amended by Laws 1996, chapter 335, section 18, is repealed.

Sec. 42. Section 41-1231, Arizona Revised Statutes, is amended to read:

41-1231 . Definitions

In this article, unless the context otherwise requires:

1. "Authorized lobbyist" means any person, other than a designated lobbyist or lobbyist for compensation, who is employed by, retained by or representing a principal with or without compensation for the purpose of lobbying and who is listed as an authorized lobbyist by the principal in its registration pursuant to section 41-1232.

2. "Authorized public lobbyist" means a person, other than a designated public lobbyist, who is employed by, retained by or representing a public body, with or without compensation, for the purpose of lobbying and who is listed as an authorized public lobbyist by the public body in its registration pursuant to section 41-1232.01.

3. "Designated lobbyist" means the person who is designated by a principal as the single point of contact for the principal and who is listed as the designated lobbyist by the principal in its registration pursuant to section 41-1232.

4. "Designated public lobbyist" means the person who is designated by a public body as the single point of contact for the public body and who is listed as the designated public lobbyist by the public body in its registration pursuant to section 41-1232.01.

5. "Entertainment" means the amount of any expenditure paid or incurred for admission to any event or for participation in any activity that is attended by a state officer or employee who believed that the principal, public body, lobbyist, designated public lobbyist or authorized public lobbyist who made the expenditure would be present at the event or activity.

6. "Expenditure" means a payment, distribution, loan, advance, deposit or gift of money or anything of value and includes a contract, promise or agreement, whether or not legally enforceable, to make an expenditure that provides a benefit to an individual state officer or state employee and that is incurred by or on behalf of one or more principals, public bodies, lobbyists, designated public lobbyists or authorized public lobbyists.

7. "Family gift" means a gift to a state officer or employee or a member of the officer's or employee's household from a principal, lobbyist, designated public lobbyist or authorized public lobbyist who is a relative of the state officer or employee or a member of the household of the state officer or employee if the donor is not acting as the agent or intermediary for someone other than a person covered by this paragraph.

8. "Food or beverage" means the amount of any expenditure paid or incurred for food or beverages for a state officer or employee provided at a location at which the principal, public body, lobbyist, designated public lobbyist or authorized public lobbyist who made the expenditure is present.

9. "Gift" means a payment, distribution, advance, deposit or donation of money, any intangible personal property or any kind of tangible personal or real property. For purposes of this article gift does not include:

(a) A gift, devise or inheritance from an individual's spouse, child, parent, grandparent, grandchild, brother, sister, parent-in-law, brother-in-law, sister-in-law, nephew, niece, aunt, uncle or first cousin or the spouse of any such individual if the donor is not acting as the agent or intermediary for someone other than a person covered by this subdivision.

(b) Expenditures which are either properly reported or exempt from reporting under this chapter for:

(i) Entertainment.

(ii) Food or beverages.

(iii) Travel and lodging.

(iv) Flowers.

(c) Salary, compensation or employer reimbursed expenses lawfully paid to a public official.

(d) The value, cost or price of professional or consulting services that are not rendered to obtain a benefit for any registered principal, public body, lobbyist, designated public lobbyist or authorized public lobbyist or the clients of a principal or lobbyist.

(e) Expenses relating to a special event or function to which all members of the legislature, either house of the legislature or any committee of the legislature are invited.

(f) A plaque or other form of recognition similar to a plaque to a state officer or state employee to signify the honorary recognition of a service or other notable accomplishment.

(g) Informational material such as books, reports, pamphlets, calendars or periodicals.

(h) An item that is not used and that is returned within fifteen days of receipt to the donor or that is delivered within fifteen days of receipt to a charitable organization and that is not claimed as a charitable contribution for state or federal income tax purposes.

(i) A campaign contribution that is properly received and reported as required by law.

(j) An item that is given to a state officer or employee if the state officer or employee gives an item of approximately the same value to the giver of the item at the same time that the item is given or on a similar occasion as the one that prompted the original item to be given.

(k) Gifts of a personal nature that were customarily received by an individual from the donor before the individual became a state officer or employee.

(l) An item that is given to the general public at an event.

10. "Legislation" means bills, resolutions, memorials, amendments, nominations and other matters pending or proposed in either house of the legislature of this state OR FOR THE PURPOSES OF BONDING LOBBYING FOR ANY MATTER PENDING OR PROPOSED BEFORE A SCHOOL DISTRICT GOVERNING BOARD .

11. "Lobbying" means attempting to influence the passage or defeat of any legislation by directly communicating with any legislator , OR IN THE CASE OF BONDING, LOBBYISTS DIRECTLY COMMUNICATING WITH ANY SCHOOL DISTRICT EMPLOYEE OR SCHOOL DISTRICT GOVERNING BOARD MEMBER or attempting to influence any formal rule making proceeding pursuant to chapter 6 of this title or rule making proceedings that are exempt from chapter 6 of this title by directly communicating with any state officer or employee. Lobbying does not include:

(a) Interagency communications between state agency employees.

(b) Communications between a public official or employee of a public body, designated public lobbyist or authorized public lobbyist and any state officer, except for a member of the legislature, or employee.

(c) Oral questions or comments made by a person to a state officer or employee regarding a proposed rule made in public at a meeting or workshop that is open to the public and is sponsored by a state agency, board, commission, council or office.

12. "Lobbyist" means any person, other than a designated public lobbyist or authorized public lobbyist, who is employed by, retained by or representing a person other than himself, with or without compensation, for the purpose of lobbying and who is listed as a lobbyist by the principal in its registration pursuant to section 41-1232. Lobbyist includes a lobbyist for compensation, designated lobbyist and authorized lobbyist. LOBBYIST INCLUDES ATTORNEYS WHOSE PRACTICE INVOLVES BONDING, UNDERWRITERS OF BONDS AND INVESTMENT BANKERS WHOSE BUSINESS INCLUDES BONDING.

13. "Lobbyist for compensation" means a lobbyist who is compensated for the primary purpose of lobbying on behalf of a principal and who is listed by the principal in its registration pursuant to section 41-1232.

14. "Person" means an individual, partnership, committee, association or corporation and any other organization or group of persons, except legislators and political parties qualified for representation on the ballot pursuant to section 16-801 or 16-804.

15. "Personal hospitality" means hospitality, meals, beverages, transportation or lodging furnished but not commercially provided by a person on property or facilities owned or possessed by the person or his family.

16. "Principal" means any person, other than a public body, that employs, retains, engages or uses, with or without compensation, a lobbyist. Principal includes any subsidiary of a corporation.

17. "Public body" means the Arizona board of regents, a university under the jurisdiction of the Arizona board of regents, the judicial department, any state agency, board, commission or council, any county, any county elected officer who elects to appoint a designated public lobbyist or any city, town, district or other political subdivision of this state which receives and utilizes tax revenues and that employs, retains, engages or uses, with or without compensation, a designated public lobbyist or authorized public lobbyist.

18. "Public official" means a person duly elected, appointed or retained through election to a state, county or local office.

19. "Single expenditure" means an expenditure that provides a benefit of more than twenty dollars to an individual state officer or state employee and that is incurred by or on behalf of one or more principals, public bodies, lobbyists, designated public lobbyists or authorized public lobbyists.

20. "State employee" means an employee of the legislature, a university under the jurisdiction of the Arizona board of regents, the judicial department or a state office, agency, board, commission or council.

21. "State officer" means a person duly elected, appointed or retained through election to any state office, or a member of any state board, commission or council, and includes a member of the legislature.

Sec. 43. Title 41, chapter 27, article 2, Arizona Revised Statutes, is amended by adding section 41-3008.18, to read:

41-3008.18 . School facilities board; termination July 1, 2008

A. THE SCHOOL FACILITIES BOARD TERMINATES ON JULY 1, 2008.

B. TITLE 15, CHAPTER 16 IS REPEALED ON JANUARY 1, 2009 ONLY IF EITHER:

1. THE BOARD HAS NO OUTSTANDING STATE SCHOOL FACILITIES REVENUE BONDS ISSUED PURSUANT TO TITLE 15, CHAPTER 16, ARTICLE 6.

2. THE LEGISLATURE HAS OTHERWISE PROVIDED FOR PAYING OR RETIRING ANY OUTSTANDING STATE SCHOOL FACILITIES REVENUE BONDS.

C. IF NEITHER OF THE CONDITIONS IN SUBSECTION B HAVE OCCURRED BY JANUARY 1, 2009, TITLE 15, CHAPTER 16 IS REPEALED THIRTY DAYS AFTER THE RETIREMENT OF ALL REVENUE BONDS ISSUED PURSUANT TO TITLE 15, CHAPTER 16, ARTICLE 6.

Sec. 44. Title 42, chapter 8, article 1, Arizona Revised Statutes, is amended by adding section 42-1342, to read:

42-1342. Distribution of revenues for school facilities

A. FROM AND AFTER JUNE 30, 1999, IF THERE ARE OUTSTANDING STATE SCHOOL FACILITIES REVENUE BONDS PURSUANT TO TITLE 15, CHAPTER 16, ARTICLE 6, AND IF THE AMOUNT OF MONIES AVAILABLE UNDER SECTION 37-521, SUBSECTION B, PARAGRAPH 1 ARE INSUFFICIENT TO PAY THE AMOUNT THAT IS NECESSARY TO SERVICE THE OBLIGATION OF ISSUED AND OUTSTANDING BONDS, THE STATE TREASURER SHALL CREDIT TO THE STATE SCHOOL FACILITIES REVENUE BOND DEBT SERVICE FUND ESTABLISHED IN SECTION 15-2054 THE AMOUNT THAT IS NECESSARY TO SERVICE THE REMAINING OBLIGATION OF THE ISSUED AND OUTSTANDING BONDS FROM STATE GENERAL FUND REVENUES THAT WERE COLLECTED PURSUANT TO THIS CHAPTER.

B. FROM AND AFTER JUNE 30, 1999, EACH FISCAL YEAR AFTER ANY PAYMENTS UNDER SUBSECTION A OF THIS SECTION THE STATE TREASURER SHALL CREDIT:

1. TO THE DEFICIENCIES CORRECTION FUND STATE GENERAL FUND REVENUES COLLECTED PURSUANT TO THIS CHAPTER IN AN AMOUNT SUFFICIENT TO MEET THE REQUIREMENTS OF SECTION 15-2021.

2. TO THE BUILDING RENEWAL FUND STATE GENERAL FUND REVENUES COLLECTED PURSUANT TO THIS CHAPTER IN AN AMOUNT SUFFICIENT TO MEET THE REQUIREMENTS OF SECTION 15-2031.

3. TO THE NEW SCHOOL FACILITIES FUND STATE GENERAL FUND REVENUES COLLECTED PURSUANT TO THIS CHAPTER IN AN AMOUNT SUFFICIENT TO MEET THE REQUIREMENTS OF SECTION 15-2041.

Sec. 45. Section 42-5029, Arizona Revised Statutes, as amended by Laws 1998, chapter 1, section 162, is amended from and after December 31, 1998, to read:

42-5029 . Remission and distribution of monies

A. The department shall transmit all revenues collected under this article and articles 5, 8 and 9 of this chapter to the state treasurer pursuant to section 42-1116, separately accounting for payments of estimated tax under section 42-5014, subsection D and revenues collected pursuant to section 42-5070. The state treasurer shall credit payments of estimated tax to an estimated tax clearing account and each month shall transfer all monies in the estimated tax clearing account to a fund designated as the transaction privilege and severance tax clearing account on notification by the department of the allocation of monies. The state treasurer shall credit all other payments to the transaction privilege and severance tax clearing account, separately accounting for the monies designated as distribution base under sections 42-5010, 42-5205, 42-5353 and 42-5409. Each month the department shall report to the state treasurer the amount of monies collected pursuant to this article and articles 5, 8 and 9 of this chapter.

B. Each month the state treasurer shall distribute the monies deposited in the transaction privilege and severance tax clearing account in the manner prescribed by this section and by sections 42-5205, 42-5353 and 42-5409, after deducting warrants drawn against the account pursuant to sections 42-1118 and 42-1254.

C. Of the monies designated as distribution base the state treasurer shall:

1. Pay twenty-five per cent to the various incorporated municipalities in this state in proportion to their population as shown by the last United States decennial or special census, or revisions to the decennial or special census certified by the United States bureau of the census, to be used by the municipalities for any municipal purpose.

2. Pay 38.08 per cent to the counties in this state by averaging the following proportions:

(a) The proportion that the population of each county bears to the total state population, as shown by the most recent United States decennial or special census, or revisions to the decennial or special census certified by the United States bureau of the census.

(b) The proportion that the distribution base monies collected during the calendar month in each county under this article, section 42-5205, subsection B , section AND SECTIONS 42-5353 and section 42-5409 bear to the total distribution base monies collected under this article, section 42-5205, subsection B , section AND SECTIONS 42-5353 and section 42-5409 throughout the state for the calendar month.

3. Pay an additional 2.43 per cent to the counties in this state as follows:

(a) Average the following proportions:

(i) The proportion that the assessed valuation used to determine secondary property taxes of each county, after deducting that part of the assessed valuation that is exempt from taxation at the beginning of the month for which the amount is to be paid, bears to the total assessed valuations used to determine secondary property taxes of all the counties after deducting that portion of the assessed valuations that is exempt from taxation at the beginning of the month for which the amount is to be paid. Property of a city or town that is not within or contiguous to the municipal corporate boundaries and from which water is or may be withdrawn or diverted and transported for use on other property is considered to be taxable property in the county for purposes of determining assessed valuation in the county under this item.

(ii) The proportion that the distribution base monies collected during the calendar month in each county under this article, section 42-5205, subsection B , section AND SECTIONS 42-5353 and section 42-5409 bear to the total distribution base monies collected under this article, section 42-5205, subsection B , section AND SECTIONS 42-5353 and section 42-5409 throughout the state for the calendar month.

(b) If the proportion computed under subdivision (a) of this paragraph for any county is greater than the proportion computed under paragraph 2 of this subsection , the state treasurer shall compute the difference between the amount distributed to that county under paragraph 2 of this subsection and the amount that would have been distributed under paragraph 2 of this subsection using the proportion computed under subdivision (a) of this paragraph and pay that difference to the county from the amount available for distribution under this paragraph. Any monies remaining after all payments under this subdivision shall be distributed among the counties according to the proportions computed under paragraph 2 of this subsection .

4. After any distributions required by sections 42-5030, 42-5030.01, 42-5031 and 42-5032, and after making any transfer to the water quality assurance revolving fund as required by section 49-282, subsection B, credit the remainder of the monies designated as distribution base to the state general fund. From this amount the legislature shall annually appropriate to:

(a) The department of revenue sufficient monies to administer and enforce this article and articles 5, 8 and 9 of this chapter.

(b) The department of economic security monies to be used for the purposes stated in title 46, chapter 1.

(c) The tourism fund an amount equal to the sum of the following:

(i) Two million dollars.

(ii) Seventy-five per cent of the amount by which revenues derived from a one-half percentage rate portion of the total tax rate imposed on the transient lodging classification for the current fiscal year exceed the revenues derived from a one-half percentage rate portion of that tax in the previous fiscal year.

(d) The Arizona arts endowment fund established by section 41-986, the full amount by which revenues derived from the amusement classification pursuant to section 42-5073 for the current fiscal year exceed the revenues that were derived from that classification in fiscal year 1993-1994, except that this amount shall not exceed two million dollars in any fiscal year. This subdivision applies for fiscal years through June 30, 2007.

D. The state treasurer shall credit the remainder of the monies in the transaction privilege and severance tax clearing account to the state general fund , SUBJECT TO ANY DISTRIBUTION REQUIRED BY SECTION 42-5030.01 .

E. Notwithstanding subsection C of this section, if a court of competent jurisdiction finally determines that tax monies distributed under this section were illegally collected under this article or articles 5, 8 and 9 of this chapter and orders the monies to be refunded to the taxpayer, the department shall compute the amount of such monies that was distributed to each city, town and county under this section. The department shall notify the state treasurer of that amount plus the proportionate share of additional allocated costs required to be paid to the taxpayer. Each city's, town's and county's proportionate share of the costs shall be based on the amount of the original tax payment each municipality and county received. Each month the state treasurer shall reduce the amount otherwise distributable to the city, town and county under this section by one thirty-sixth of the total amount to be recovered from the city, town or county until the total amount has been recovered, but the monthly reduction for any city, town or county shall not exceed ten per cent of the full monthly distribution to that entity. The reduction shall begin for the first calendar month after the final disposition of the case and shall continue until the total amount, including interest and costs, has been recovered.

F. On receiving a certificate of default from the greater Arizona development authority pursuant to section 41-1554.06 or 41-1554.07 and to the extent not otherwise expressly prohibited by law, the state treasurer shall withhold from the next succeeding distribution of monies pursuant to this section due to the defaulting political subdivision the amount specified in the certificate of default and immediately deposit the amount withheld in the greater Arizona development authority revolving fund. The state treasurer shall continue to withhold and deposit the monies until the greater Arizona development authority certifies to the state treasurer that the default has been cured. In no event may the state treasurer withhold any amount that the defaulting political subdivision certifies to the state treasurer and the authority as being necessary to make any required deposits then due for the payment of principal and interest on bonds of the political subdivision that were issued before the date of the loan repayment agreement or bonds and that have been secured by a pledge of distributions made pursuant to this section.

Sec. 46. Transfer and renumber

Section 42-1342, Arizona Revised Statutes, as added by this act, is transferred and renumbered from and after December 31, 1998, for placement in title 42, chapter 5, article 1, Arizona Revised Statutes, as section 42-5030.01.

Sec. 47. Purpose

The purpose of the school facilities board is to evaluate the school capital needs of school districts and to distribute monies to school districts in order to cure existing deficiencies, for building renewal and for the construction of new facilities.

Sec. 48. School facilities board; initial members; transition

A. Notwithstanding section 15-2001, Arizona Revised Statutes, as added by this act, of the initial members appointed by the governor to the school facilities board, the governor shall appoint three members of the board to two-year terms in office, three members to three-year terms in office and three members to four-year terms in office. The governor shall appoint all subsequent members as prescribed by section 15-2001, Arizona Revised Statutes.

B. Notwithstanding Laws 1997, chapter 4, section 16, as amended by Laws 1997, first special session, chapter 9, section 1, the school facilities board succeeds to the functions of the state board for school capital facilities established pursuant to Laws 1996, fifth special session, chapter 8. All administrative and financial matters, contracts, proceedings and authorizations, whether completed, pending or in process, of the state board for school capital facilities are transferred to and retain the same status with the school facilities board. This act does not alter the effect of any actions that were taken or impair the valid obligations of the state board for school capital facilities that were in existence on the effective date of this act.

C. The school facilities board shall assume responsibility for the operation of the school capital equity fund.

Sec. 49. Termination of state board for school capital facilities

Notwithstanding any unfulfilled condition prescribed by Laws 1997, chapter 4, section 16, as amended by Laws 1997, first special session, chapter 9, section 1, the state board for school capital facilities is terminated for all purposes.

Sec. 50. Assistance to build classroom monies; reversion to state general fund

Notwithstanding any unfulfilled condition prescribed by Laws 1997, chapter 4, section 16, as amended by Laws 1997, first special session, chapter 9, section 1, all unexpended monies remaining in the assistance to build classrooms fund revert to the state general fund.

Sec. 51. Initial report of building renewal fund distribution amount

Notwithstanding section 15-2031, Arizona Revised Statutes, as added by this act, the school facilities board shall submit its initial report on the proposed distribution of building renewal monies to the president of the senate, the speaker of the house of representatives, the department of library, archives and public records and the governor as soon as practical but no later than May 1, 1999.

Sec. 52. School district tax rate reduction; state appropriation limitation; adjustment for school capital facilities

A. As a result of the state assuming financial responsibility for the costs associated with the construction of capital facilities for pupils in this state who are attending public school in preschool programs for children with disabilities, kindergarten programs and grades one through twelve pursuant to this act, school districts are prohibited from levying secondary property taxes for the purpose of financing capital facilities financed by the state. As a result, secondary property taxes in local school districts are required to be reduced from what the rates otherwise would have been.

B. In accordance with the provisions of article IX, section 17, subsection 4, paragraph (c), Constitution of Arizona, authorizing an increase in the state appropriation limitation for the transference of costs of providing a governmental function to the state if the political subdivision from which the function is transferred is required to commensurately reduce its tax rate, beginning with fiscal year 1998-1999, the economic estimates commission shall increase the state appropriation limitation by the percentage equivalent of the amount appropriated by this act for new construction of school capital facilities divided by the final estimate of total personal income for fiscal year 1998-1999.

Sec. 53. Building renewal monies; distribution in fiscal year 1998-1999

Notwithstanding section 15-2031, subsection E, Arizona Revised Statutes, as added by this act, the school facilities board shall distribute monies for fiscal year 1998-1999 from the building renewal fund to school districts in a single lump sum payment on June 15, 1999.

Sec. 54. Electronic reporting; implementation

Notwithstanding section 15-902, 15-903, 15-904 and 15-905, Arizona Revised Statutes, as amended by this act, schools and school districts shall not be required to submit electronic data to the department of education until fiscal year 2000-2001

Sec. 55. Exemption from rule-making requirements; delayed effective date of rules

Notwithstanding any other law, the school facilities board is exempt from the provisions of title 41, chapter 6, Arizona Revised Statutes, until April 30, 1999 with respect to the enactment of the rules establishing minimum school facility adequacy guidelines pursuant to section 15-2011, Arizona Revised Statutes, as added by this act. By March 31, 1999, the school facilities board shall provide a final draft of proposed minimum school facility adequacy guidelines to the governor, the speaker of the house of representatives and the president of the senate and the school facilities board shall make copies of the final draft available to the public. The school facilities board shall provide the public with an opportunity to comment on the proposed rules and shall hold at least one public hearing on the proposed rules. The rules adopted pursuant to this section do not become effective until April 30, 1999.

Sec. 56. Provisions for fiscal year 1998-1999

A. For fiscal year 1998-1999, the capital levy revenue limit per student count for fiscal year 1998-1999 is increased by $42.82 before the weights are applied pursuant to section 15-962, subsection A, Arizona Revised Statutes, as amended by Laws 1996, chapter 62, section 4. School districts may revise their budgets within sixty days of the effective date of this act to include the increase, but may only expend the additional monies for items included in section 15-962, subsection F, Arizona Revised Statutes, as amended by this act.

B. For fiscal year 1998-1999, the charter school capital allocation pursuant to section 15-185.01, Arizona Revised Statutes, is increased by three hundred fifty dollars.

C. For fiscal year 1998-1999, all restrictions on general obligation bonding as provided in this act apply to joint technological education districts.

Sec. 57. Existing monies in the reserve of the capital outlay fund

Notwithstanding section 15-947, subsection D, Arizona Revised Statutes, as amended by this act, for fiscal year 2000 school districts may budget any monies accumulated in the reserve of the capital outlay fund as of June 30, 1999 as if the monies were the ending unexpended budget balance in the unrestricted capital outlay fund.

Sec. 58. Charter school transportation funding

For fiscal year 1999-2000, notwithstanding section 15-185, Arizona Revised Statutes, as amended by this act, a charter school that is sponsored by a school district governing board may elect to receive transportation funding as provided in section 15-945, Arizona Revised Statutes, as follows:

1. If a charter school that is sponsored by a school district governing board elects to receive transportation funding as provided in section 15-945, Arizona Revised Statutes, the school district shall increase its transportation support level to include the increases caused by the transportation of eligible pupils enrolled in the charter school. The transportation support level shall be determined using an estimated transportation support level as prescribed in section 15-945, Arizona Revised Statutes, before the beginning of the school year. After the first one hundred days in session, the charter school shall revise the transportation support level to be equal to the actual transportation support level of the charter school. Before the one hundredth day in session, the state board of education may require a charter school to report periodically regarding the daily route mileage and the number of eligible pupils transported. A charter school that overestimated its transportation support level shall revise its budget before May 15. A charter school that underestimated its transportation support level may revise its budget before May 15.

2. The additional assistance as provided in section 15-185, Arizona Revised Statutes, for a charter school that is sponsored by a school district governing board that elects to receive transportation funding under section 15-945, Arizona Revised Statutes, shall be reduced by one hundred seventy-four dollars per student count in kindergarten programs and grades one through eight and by one hundred seventy-four dollars per student count in grades nine through twelve.

Sec. 59. Capital outlay revenue limit provisions for fiscal year 1998-1999

Notwithstanding sections 15-905, subsection R, 15-947, subsection D, paragraph 4 and 15-947.01, subsection C, Arizona Revised Statutes, as amended by this act, for fiscal year 1998-1999, the capital outlay revenue limit for the budget year is included in the general budget limit and not included in the capital budget limit and a school district is not subject to the provisions of section 15-905, subsection R, Arizona Revised Statutes.

Sec. 60. School facilities board; procurement

Notwithstanding any other provision of law, the school facilities board is exempt from the provisions of title 41, chapter 23, Arizona Revised Statutes, until from and after December 31, 1999.

Sec. 61. Delayed repeal

Title 15, chapter 16, article 3, Arizona Revised Statutes, as added by this act, is repealed from and after June 30, 2003.

Sec. 62. Delayed repeal

Section 58 of this act is repealed from and after June 30, 2000.

Sec. 63. Appropriation

A. The sum of $3,200,000 is appropriated from the state general fund to the school facilities board for fiscal year 1998-1999 for the purposes prescribed by law. Of this appropriated amount, up to $2,000,000 may be used by the board to contract for professional and other outside services, subject to prior review by the joint legislative budget committee.

B. The appropriation under this section includes authorization for up to nine full-time equivalent employment positions.

Sec. 64. Appropriation

A. Notwithstanding sections 15-2002 and 42-1342, Arizona Revised Statutes, as added by this act, the sum of $35,000,000 is appropriated from the state general fund to the school facilities board for fiscal year 1998-1999 for deposit in the deficiencies correction fund established by section 15-2021, Arizona Revised Statutes, as added by this act.

B. Notwithstanding sections 15-2002 and 42-1342, Arizona Revised Statutes, as added by this act, the sum of $75,000,000 is appropriated from the state general fund to the school facilities board for fiscal year 1998-1999 for deposit in the building renewal fund established by section 15-2031, Arizona Revised Statutes, as added by this act.

C. Notwithstanding sections 15-2002 and 42-1342, Arizona Revised Statutes, as added by this act, the sum of $200,000,000 is appropriated from the state general fund to the school facilities board for fiscal year 1998-1999 for deposit in the new school facilities fund established by section 15-2041, Arizona Revised Statutes, as added by this act.

Sec. 65. Appropriation; additional capital assistance for charter schools

The sum of $12,460,000 is appropriated from the state general fund to the department of education for fiscal year 1998-1999 for additional assistance for charter schools as prescribed in section 15-185, Arizona Revised Statutes.

Sec. 66. Appropriation; capital levy revenue limit

The sum of $36,500,000 is appropriated from the state general fund to the department of education in fiscal year 1998-1999 for the additional capital levy revenue limit to school districts pursuant to section 56, subsection A of this act.

Sec. 67. Appropriation; deficiencies correction

A. Any unexpended monies up to $15,000,000 in the capital reserve fund established by section 15-2003, Arizona Revised Statutes, as of June 30, 1999 are transferred to the deficiencies correction fund and is appropriated for the purposes of the deficiencies correction fund.

B. For fiscal year 1999-2000, the amount of $15,000,000, minus any amount transferred pursuant to subsection A of this section, is appropriated from the state general fund to the deficiencies correction fund for the purposes of the deficiencies correction fund.

C. Any unexpended monies up to $15,000,000 in the capital reserve fund established by section 15-2003, Arizona Revised Statutes, as added by this act, as of June 30, 2000 are transferred to the deficiencies correction fund and are appropriated for the purposes of the deficiencies correction fund.

D. For fiscal year 2000-2001 the amount of $15,000,000, minus any amount transferred pursuant to subsection C of this section, is appropriated from the state general fund to the deficiencies correction fund for the purposes of the deficiencies correction fund.

Sec. 68. Emergency

This act is an emergency measure that is necessary to preserve the public peace, health or safety and is operative immediately as provided by law.


APPROVED BY THE GOVERNOR JULY 9, 1998.

FILED IN THE OFFICE OF THE SECRETARY OF STATE JULY 9, 1998.


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