853F-10-50153F-10-50253F-10-50353F-10-50453G-3-3020School District Funding Amendments2026 GENERAL SESSIONSTATE OF UTAHChief Sponsor: Emily BussHouse Sponsor: Tracy J. MillerLONG TITLEGeneral Description:This bill establishes a framework for addressing enrollment growth disparities when school districts reorganize.Highlighted Provisions:This bill:authorizes successor districts to create voluntary high growth transition loan arrangements; establishes criteria for identifying high growth successor districts; requires high growth transition planning during asset allocation; directs the State Board of Education to track and report on growth patterns in reorganizations; and authorizes the State Board to develop model policies and guidance.Money Appropriated in this Bill:NoneOther Special Clauses:NoneUtah Code Sections Affected:AMENDS:53G-3-302, as last amended by Laws of Utah 2025, Chapter 33ENACTS:53F-10-501, Utah Code Annotated 195353F-10-502, Utah Code Annotated 195353F-10-503, Utah Code Annotated 195353F-10-504, Utah Code Annotated 1953Be it enacted by the Legislature of the state of Utah:

Section 1. Section 53F-10-501 is enacted to read:5. High Growth Framework for School District Reorganizations53F-10-501. General provisions -- Definitions.(1)"ADM" means average daily membership, as defined in Section 53F-2-102.(2)"Allocation date" means the same as that term is defined in Section 53G-3-102.(3)"Creation date" means the same as that term is defined in Section 53G-3-102.(4)"Divided school district" means the same as that term is defined in Section 53G-3-102.(5)"High growth successor district" means a successor district that meets the criteria described in Section 53F-10-502.(6)"New school district" means the same as that term is defined in Section 53G-3-102.(7)"Reorganization" means the creation of a new school district under Section 53G-3-301.1, 53G-3-301.3, or 53G-3-301.4.(8)"Reorganized new school district" means the same as that term is defined in Section 53G-3-102.(9)"Successor district" means a new school district or reorganized new school district.

Section 2. Section 53F-10-502 is enacted to read:53F-10-502. High growth successor district criteria -- State Board identification and reporting.(1)For purposes of this part, a successor district is a high growth successor district if:(a)the successor district has been in operation for at least two full fiscal years since the allocation date and has had an average annual enrollment increase of at least 3%; or(b)for a successor district that has been in operation for less than two full fiscal years since the allocation date, the successor district demonstrates projected enrollment growth of at least 5% annually based on:(i)residential construction permits issued within the successor district's boundaries;(ii)population growth projections from the Utah Population Committee created in Section 63C-20-103;(iii)new housing development plans;(iv)historical enrollment trends from the geographic area; and(v)other relevant demographic data.(2)The State Board of Education shall, using existing enrollment data collection processes:(a)identify which successor districts meet the high growth criteria annually;(b)calculate each successor district's proportional share of the divided school district based on the methodology established in Section 53G-3-302; and(c)notify successor districts of their high growth status.(3)The State Board shall report annually to the Public Education Appropriations Subcommittee regarding:(a)the number of reorganizations that have occurred;(b)which successor districts qualify as high growth successor districts;(c)enrollment growth patterns and trends in successor districts;(d)facility capacity challenges identified in high growth transition plans submitted under Subsection 53G-3-302(13);(e)strategies successor districts have used to address high growth, including any voluntary loan arrangements; and(f)recommendations for supporting equitable transitions during reorganizations.

Section 3. Section 53F-10-503 is enacted to read:53F-10-503. Voluntary high growth transition loan arrangements authorized -- Proportional repayment methodology.(1)Successor districts from the same divided school district may enter into interlocal agreements under Title 11, Chapter 13, Interlocal Cooperation Act, to create voluntary transition loan arrangements to address enrollment growth disparities.(2)An interlocal agreement under this section may provide for:(a)pooling of discretionary assets, as that term is defined in Section 53G-3-302, from the divided school district;(b)loans to high growth successor districts for:(i)acquiring land and facilities;(ii)constructing, expanding, or renovating facilities; or(iii)expanding transportation infrastructure;(c)enhanced borrowing authority for high growth successor districts up to:(i)150% of the high growth district's proportional share of pooled assets; or(ii)up to 200% of the proportional share with approval of all participating successor districts;(d)proportional repayment, calculated as:(i)each loan payment multiplied by the borrowing district's proportional share represents that district's repayment obligation; and(ii)the remainder of each payment is credited back to the pool or distributed to other successor districts;(e)loan terms not exceeding twelve years from the allocation date;(f)acceleration of repayment if the borrowing district issues bonds for school construction; and(g)loan application periods limited to before the borrowing district has authority to issue bonds.(3)Successor districts are not required to enter into interlocal agreements under this section.(4)Participation in an interlocal agreement under this section does not affect:(a)the transition funding provided under Subsection 53G-3-301(6);(b)the asset allocation process under Section 53G-3-302;(c)assistance from municipalities under Subsection 53G-3-301.3(9); or(d)assistance from interlocal agreement participants under Subsection 53G-3-301.4(11).

Section 4. Section 53F-10-504 is enacted to read:53F-10-504. State Board guidance and technical assistance.(1)The State Board of Education may, using existing staff and resources, develop and make available to school districts:(a)model interlocal agreement templates for voluntary high growth transition loan arrangements;(b)guidance on calculating proportional shares;(c)sample high growth determination methodologies;(d)best practices for addressing enrollment growth disparities during reorganizations;(e)examples of proportional repayment structures; and(f)sample loan agreement provisions, including acceleration clauses.(2)The State Board may, upon request and using existing resources, provide technical assistance to successor districts developing high growth transition plans under Subsection 53G-3-302(12) or considering voluntary loan arrangements under Section 53F-10-503.(3)Nothing in this section requires the State Board to develop any specific materials or provide any specific technical assistance.

Section 5. Section 53G-3-302 is amended to read:53G-3-302. Election of local school board members -- Allocation of assets and liabilities -- Startup costs -- Transfer of title.(1)As used in this section:(a)"Associated property" means furniture, equipment, or supplies located in or specifically associated with a physical asset.(b)(i)"Discretionary asset or liability" means an asset or liability that is not tied to a specific project, school, student, or employee by law or school district accounting practice.(ii)"Discretionary asset or liability" does not include a physical asset, associated property, a vehicle, an employee, or bonded indebtedness.(c)(i)"Nondiscretionary asset or liability" means an asset or liability that is tied to a specific project, school, student, or employee by law or school district accounting practice.(ii)"Nondiscretionary asset or liability" does not include a physical asset, associated property, a vehicle, or bonded indebtedness.(d)"Physical asset" means a building, land, or water right together with revenue derived from the lease or use of the building, land, or water right.(e)(i)"Physical liability" means a liability associated with a physical asset, including:(A)a seismic safety evaluation or mitigation; or(B)deferred maintenance.(ii)"Physical liability" does not include a liability associated with any debt, including a general obligation or lease revenue bond.(2)(a)If voters approve a proposal to create a new school district under this part:(i)the legislative body of each county where all or a part of the new school district and the reorganized new school district are located shall hold elections, during the year immediately following the year in which the voters approve the proposal or municipal legislative bodies or interlocal agreement participants create a new school district, to elect members to the local school board of the new school district and to the local school board of the reorganized new school district, as follows:(A)the filing period for a declaration of candidacy is the same as the filing period for the next regular or municipal general election for the given year;(B)the primary election is held on the same day as the primary election for the next regular or municipal general election for the given year; and(C)the general election is held on the same day as the next regular or municipal general election for the given year;(ii)any new school district and reorganized new school district shall divide the assets and liabilities of the divided school district between the school districts in accordance with Subsection (4) and Section 53G-3-307;(iii)any new school district and reorganized new school district shall treat the employment of transferred employees from the divided school district in accordance with Sections 53G-3-205 and 53G-3-308;(iv)an individual residing within the boundaries of a new school district or reorganized new school district at the time the new school district is created may, for six school years following the creation of the new school district, elect to enroll in a secondary school located outside the boundaries of the school district if:(A)the individual resides within the boundaries of the secondary school on the day before the creation of the new school district; and(B)the individual would have been eligible to enroll in the secondary school if not for the creation of the new school district;(C)the new school district shall provide educational services, including, if provided before the creation of the new school district, busing to each individual making an election under Subsection (2)(a)(iv) for each school year for which the individual makes the election; and(v)within one year following the date on which the new school district begins providing educational services, the superintendent of each affected school district shall meet, together with the state superintendent, to determine if further boundary changes should take place in accordance with Section 53G-3-501.(b)(i)The county or municipal legislative bodies that conduct redistricting for the new school district and the reorganized new school district shall, at the meeting where the county or municipal legislative bodies adopt the final redistricting maps, adjust the initial terms of the board members for the new school district and the reorganized new school district, by lot, so that approximately half of the board members on each board will have an initial term of three years with the other members having an initial term of five years.(ii)Notwithstanding the existence of the new school district local school board and the reorganized new school district local school board under Subsection (2)(a)(i), the divided school district local school board shall continue to function and exercise authority as a local school board until the allocation date to the extent necessary to continue to provide educational services to the entire divided school district.(iii)An individual may simultaneously serve as or be elected to be a member of the local school board of a divided school district and a member of the local school board of:(A)a new school district; or(B)a reorganized new school district.(iv)On the allocation date, the divided school district and the associated local school board cease to exist.(c)(i)On the Tuesday immediately following certification of the election results for the first election for the members of the local school board described in Subsection (2)(a)(i), the newly elected members of the local school board for the new school district or reorganized new school district shall take the oath of office and begin serving.(ii)If the term of a member of the local school board of the divided school district ends within one year of the allocation date, the member's term shall extend to the allocation date.(3)(a)The divided school district local school board shall:(i)within 60 days after the creation date prepare an initial inventory of the divided school district's:(A)assets, both tangible and intangible, real and personal; and(B)liabilities;(ii)on or before December 1 of the year following the creation date:(A)prepare an asset inventory, with records, of the divided school district's assets and the location of each associated property, discretionary asset, nondiscretionary asset, and physical asset; and(B)prepare an inventory of the divided school district's liabilities, with records, that includes a description of any liability, including an estimated cost to resolve the liability, for each associated property, discretionary asset, nondiscretionary asset, physical asset, and unresolved demands, claims, or suits with an estimated cost to resolve each liability;(iii)mutually agree with the local school board of each relevant district to establish a regular schedule for the divided school district local school board to, between the creation date and the allocation date, prepare regular updates including any change in the information required in the inventory and liability reports described in this Subsection (3)(a); and(iv)deliver the reports described in this Subsection (3)(a) to:(A)the Office of the Legislative Auditor General; and(B)the local school board of each relevant new school district and reorganized new school district.(b)Following the local school board election date described in Subsection (2)(a), the new school district and reorganized new school district local school boards shall:(i)in cooperation with the local school board of each new school district and reorganized new school district, determine the allocation of the divided school district's assets and, except for indebtedness under Section 53G-3-307, liabilities of the new school district and reorganized new school district in accordance with Subsection (4);(ii)prepare a written report detailing the allocation under Subsection (3)(b)(i);(iii)prepare a written report of the disposition of assets and liabilities upon which the local school boards could not agree; and(iv)deliver a copy of the written report to the Office of the Legislative Auditor General and the local school board of the divided school district.(c)The new school district and reorganized new school district local boards shall determine the allocation under Subsection (3)(b) and deliver the report required under Subsection (3)(b) on or before December 15 of the year following the school board election date described in Subsection (2)(a), unless that deadline is extended by mutual agreement of the local school boards of the new school district and reorganized new school district.(4)(a)Except as provided under Subsection (4)(c), the new school district and reorganized new school district local school boards shall allocate all assets and liabilities the divided school district owns on the allocation date, both tangible and intangible, real and personal, allocating:(i)a physical asset, physical liability, and associated property asset to the school district in which the physical asset is located;(ii)a discretionary asset or liability between the new school district and reorganized new school district in proportion to the student population of the school districts;(iii)vehicles used for pupil transportation:(A)according to the transportation needs of schools, as measured by the number and assortment of vehicles used to serve eligible state supported transportation routes serving schools within the new school district and the reorganized new school district; and(B)in a manner that gives each school district a fleet of vehicles for pupil transportation that is equivalent in terms of age, condition, and variety of carrying capacities; and(iv)other vehicles:(A)in proportion to the student population of the school districts; and(B)in a manner that gives each district a fleet of vehicles that is similar in terms of age, condition, and carrying capacities.(b)Each new and reorganized new school district retains the buildings, land, and water rights of the divided district within the boundaries of the relevant new or reorganized new school district.(c)By mutual agreement, the new school district and reorganized new school district local school boards may allocate an asset or liability in a manner different than the allocation method specified in Subsection (4)(a).(5)(a)(i)After the creation date, the local school board of the divided district may issue a lease revenue bond, in accordance with Section 11-14-103:(A)that records the date, terms, and amount of the lease revenue bond the divided school district provides;(B)that designates the new and reorganized new school districts that are the joint recipients of the bond proceeds, in proportion to the property tax values within each district, as the local political subdivisions receiving the bond proceeds;(C)that obligates the new and reorganized new school districts receiving the bond proceeds to proportionally repay the remainder of the bond debt after the allocation date, in proportion to the portion of the bond proceeds each new or reorganized new school district receives;(D)that prohibits the bond from inclusion in the outstanding bond indebtedness of the divided school district, in accordance with Section 53G-3-307;(E)to which, if the relevant local school board has been seated, the local school board of the new school district or reorganized new school district consents in writing; and(F)that provides that the divided school district is responsible for the bond payments until the allocation date and that each new and reorganized new school district receiving the bond proceeds under this section is responsible for a proportional share of the bond payments after the allocation date.(ii)This Subsection (5)(a) applies retrospectively to a lease revenue bond that a divided school district issued after November 4, 2024.(b)(i)After the creation date, the local school board of the divided school district may issue a general obligation bond for the interlocal agreement participants on behalf of the relevant new and reorganized new school district within the divided school district, in accordance with Section 11-14-103.(ii)The local school board shall ensure that the resolution submitting the question of the issuance of the bond by the divided school district, in accordance with Section 11-14-201:(A)designates the new and reorganized new school districts that are the joint recipients of the bond proceeds, in proportion to the property tax values within each district, as the local political subdivisions receiving the bond proceeds;(B)obligates the new and reorganized new school districts receiving the bond proceeds to proportionally repay the remainder of the bond debt after the allocation date, in proportion to the portion of the bond proceeds each new or reorganized new school district receives;(C)prohibits the bond from inclusion in the outstanding bonded indebtedness of the divided school district, in accordance with Section 53G-3-307;(D)provides that the divided school district may not issue the bond unless the majority of the qualified voters of the divided school district who vote on the bond proposition approve the issuance of the bond; and(E)provides that the divided school district is responsible for the bond payments until the allocation date and that each new and reorganized new school district receiving the bond proceeds under this section is responsible for a proportional share of the bond payments after the allocation date.(iii)This Subsection (5)(b) applies retrospectively to a general obligation bond that a divided school district issued after November 4, 2024.(c)(i)If, within the preceding three years, voters within the divided school district rejected a general obligation bond for which a majority of voters within the area now included in a new or reorganized new school district voted in favor of the general obligation bond, the local school board of the divided district shall issue a lease revenue bond in accordance with Subsection (5)(a)(i) for the relevant new or reorganized new school district.(ii)A lease revenue bond described in Subsection (5)(c)(i) is not subject to the combined total limitation described in Subsection 11-14-103(6)(b)(i) due to the prior approval of voters within the new or reorganized new school district for the general obligation bond.(d)The local school board of each new and reorganized new school district may access and spend funds made available under Subsections 53G-3-301.3(9) and 53G-3-301.4(11) and under this Subsection (5).(6)(a)The divided school district shall transfer title or, if applicable, partial title of property to the new school district and the reorganized new school district in accordance with the allocation of property as stated in the report under Subsection (3)(b)(ii).(b)The divided school district shall complete each transfer of title or, if applicable, partial title to real property and vehicles on the allocation date, except as that date is changed by the mutual agreement of:(i)the local school board of the divided school district;(ii)the local school board of the reorganized new school district; and(iii)the local school board of the new school district.(c)The divided school district shall complete the transfer of all property not included in Subsection (6)(b) on the allocation date.(d)Except as provided in this Subsection (6), a divided school district may not transfer or agree to transfer title to district property beginning on the creation date, without the prior consent of:(i)before the election of local school boards for the new or reorganized new school district:(A)the legislative body of the municipality in which the boundaries for the new school district or reorganized new school district are entirely located; or(B)the legislative bodies of all interlocal agreement participants in which the boundaries of the new school district or reorganized new school district are located; or(ii)after the election of local school boards for the new or reorganized new school district, the local school board of the school district where the physical property is located.(e)(i)A divided district may:(A)sell property associated with a career and technical education program; and(B)use proceeds from a sale described in this Subsection (6)(e) to fund the following year's career and technical education program project.(ii)A divided district shall distribute any proceeds from a sale described in this Subsection (6)(e) two years after the inaugural election of local school board members for the new and reorganized new school districts based on student population.(7)(a)On July 1 of the second year following the local school board election date described in Subsection (2)(a), the new school district or the reorganized new school district that receives title to the physical asset of the divided school district main office that existed at the creation date shall become the successor district to the records of the divided school district, unless the local school boards of any relevant new school district and reorganized new school district agree to a chosen successor district.(b)As described in Subsection 63G-2-206(1)(a), the successor district shall serve as a repository of archives for purposes of historical preservation, administrative maintenance, or destruction of all the divided school district's books, accounts, and records.(c)For one year after the allocation date, each new school district or reorganized new school district within the divided school district may access the records of the divided school district through an interlocal agreement and without cost.(8)(a)Upon the creation date, a divided school district may not, except by mutual agreement of the local school boards of the new and reorganized new school districts:(i)destroy a school district record;(ii)enter into any employment agreement without including a statement providing that the contract does not bind any new school district or reorganized new school district;(iii)pay any severance or bonuses, issue a retirement package, or provide buy-out compensation to any employee unless under a written agreement or policy that was executed before the creation date; or(iv)increase compensation for any school district employee, other than:(A)a yearly cost-of-living adjustment; or(B)any pay structure increases the divided district established before the creation date for longevity, years of experience, or additional education and professional development.(b)Notwithstanding Subsection 53G-4-402(24), upon the creation of a new school district or a reorganized new school district, a divided school district may not close a school, except with the consent of the relevant local school board of the new school district or relevant reorganized new school district once the members of the local school board take the oath of office.(c)Any agreement or policy contrary to this Subsection (8) is void, including retrospective operation to any agreement or policy that a divided school district created after November 4, 2024.(9)The newly elected local school boards of any new school district and any reorganized new school district, by December 15 in the year following the local school board election for the new and reorganized new school districts, shall establish a transition plan with the local school board of the divided school district.(10)Unless otherwise specified in this section, the following bear all costs and expenses to create a new school district or a reorganized new school district and to comply with this section:(a)for costs that a new school district incurs, the new school district;(b)for costs that a reorganized new school district incurs, the reorganized new school district; and(c)for costs that a divided school district incurs, the divided school district.(11)(a)A mutually agreed upon arbiter shall resolve any disagreements between local school boards of the divided school district, any new school district, and any reorganized new school district.(b)If the local school boards do not agree on an arbiter, the state board shall appoint an arbiter.(c)The Office of the Legislative Auditor General shall provide information the office receives under this part to local school boards and the arbiter described in this Subsection (11) during the dispute resolution process.(12)(a)As part of the asset allocation process under this section, the local school boards of the new school district and reorganized new school district shall develop a high growth transition plan that addresses enrollment growth disparities among successor districts.(b)The plan shall include:(i)projected enrollment for each successor district for the first five fiscal years after the allocation date, including documentation supporting the projections;(ii)identification of any successor districts projected to have average annual enrollment growth of 5% or more;(iii)assessment of facility capacity in each successor district relative to projected enrollment;(iv)identification of facility or transportation infrastructure needs in high growth areas; and(v)potential strategies for addressing high growth needs, which may include voluntary loan arrangements using discretionary assets.(c)The high growth transition plan shall be:(i)completed before the allocation date;(ii)provided to the State Board of Education within 30 days after the allocation date; and(iii)made available to the public upon request.(d)Development of the plan does not create any obligation for successor districts to implement any particular strategy identified in the plan.

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

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