Section 1. Section 53F-10-401 is enacted to read:4. High Growth District Grant Program53F-10-401. General provisions -- Definitions.As used in this part:(1)"Account" means the High Growth District Revolving Account created in Section 53F-10-402.(2)"ADM" means average daily membership, as defined in Section 53F-2-102, excluding a pupil who is fully enrolled in an online education program for at least 180 days.(3)"Average annual net enrollment increase" means the average percentage increase in a school district's ADM for each of the three school years immediately preceding the fiscal year for which the school district applies for a loan, calculated by:(a)dividing each year's net enrollment increase by the school district's ADM for the preceding fiscal year; and(b)averaging the resulting percentages.(4)"Eligible district" means a school district that meets the requirements described in Section 53F-10-403.(5)"High growth district" means , as calculated by the state board under Section 53F-10-403:(a)(i)a school district that is ranked in the top 10% of all school districts with positive average annual net enrollment increases; or(ii)if fewer than 10 school districts have positive average annual net enrollment increases, a school district that has an average annual net enrollment increase of:(A)at least 100 students; or(B)at least 2% of the school district's ADM; or(b)a school district whose average annual net enrollment increase totals at least 10% of the total average annual net enrollment increase from all school districts with positive average annual net enrollment increases.(6)"Net enrollment increase" means:(a)for a fiscal year, the difference, if positive, between a school district's ADM for the fiscal year and the school district's ADM for the previous fiscal year; or(b)for a projected year, the difference, if positive, between a school district's projected ADM for the fiscal year and the school district's ADM for the most recent fiscal year for which data is available.(7)"Program" means the High Growth District Loan Program created in Section 53F-10-402.

Section 2. Section 53F-10-402 is enacted to read:53F-10-402. High Growth District Loan Program and account created -- Purpose -- Loan authority -- State board duties.(1)The High Growth District Loan Program is created to provide loans to high growth districts for:(a)acquiring land and facilities to accommodate enrollment growth, including purchasing land for future school sites, purchasing existing buildings, and related construction or renovation; and(b)expanding transportation infrastructure to accommodate enrollment growth, including purchasing school buses and constructing or expanding transportation facilities.(2)(a)There is created within the Uniform School Fund a restricted account known as the "High Growth District Revolving Account" to provide loans to eligible districts under this part.(b)The state board shall administer the High Growth District Revolving Account in accordance with this part and rules adopted by the state board under Section 53F-10-405.(3)The account consists of:(a)money appropriated to the account by the Legislature;(b)money received from the repayment of loans made from the account;(c)interest and other charges received on loans made from the account; and(d)interest earned on money in the account.(4)The state superintendent shall make loans to eligible districts from the account to pay for the costs described in Subsection (1).(5)Loans to eligible districts with urgent facility needs or limited financial capacity may be given priority.(6)The state board shall:(a)determine which eligible districts qualify as high growth districts in accordance with Section 53F-10-403;(b)review requests by eligible districts for loans under this part; and(c)approve or reject each loan request; and(d)upon request, report to the Public Education Appropriations Subcommittee regarding:(i)the number of applications received;(ii)the amount of loans made from the account;(iii)the status of loan repayments;(iv)how eligible districts use loan proceeds; and(v)enrollment growth trends in eligible districts.(7)A loan under this part may not be made unless the state board approves the loan.

Section 3. Section 53F-10-403 is enacted to read:53F-10-403. Eligibility requirements -- High growth district determination.(1)A school district is an eligible district if:(a)the school district has a positive average annual net enrollment increase;(b)the school district has an average annual enrollment growth rate of at least 1.0% over the three school years immediately preceding the fiscal year for which the school district applies for a loan; and(c)the state board determines that the school district is a high growth district under Subsection (2).(2)(a)The state board shall determine which eligible districts qualify as high growth districts under the ranking methodology described in Subsection (2)(b), the proportional share methodology described in Subsection (2)(c), or both.(b)Under the ranking methodology:(i)if 10 or more school districts have positive average annual net enrollment increases, the state board shall:(A)rank all school districts with positive average annual net enrollment increases in descending order;(B)calculate the number of high growth districts by multiplying the total number of school districts with positive average annual net enrollment increases by 0.10 and rounding up to the nearest whole number; and(C)designate as high growth districts the number of school districts calculated under Subsection (2)(b)(i)(B), starting with the school district with the highest average annual net enrollment increase; or(ii)if fewer than 10 school districts have positive average annual net enrollment increases, the state board shall designate as high growth districts those school districts that have an average annual net enrollment increase of:(A)at least 100 students; or(B)at least 2% of the school district's ADM.(c)Under the proportional share methodology, the state board shall:(i)calculate the sum of average annual net enrollment increases for all school districts that have a positive average annual net enrollment increase;(ii)for each school district described in Subsection (2)(c)(i), calculate the ratio of the school district's average annual net enrollment increase to the sum calculated under Subsection (2)(c)(i); and(iii)designate as a high growth district each school district whose ratio calculated under Subsection (2)(c)(ii) is equal to or greater than 0.10.(3)In calculating net enrollment increases under this section, the state board:(a)shall use ADM data from the three most recent fiscal years for which data is available; and(b)may include projected enrollment data for the upcoming fiscal year if:(i)the school district provides documentation supporting the projection; and(ii)the state board determines the projection is reasonable based on:(A)historical enrollment trends;(B)residential construction permits issued within the school district's boundaries;(C)population growth data from the Utah Population Committee created in Section 63C-20-103; and(D)other demographic data the state board considers relevant.(4)The state board shall recalculate high growth district designations annually.(5)(a)For purposes of calculating net enrollment increase under this section, if a school district is created through a split, consolidation, or reorganization of one or more existing school districts:(i)for the fiscal year in which the new or reorganized school district is created, the state board shall calculate the new or reorganized school district's net enrollment increase by:(A)using as the baseline ADM the number of students from the geographic territory served by the new or reorganized school district who were enrolled in the predecessor district or districts for the fiscal year immediately preceding the creation or reorganization; and(B)comparing the baseline ADM under Subsection (5)(a)(i)(A) to the new or reorganized school district's actual ADM for the fiscal year;(ii)for the two fiscal years immediately following the fiscal year described in Subsection (5)(a)(i), the state board shall calculate the new or reorganized school district's average annual net enrollment increase using:(A)the calculation described in Subsection (5)(a)(i) for the fiscal year in which the district was created or reorganized;(B)actual year-over-year ADM changes for each subsequent fiscal year; and(C)projected enrollment data under Subsection (3)(b) if applicable; and(iii)beginning with the third fiscal year after the creation or reorganization, the state board shall calculate the school district's average annual net enrollment increase using the standard methodology described in Subsection (2).(b)For purposes of calculating net enrollment increase under this section, if a school district loses territory or students due to a split, consolidation, or reorganization:(i)for the fiscal year in which the split, consolidation, or reorganization occurs, the state board shall calculate the remaining school district's net enrollment increase by:(A)using as the baseline ADM the remaining school district's ADM for the fiscal year immediately preceding the split, consolidation, or reorganization, adjusted to exclude the ADM of students who were transferred to another district; and(B)comparing the adjusted baseline ADM under Subsection (5)(b)(i)(A) to the remaining school district's actual ADM for the fiscal year;(ii)for the two fiscal years immediately following the fiscal year described in Subsection (5)(b)(i), the state board shall calculate the remaining school district's average annual net enrollment increase using:(A)the calculation described in Subsection (5)(b)(i) for the fiscal year in which the split, consolidation, or reorganization occurred;(B)actual year-over-year ADM changes for each subsequent fiscal year; and(C)projected enrollment data under Subsection (3)(b) if applicable; and(iii)beginning with the third fiscal year after the split, consolidation, or reorganization, the state board shall calculate the school district's average annual net enrollment increase using the standard methodology described in Subsection (2).(c)The state board shall make rules in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, to establish:(i)procedures for implementing the calculations described in Subsections (5)(a) and (5)(b);(ii)documentation requirements for school districts affected by a split, consolidation, or reorganization;(iii)methods for allocating historical enrollment growth among successor districts when necessary to implement this subsection; and(iv)methods for determining the baseline ADM for each new or reorganized district's geographic territory when historical data for the specific territory is not readily available.

Section 4. Section 53F-10-404 is enacted to read:53F-10-404. Loan terms and conditions -- Allowable uses -- Limitations.(1)Subject to available money in the account, the state board may approve loans to eligible districts in accordance with this section.(2)The state board shall give priority to loan applications from eligible districts that demonstrate:(a)qualification as a high growth district under Section 53F-10-403;(b)urgent facility needs due to enrollment growth; or(c)limited financial capacity to meet capital needs through other sources.(3)The state board may not approve loans to eligible districts under this part that exceed a total of $15,000,000 in any fiscal year.(4)The term of a loan to an eligible district under this part may not exceed 10 years.(5)The state board shall establish interest rates for loans under this part by rule in accordance with Section 53F-10-405, considering:(a)the cost of funds to the state;(b)administrative costs of the program; and(c)the need to maintain the account's sustainability.(6)An eligible district that receives a loan under this part may use the loan proceeds only for:(a)acquiring facilities, including:(i)purchasing land for future school sites;(ii)purchasing existing buildings for conversion to educational use;(iii)conducting feasibility studies;(iv)obtaining appraisals;(v)paying closing costs; and(vi)conducting environmental assessments;(b)constructing, expanding, or renovating facilities to accommodate enrollment growth, including:(i)constructing new school buildings or additions;(ii)renovating purchased buildings for educational use; and(iii)expanding existing facilities;(c)expanding transportation infrastructure to serve new or expanded school facilities, including:(i)purchasing school buses;(ii)constructing or expanding bus barns or maintenance facilities; and(iii)implementing transportation management systems; or(d)paying for costs directly related to the activities described in Subsections (6)(a) through (6)(c).(7)An eligible district may not use loan proceeds received under this part for ongoing operational expenses, including:(a)salaries or benefits for personnel;(b)utilities or maintenance costs;(c)instructional materials or supplies; or(d)other recurring operational costs.(8)If property or facilities acquired using loan proceeds are sold or used for a non-educational purpose before the loan is fully repaid:(a)the proceeds from the sale or repurposing shall be applied to the outstanding loan balance; and(b)any remaining sale proceeds after satisfying the loan obligation shall be retained by the eligible district.

Section 5. Section 53F-10-405 is enacted to read:53F-10-405. Loan agreements -- Application process -- Reporting -- Rulemaking.(1)Before disbursing loan proceeds, the state board and the eligible district shall execute a loan agreement that includes:(a)the loan amount;(b)the interest rate;(c)the repayment schedule;(d)the permitted uses of loan proceeds;(e)reporting requirements; and(f)remedies for default or misuse of funds.(2)The state board shall make rules, in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, to establish:(a)an application process for eligible districts to apply for loans under this part, including:(i)the application format and required documentation;(ii)the timeline for submitting applications;(iii)the criteria the state board uses to evaluate applications;(iv)a process for eligible districts to demonstrate projected enrollment growth under Subsection 53F-10-403(3)(b);(v)a process for prioritizing applications if available funds are insufficient to fully fund all eligible applicants; and(vi)documentation of an eligible district's financial capacity to repay the loan;(b)the weighted formula for ranking school districts under Subsection 53F-10-403(2)(a), including:(i)the relative weight given to average annual enrollment growth rate and building utilization rate; and(ii)the methodology for calculating building utilization rates;(c)interest rates for loans under this part in accordance with Subsection 53F-10-404(5);(d)repayment schedules and terms, including:(i)minimum and maximum repayment periods;(ii)prepayment options without penalty;(iii)acceptable methods of payment; and(iv)consequences of late or missed payments;(e)reporting requirements for eligible districts that receive loans under this part, including:(i)how the eligible district uses loan proceeds;(ii)progress toward completing projects funded by loan proceeds;(iii)updates on enrollment growth;(iv)the impact of loan-funded projects on the eligible district's ability to accommodate enrollment growth; and(v)the status of loan repayment;(f)procedures for monitoring eligible districts' compliance with the requirements of this part, loan agreements, and rules made under this section; and(g)procedures for addressing loan defaults or misuse of loan proceeds.(3)An eligible district shall submit reports required under rules made under Subsection (2)(d):(a)annually while the eligible district is:(i)using loan proceeds received under this part; or(ii)repaying a loan received under this part; and(b)within one year after the eligible district completes a project funded by loan proceeds.(4)If an eligible district uses loan proceeds in a manner that does not comply with Section 53F-10-404, or the loan agreement fails to make required loan payments, or fails to comply with reporting requirements under this section, the state board may:(a)accelerate the repayment schedule;(b)require immediate repayment of the outstanding loan balance;(c)pursue legal remedies to recover outstanding amounts; or(d)make the eligible district ineligible for future loans under this part for up to five years.(5)All loan repayments, interest, and other charges collected under this part shall be deposited into the High Growth District Revolving Account.

Section 6. FY 2027 Appropriations.

The following sums of money are appropriated for the fiscal year beginning July 1, 2026, and ending June 30, 2027. These are additions to amounts previously appropriated for fiscal year 2027.

Subsection 6(a).Operating and Capital Budgets

Under the terms and conditions of Title 63J, Chapter 1, Budgetary Procedures Act, the Legislature appropriates the following sums of money from the funds or accounts indicated for the use and support of the government of the state of Utah.

PUBLIC EDUCATIONSTATE BOARD OF EDUCATION - SCHOOL BUILDING PROGRAMSITEM 1State Board of Education - School Building Programs - Public Education Capital ProjectsFrom Public Education Economic Stabilization Restricted Account, One-time15,000,000High Growth District Revolving Account15,000,000

Section 7. Effective Date.This bill takes effect on May 6, 2026.