First Substitute S.B. 118

Senator Patricia W. Jones proposes the following substitute bill:


             1     
SCHOOL FUNDING THROUGH INCOME TAX REVISIONS

             2     
2014 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: Patricia W. Jones

             5     
House Sponsor: Patrice M. Arent

             6     
             7      LONG TITLE
             8      General Description:
             9          This bill modifies income taxes and creates a funding program for public schools.
             10      Highlighted Provisions:
             11          This bill:
             12          .    modifies the taxpayer tax credit calculation by limiting the number of personal
             13      exemptions;
             14          .    creates the School-Level Funding Program in which money is allocated to public
             15      schools for the implementation of school improvement plans;
             16          .    modifies requirements pertaining to a school improvement plan;
             17          .    authorizes the State Board of Education to make certain rules regarding the
             18      School-Level Funding Program;
             19          .    requires the State Board of Education to:
             20              .    make reports evaluating the progress of the School-Level Funding Program in
             21      improving the academic achievement of the state's public school students; and
             22              .    select an independent evaluator through a request for proposals process to
             23      evaluate the School-Level Funding Program after five years' implementation of
             24      the program; and
             25          .    makes technical amendments.


             26      Money Appropriated in this Bill:
             27          This bill appropriates in fiscal year 2015:
             28          .    to Related to Basic Program as an ongoing appropriation:
             29              .    from the Education Fund, $266,764,800.
             30      Other Special Clauses:
             31          This bill provides an effective date.
             32          This bill provides retrospective operation for a taxable year beginning on or after
             33      January 1, 2014.
             34      Utah Code Sections Affected:
             35      AMENDS:
             36           53A-1a-108.5 , as enacted by Laws of Utah 2002, Chapter 324
             37           53A-1a-511 , as last amended by Laws of Utah 2012, Chapter 347
             38           59-10-1018 , as last amended by Laws of Utah 2012, Chapter 295
             39      ENACTS:
             40           53A-16-201 , Utah Code Annotated 1953
             41           53A-16-202 , Utah Code Annotated 1953
             42           53A-16-203 , Utah Code Annotated 1953
             43           53A-16-204 , Utah Code Annotated 1953
             44           53A-16-205 , Utah Code Annotated 1953
             45           53A-16-206 , Utah Code Annotated 1953
             46     
             47      Be it enacted by the Legislature of the state of Utah:
             48          Section 1. Section 53A-1a-108.5 is amended to read:
             49           53A-1a-108.5. School improvement plan.
             50          (1) As used in this section:
             51          (a) "Local school board" means a board elected pursuant to Title 20A, Chapter 14, Part
             52      2, Nomination and Election of Members of Local Boards of Education, except:
             53          (i) in applying this section to the Utah Schools for the Deaf and the Blind, "local school
             54      board" means the State Board of Education; and
             55          (ii) in applying this section to a charter school, "local school board" means a charter
             56      school governing board.


             57          (b) "School community council" means a school community council established
             58      pursuant to Section 53A-1a-108 , except in applying this section to a charter school, "school
             59      community council" means a council established by a charter school governing board to
             60      prepare a plan for the use of School LAND Trust Program money pursuant to Section
             61      53A-16-101.5 .
             62          (c) "U-PASS test" means a statewide assessment that a school district or charter school
             63      is required to administer pursuant to Section 53A-1-603 .
             64          [(1)] (2) (a) (i) Each school community council shall annually evaluate the school's
             65      U-PASS test results and use the evaluations in developing a school improvement plan.
             66          (ii) In addition to evaluating U-PASS test results, a school community council of a
             67      high school shall consider the high school's graduation rate in developing a school
             68      improvement plan.
             69          (b) In evaluating U-PASS test results and developing a school improvement plan, a
             70      school community council may not have access to data that reveal the identity of students.
             71          [(2)] (3) Each school improvement plan shall:
             72          (a) identify the school's most critical academic needs;
             73          (b) recommend a course of action to meet the identified needs;
             74          (c) list any programs, practices, materials, or equipment that the school will need to
             75      implement its action plan to have a direct impact on the instruction of students and result in
             76      measurable increased student performance; [and]
             77          (d) specify actions that school leadership will take to improve student achievement;
             78          (e) specify what actions will be implemented to ensure that high quality instruction is
             79      delivered to all students;
             80          (f) describe how assessments will be used to inform instruction;
             81          (g) describe how targeted interventions will be implemented to meet individual student
             82      needs;
             83          (h) specify what actions will be taken to ensure that professional development results
             84      in improved student achievement;
             85          [(d)] (i) describe how the school intends to [enhance or improve academic
             86      achievement, including how] use financial resources available to the school, such as School
             87      LAND Trust Program money received under Section 53A-16-101.5 , School-Level Funding


             88      Program money received under Section 53A-16-203 , and state and federal grants, [will be
             89      used] to enhance or improve academic achievement[.]; and
             90          (j) specify goals for growth in student academic achievement, with a focus on
             91      improving:
             92          (i) the percentage of students proficient in English language arts, mathematics, or
             93      science as measured by U-PASS tests;
             94          (ii) student progress in mastering learning standards and objectives for English
             95      languages arts, mathematics, and science as measured by U-PASS tests; and
             96          (iii) for a high school, the high school's graduation rate.
             97          [(3)] (4) The school improvement plan shall focus on the school's most critical
             98      academic needs but may include other actions to enhance or improve academic achievement
             99      and the community environment for students.
             100          [(4)] (5) The school principal shall make available to the school community council the
             101      school budget and other data needed to develop the school improvement plan.
             102          [(5)] (6) The school improvement plan shall be subject to the approval of the local
             103      school board of the school district in which the school is located.
             104          [(6)] (7) A school community council may develop a multiyear school improvement
             105      plan, but the plan must be presented to and approved annually by the local school board.
             106          [(7)] (8) Each school shall:
             107          (a) implement the school improvement plan as developed by the school community
             108      council and approved by the local school board;
             109          (b) provide ongoing support for the council's plan; [and]
             110          (c) annually evaluate the school's progress in meeting the goals for growth in student
             111      academic achievement as specified in the school improvement plan and submit the evaluation
             112      to the local school board; and
             113          [(c)] (d) meet local school board reporting requirements regarding performance and
             114      accountability.
             115          Section 2. Section 53A-1a-511 is amended to read:
             116           53A-1a-511. Waivers from state board rules -- Application of statutes and rules
             117      to charter schools.
             118          (1) A charter school shall operate in accordance with its charter and is subject to Title


             119      53A, State System of Public Education, and other state laws applicable to public schools,
             120      except as otherwise provided in this part.
             121          (2) (a) A charter school or any other public school or school district may apply to the
             122      State Board of Education for a waiver of any state board rule that inhibits or hinders the school
             123      or the school district from accomplishing its mission or educational goals set out in its strategic
             124      plan or charter.
             125          (b) The state board may grant the waiver, unless:
             126          (i) the waiver would cause the school district or the school to be in violation of state or
             127      federal law; or
             128          (ii) the waiver would threaten the health, safety, or welfare of students in the district or
             129      at the school.
             130          (c) If the State Board of Education denies the waiver, the reason for the denial shall be
             131      provided in writing to the waiver applicant.
             132          (3) (a) Except as provided in Subsection (3)(b), State Board of Education rules
             133      governing the following do not apply to a charter school:
             134          (i) school libraries;
             135          (ii) required school administrative and supervisory services; and
             136          (iii) required expenditures for instructional supplies.
             137          (b) A charter school shall comply with rules implementing statutes that prescribe how
             138      state appropriations may be spent.
             139          (4) The following provisions of Title 53A, State System of Public Education, and rules
             140      adopted under those provisions, do not apply to a charter school:
             141          (a) [Sections ] Section 53A-1a-108 [and 53A-1a-108.5 ], requiring the establishment of
             142      a school community council [and school improvement plan];
             143          (b) Sections 53A-3-413 and 53A-3-414 , pertaining to the use of school buildings as
             144      civic centers;
             145          (c) Section 53A-3-420 , requiring the use of activity disclosure statements;
             146          (d) Section 53A-12-207 , requiring notification of intent to dispose of textbooks;
             147          (e) Section 53A-13-107 , requiring annual presentations on adoption;
             148          (f) Chapter 19, Part 1, Fiscal Procedures, pertaining to fiscal procedures of school
             149      districts and local school boards; and


             150          (g) Section 53A-14-107 , requiring an independent evaluation of instructional materials.
             151          (5) For the purposes of Title 63G, Chapter 6a, Utah Procurement Code, a charter
             152      school shall be considered a local public procurement unit.
             153          (6) Each charter school shall be subject to:
             154          (a) Title 52, Chapter 4, Open and Public Meetings Act; and
             155          (b) Title 63G, Chapter 2, Government Records Access and Management Act.
             156          (7) (a) The State Charter School Board shall, in concert with the charter schools, study
             157      existing state law and administrative rules for the purpose of determining from which laws and
             158      rules charter schools should be exempt.
             159          (b) (i) The State Charter School Board shall present recommendations for exemption to
             160      the State Board of Education for consideration.
             161          (ii) The State Board of Education shall consider the recommendations of the State
             162      Charter School Board and respond within 60 days.
             163          Section 3. Section 53A-16-201 is enacted to read:
             164     
Part 2. School-Level Funding Program

             165          53A-16-201. Title.
             166          This part is known as the "School-Level Funding Program."
             167          Section 4. Section 53A-16-202 is enacted to read:
             168          53A-16-202. Definitions.
             169          As used in this part:
             170          (1) "District school" means a school under the control of a local school board elected
             171      pursuant to Title 20A, Chapter 14, Nomination and Election of State and Local School Boards.
             172          (2) "Public school" means a district school, charter school, or the Utah Schools for the
             173      Deaf and the Blind.
             174          Section 5. Section 53A-16-203 is enacted to read:
             175          53A-16-203. School-Level Funding Program created -- Use and allocation of
             176      funds.
             177          (1) The School-Level Funding Program is created to provide funding for the
             178      implementation of a school improvement plan required by Section 53A-1a-108.5 .
             179          (2) (a) A school district, charter school, or the Utah Schools for the Deaf and the Blind
             180      shall use funds allocated to a school through the School-Level Funding Program to supplement,


             181      not supplant, other state, federal, or local funds that would otherwise be made available for the
             182      school's educational programs.
             183          (b) The State Board of Education may eliminate or reduce a school's allocation of
             184      funds provided through the School-Level Funding Program if the State Board of Education
             185      finds the school district, charter school, or the Utah Schools for the Deaf and the Blind is in
             186      violation of Subsection (2)(a) or rules enacted by the State Board of Education under Section
             187      53A-16-205 .
             188          (3) Subject to future budget constraints, the Legislature shall:
             189          (a) beginning with fiscal year 2014-15, make an appropriation from the Education
             190      Fund for the School-Level Funding Program; and
             191          (b) beginning with fiscal year 2015-16, annually increase the appropriation for the
             192      School-Level Funding Program by a percentage equal to the annual percentage increase in
             193      collections from an individual income tax imposed under Title 59, Chapter 10, Individual
             194      Income Tax Act, during the prior year.
             195          (4) (a) From money appropriated for the School-Level Funding Program, the State
             196      Board of Education shall:
             197          (i) distribute an amount specified in statute to school districts, charter schools, and the
             198      Utah Schools for the Deaf and the Blind, in accordance with a distribution formula adopted by
             199      the State Board of Education in rule, for training school community councils; and
             200          (ii) allocate the remaining amount among the school districts combined, the charter
             201      schools combined, and the Utah Schools for the Deaf and the Blind in proportion to the school
             202      districts combined, charter schools combined, or the Utah Schools for the Deaf and the Blind
             203      share of total enrollment statewide on October 1 in the prior year.
             204          (b) (i) From the allocation for the school districts combined as determined under
             205      Subsection [(5)] (4)(a)(ii), the State Board of Education shall distribute to school districts:
             206          (A) 10% of the allocation on an equal basis to each school district; and
             207          (B) 90% of the allocation on an equal per student basis.
             208          (ii) A school district shall allocate money received under Subsection [(5)] (4)(b)(i) to
             209      schools within the school district on an equal per student basis.
             210          (c) From the allocation for the charter schools combined as determined under
             211      Subsection [(5)] (4)(a)(ii), the State Board of Education shall distribute funds to charter schools


             212      in accordance with a formula specified in rules adopted by the State Board of Education in
             213      consultation with the State Charter School Board.
             214          (d) The State Board of Education shall distribute to the Utah Schools for the Deaf and
             215      the Blind the allocation for the Utah Schools for the Deaf and the Blind as determined under
             216      Subsection [(5)] (4)(a)(ii).
             217          Section 6. Section 53A-16-204 is enacted to read:
             218          53A-16-204. School improvement plan required to receive School-Level Funding
             219      Program money -- School-Level Funding Program money to be used to implement a
             220      school improvement plan.
             221          (1) (a) Except as provided in Subsection (1)(b), to receive an allocation of
             222      School-Level Funding Program money under Section 53A-16-203 , a public school shall have a
             223      school improvement plan that is developed and approved in accordance with Section
             224      53A-1a-108.5 .
             225          (b) In accordance with rules adopted by the State Board of Education, a public school
             226      that is a secure facility, juvenile detention facility, hospital program school, or other small
             227      special program may receive School-Level Funding Program money without having a school
             228      community council if the school:
             229          (i) demonstrates and documents a good faith effort to recruit school community council
             230      members, have meetings, and publicize results; and
             231          (ii) develops a school improvement plan.
             232          (2) A public school shall use its allocation of School-Level Funding Program money to
             233      implement a school improvement plan that is developed and approved in accordance with
             234      Section 53A-1a-108.5 .
             235          (3) A public school may carry forward unexpended School-Level Funding Program
             236      money to implement a school improvement plan in the next year, if the public school has a
             237      multiyear school improvement plan that:
             238          (a) specifies how the unexpended money will be used in the next year; and
             239          (b) is annually reviewed and approved by the local school board.
             240          (4) The expenditure of School-Level Funding Program money allocated to a district
             241      school shall be administered in accordance with policies of the local school board.
             242          Section 7. Section 53A-16-205 is enacted to read:


             243          53A-16-205. State Board of Education authority to make rules.
             244          The State Board of Education may make rules in accordance with this part and Title
             245      63G, Chapter 3, Utah Administrative Rulemaking Act, that:
             246          (1) require a school district, charter school, or the Utah Schools for the Deaf and the
             247      Blind to annually submit to the State Board of Education:
             248          (a) school improvement plans; and
             249          (b) each school's evaluation of progress in meeting goals for growth in student
             250      academic achievement as specified in the school's school improvement plan;
             251          (2) prohibit a school district or public school from using School-Level Funding
             252      Program money to supplant other state, federal, or local funds that would otherwise be
             253      available for a school's educational programs;
             254          (3) establish a formula for distributing money allocated for training school community
             255      councils among school districts, charter schools, and the Utah Schools for the Deaf and the
             256      Blind;
             257          (4) specify the time and manner in which a student count shall be determined for the
             258      purpose of distributing School-Level Funding Program money on an equal per student basis
             259      pursuant to Section 53A-16-203 ; and
             260          (5) allow a secure facility, juvenile detention facility, hospital program school, or other
             261      small special program to receive School-Level Funding Program money without having a
             262      school community council if the school:
             263          (a) demonstrates and documents a good faith effort to recruit school community
             264      council members, have meetings, and publicize results; and
             265          (b) develops a school improvement plan.
             266          Section 8. Section 53A-16-206 is enacted to read:
             267          53A-16-206. Evaluation of School-Level Funding Program.
             268          (1) By November 1, 2016, 2017, and 2018, the State Board of Education shall make a
             269      report to the Education Interim Committee evaluating the progress of the School-Level
             270      Funding Program in improving the academic achievement of the state's public school students.
             271          (2) (a) After the fifth year of implementation of the School-Level Funding Program, the
             272      State Board of Education shall select an independent evaluator through a request for proposals
             273      process to evaluate the impact of the School-Level Funding Program on the academic


             274      achievement of the state's public school students.
             275          (b) The independent evaluator shall use multiple indicators, including test scores, to
             276      evaluate the School-Level Funding Program.
             277          (c) By November 1, 2019, the State Board of Education shall report to the Education
             278      Interim Committee on the evaluation conducted pursuant to Subsection (2)(a).
             279          Section 9. Section 59-10-1018 is amended to read:
             280           59-10-1018. Definitions -- Nonrefundable taxpayer tax credits.
             281          (1) As used in this section:
             282          (a) "Dependent adult with a disability" means an individual who:
             283          (i) a claimant claims as a dependent under Section 151, Internal Revenue Code, on the
             284      claimant's federal individual income tax return for the taxable year;
             285          (ii) is not the claimant or the claimant's spouse; and
             286          (iii) is:
             287          (A) 18 years of age or older;
             288          (B) eligible for services under Title 62A, Chapter 5, Services for People with
             289      Disabilities; and
             290          (C) not enrolled in an education program for students with disabilities that is
             291      authorized under Section 53A-15-301 .
             292          (b) "Dependent child with a disability" means an individual 21 years of age or younger
             293      who:
             294          (i) a claimant claims as a dependent under Section 151, Internal Revenue Code, on the
             295      claimant's federal individual income tax return for the taxable year;
             296          (ii) is not the claimant or the claimant's spouse; and
             297          (iii) is:
             298          (A) an eligible student with a disability; or
             299          (B) identified under guidelines of the Department of Health as qualified for Early
             300      Intervention or Infant Development Services.
             301          (c) "Eligible student with a disability" means an individual who is:
             302          (i) diagnosed by a school district representative under rules the State Board of
             303      Education adopts in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking
             304      Act, as having a disability classified as autism, deafness, preschool developmental delay, dual


             305      sensory impairment, hearing impairment, intellectual disability, multidisability, orthopedic
             306      impairment, other health impairment, traumatic brain injury, or visual impairment;
             307          (ii) not receiving residential services from the Division of Services for People with
             308      Disabilities created under Section 62A-5-102 or a school established under Title 53A, Chapter
             309      25b, Utah Schools for the Deaf and the Blind; and
             310          (iii) (A) enrolled in an education program for students with disabilities that is
             311      authorized under Section 53A-15-301 ; or
             312          (B) a recipient of a scholarship awarded under Title 53A, Chapter 1a, Part 7, Carson
             313      Smith Scholarships for Students with Special Needs Act.
             314          (d) "Head of household filing status" means a head of household, as defined in Section
             315      2(b), Internal Revenue Code, who files a single federal individual income tax return for the
             316      taxable year.
             317          (e) "Joint filing status" means:
             318          (i) a husband and wife who file a single return jointly under this chapter for a taxable
             319      year; or
             320          (ii) a surviving spouse, as defined in Section 2(a), Internal Revenue Code, who files a
             321      single federal individual income tax return for the taxable year.
             322          (f) "Qualifying personal exemption deduction" means the sum of:
             323          (i) the amount a claimant deducts as allowed as a personal exemption deduction for the
             324      claimant on the claimant's federal individual income tax return for the taxable year; and
             325          (ii) if the claimant deducts one or more personal exemption deductions on the
             326      claimant's federal individual income tax return in addition to the personal exemption deduction
             327      described in Subsection (1)(f)(i), the amount the claimant deducts as allowed for one personal
             328      exemption deduction on the claimant's federal individual income tax return for the taxable year.
             329          [(f)] (g) "Single filing status" means:
             330          (i) a single individual who files a single federal individual income tax return for the
             331      taxable year; or
             332          (ii) a married individual who:
             333          (A) does not file a single federal individual income tax return jointly with that married
             334      individual's spouse for the taxable year; and
             335          (B) files a single federal individual income tax return for the taxable year.


             336          (2) Except as provided in Section 59-10-1002.2 , and subject to Subsections (3) through
             337      (5), a claimant may claim a nonrefundable tax credit against taxes otherwise due under this part
             338      equal to the sum of:
             339          (a) (i) for a claimant that deducts the standard deduction on the claimant's federal
             340      individual income tax return for the taxable year, 6% of the amount the claimant deducts as
             341      allowed as the standard deduction on the claimant's federal individual income tax return for
             342      that taxable year; or
             343          (ii) for a claimant that itemizes deductions on the claimant's federal individual income
             344      tax return for the taxable year, the product of:
             345          (A) the difference between:
             346          (I) the amount the claimant deducts as allowed as an itemized deduction on the
             347      claimant's federal individual income tax return for that taxable year; and
             348          (II) any amount of state or local income taxes the claimant deducts as allowed as an
             349      itemized deduction on the claimant's federal individual income tax return for that taxable year;
             350      and
             351          (B) 6%; and
             352          (b) the product of:
             353          (i) 75% of the [total] amount the claimant deducts as allowed as a qualifying personal
             354      exemption deduction on the claimant's federal individual income tax return for that taxable
             355      year, plus an additional 75% of the amount the claimant deducts as allowed as a personal
             356      exemption deduction on the claimant's federal individual income tax return for that taxable
             357      year with respect to each dependent adult with a disability or dependent child with a disability;
             358      and
             359          (ii) 6%.
             360          (3) A claimant may not carry forward or carry back a tax credit under this section.
             361          (4) The tax credit allowed by Subsection (2) shall be reduced by $.013 for each dollar
             362      by which a claimant's state taxable income exceeds:
             363          (a) for a claimant who has a single filing status, $12,000;
             364          (b) for a claimant who has a head of household filing status, $18,000; or
             365          (c) for a claimant who has a joint filing status, $24,000.
             366          (5) (a) For taxable years beginning on or after January 1, 2009, the commission shall


             367      increase or decrease the following dollar amounts by a percentage equal to the percentage
             368      difference between the consumer price index for the preceding calendar year and the consumer
             369      price index for calendar year 2007:
             370          (i) the dollar amount listed in Subsection (4)(a); and
             371          (ii) the dollar amount listed in Subsection (4)(b).
             372          (b) After the commission increases or decreases the dollar amounts listed in Subsection
             373      (5)(a), the commission shall round those dollar amounts listed in Subsection (5)(a) to the
             374      nearest whole dollar.
             375          (c) After the commission rounds the dollar amounts as required by Subsection (5)(b),
             376      the commission shall increase or decrease the dollar amount listed in Subsection (4)(c) so that
             377      the dollar amount listed in Subsection (4)(c) is equal to the product of:
             378          (i) the dollar amount listed in Subsection (4)(a); and
             379          (ii) two.
             380          (d) For purposes of Subsection (5)(a), the commission shall calculate the consumer
             381      price index as provided in Sections 1(f)(4) and 1(f)(5), Internal Revenue Code.
             382          Section 10. Appropriation.
             383          Under the terms and conditions of Title 63J, Chapter 1, Budgetary Procedures Act, for
             384      the fiscal year beginning July 1, 2014, and ending June 30, 2015, the following sums of money
             385      are appropriated from resources not otherwise appropriated, or reduced from amounts
             386      previously appropriated, out of the funds or accounts indicated. These sums of money are in
             387      addition to any amounts previously appropriated for fiscal year 2015.
             388          To Related to Basic Program
             389              From Education Fund
$266,764,800

             390              Schedule of Programs:
             391                  School-Level Funding Program        $266,764,800
             392          The Legislature intends that of the $266,764,800 appropriated for the School-Level
             393      Funding Program, $160,000 shall be distributed to school districts, charter schools, and the
             394      Utah Schools for the Deaf and the Blind as provided in Section 53A-16-203 for training school
             395      community councils.
             396          Section 11. Retrospective operation -- Effective date.
             397          (1) Section 59-10-1018 takes effect on May 13, 2014, and has retrospective operation


             398      for a taxable year beginning on or after January 1, 2014.
             399          (2) The following sections take effect on July 1, 2014:
             400          (a) Section 53A-1a-108.5 ;
             401          (b) Section 53A-1a-511 ;
             402          (c) Section 53A-16-201 ;
             403          (d) Section 53A-16-202 ;
             404          (e) Section 53A-16-203 ;
             405          (f) Section 53A-16-204 ;
             406          (g) Section 53A-16-205 ;
             407          (h) Section 53A-16-206 ; and
             408          (i) Uncodified Section 10. Appropriation.


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