S.B. 155

1

EDUCATION BUDGET RESERVE ACCOUNT
2 2002 GENERAL SESSION
3 STATE OF UTAH
4 Sponsor: Leonard M. Blackham
5 This act modifies the State System of Public Education code, the Budgetary Procedures Act,
6 and the State Appropriations and Tax Limitation Act by creating the Education Budget
7 Reserve Account. This act requires surplus monies in the Uniform School Fund at the end
8 of a fiscal year to be deposited into the Education Budget Reserve Account and specifies how
9 money in the Education Budget Reserve Account may be used. This act excludes transfers
10 into or appropriations from the Education Budget Reserve Account from the definition of
11 "appropriations" for the purpose of a limit on state appropriations. This act takes effect
12 July 1, 2002.
13 This act affects sections of Utah Code Annotated 1953 as follows:
14 AMENDS:
15 53A-17a-144, as last amended by Chapter 6, Laws of Utah 1996, Second Special Session
16 63-38c-103 (Effective 07/01/02), as last amended by Chapter 332, Laws of Utah 2000
17 ENACTS:
18 63-38-2.6, Utah Code Annotated 1953
19 Be it enacted by the Legislature of the state of Utah:
20 Section 1. Section 53A-17a-144 is amended to read:
21 53A-17a-144. Contribution of state to cost of minimum school program --
22 Determination of amounts -- Levy on taxable property -- Disbursal -- Deficiency.
23 (1) The state's contribution to the total cost of the minimum school program is determined
24 and distributed as [follows:] provided in this section.
25 [(1)] (2) (a) Prior to June 16 of each year, the State Board of Education shall determine the
26 estimated total cost of the minimum school program for each school district for the next school
27 year.

28 [(a)] (b) The board shall certify this cost to the State Tax Commission, the Division of
29 Finance, and the state auditor.
30 [(b)] (c) The certified report shall include the estimated number of units, the cost of the
31 minimum program for each district as determined with the district, and the amount of any
32 deficiency in the state's contribution to the minimum school program for the current and the
33 preceding years.
34 [(2)] (3) (a) The State Tax Commission shall levy an amount determined by the Legislature
35 on all taxable property of the state.
36 [(a)] (b) This amount, together with other funds provided by law, is the state's contribution
37 to the minimum school program.
38 [(b)] (c) The statewide levy is set at zero until changed by the Legislature.
39 [(3)] (4) During the first week in November, the State Tax Commission shall certify to the
40 State Board of Education the amounts designated as state aid for each district under Section
41 59-2-902 .
42 [(4)] (5) (a) The actual amounts computed under Section 59-2-902 are the state's
43 contribution to the minimum school program of each district.
44 (b) The state board shall provide each district with a statement of the amount of state aid.
45 [(5)] (6) (a) Prior to the first day of each month, the state treasurer and the Division of
46 Finance, with the approval of the State Board of Education, shall disburse 1/12 of the state's
47 contribution to the cost of the minimum school program to each school district.
48 [(a)] (b) A disbursement may not be made to a district whose payments have been
49 interrupted under Subsection [(5)(d)] (6)(e).
50 [(b)] (c) Discrepancies between the monthly disbursements and the actual cost of the
51 program shall be adjusted in the final settlement under Subsection [(6)] (7).
52 [(c)] (d) If the monthly distributions overdraw the money in the Uniform School Fund, the
53 Division of Finance is authorized to run this fund in a deficit position.
54 [(d)] (e) (i) The state board may interrupt disbursements to a district if, in the judgment
55 of the board, the district:
56 (A) is failing to comply with the minimum school program[,];
57 (B) is operating programs that are not approved by the state board[,]; or
58 (C) has not submitted reports required by law or the state board.

59 [(i)] (ii) Disbursements shall be resumed upon request of the state board.
60 [(ii)] (iii) Back disbursements shall be included in the next regular disbursement, and the
61 amount disbursed certified to the State Division of Finance and state treasurer by the state board.
62 [(e)] (f) The State Board of Education may authorize exceptions to the 1/12 per month
63 disbursement formula for grant funds if the board determines that a different disbursement formula
64 would better serve the purposes of the grant.
65 [(6)] (7) (a) If monies in the Uniform School Fund are insufficient to meet the state's
66 contribution to the minimum school program as appropriated, the amount of the deficiency [thus]
67 created shall be carried as a deficiency in the Uniform School Fund until the next session of the
68 Legislature, at which time the Legislature shall appropriate funds to cover the deficiency.
69 (b) If there is an operating deficit in public education Uniform School Fund appropriations,
70 the Legislature shall eliminate the deficit by:
71 (i) budget transfers or other legal means;
72 (ii) appropriating money from the Education Budget Reserve Account created in Section
73 63-38-2.6 ;
74 [(ii)] (iii) appropriating up to 25% of the balance in the [Budgetary] Budget Reserve
75 Account created in Section 63-38-2.5 ; or
76 [(iii)] (iv) some combination of Subsections (7)(b)(i) [and (ii)] through (7)(b)(iii).
77 (c) Nothing in Subsection (7)(b) precludes the Legislature from appropriating more than
78 25% of the balance in the [Budgetary] Budget Reserve Account created in Section 63-38-2.5 to
79 fund operating deficits in public education appropriations.
80 Section 2. Section 63-38-2.6 is enacted to read:
81 63-38-2.6. Education Budget Reserve Account created -- Use of account monies --
82 Interest -- Nonlapsing.
83 (1) There is created within the Uniform School Fund a restricted account known as the
84 Education Budget Reserve Account.
85 (2) (a) Beginning June 30, 2003, at the end of any fiscal year in which the Division of
86 Finance, in conjunction with the completion of the annual audit by the state auditor, determines
87 there is a Uniform School Fund surplus, 25% of the surplus shall be transferred to the Education
88 Budget Reserve Account.
89 (b) The amount to be transferred to the Education Budget Reserve Account shall be

90 determined before the deduction of any other contingency appropriation using surplus monies in
91 the Uniform School Fund.
92 (3) The Legislature may appropriate money from the Education Budget Reserve Account
93 to cover:
94 (a) operating deficits or projected deficits in the Uniform School Fund;
95 (b) a deficiency in the Uniform School Fund at the end of a fiscal year; or
96 (c) retroactive tax refunds.
97 (4) All interest earned on monies in the Education Budget Reserve Account shall be
98 deposited into the account.
99 (5) Appropriations to the account are nonlapsing.
100 Section 3. Section 63-38c-103 (Effective 07/01/02) is amended to read:
101 63-38c-103 (Effective 07/01/02). Definitions.
102 As used in this chapter:
103 (1) (a) "Appropriations" means actual unrestricted capital and operating appropriations
104 from unrestricted General Fund, Uniform School Fund, and Transportation Fund sources as
105 presented in the governor's executive budgets.
106 (b) "Appropriation" includes appropriations that are contingent upon available surpluses
107 in the General Fund, Uniform School Fund, or Transportation Fund.
108 (c) "Appropriation" includes appropriations made to the Centennial Highway Fund from
109 unrestricted General Fund and Transportation Fund revenues.
110 (d) "Appropriations" does not mean:
111 (i) debt service expenditures;
112 (ii) emergency expenditures;
113 (iii) expenditures from all other fund or subfund sources presented in the executive
114 budgets;
115 (iv) transfers into, or appropriations made to, the [Budgetary] Budget Reserve Account
116 established in Section 63-38-2.5 or Education Budget Reserve Account established in Section
117 63-38-2.6 ;
118 (v) monies appropriated to fund the total one-time project costs for the construction of
119 capital developments as defined in Section 63A-5-104 ; or
120 (vi) appropriations made to the Centennial Highway Fund from sources other than the

121 unrestricted General Fund and Transportation Fund revenues created by Section 72-2-118 .
122 (2) "Base year real per capita appropriations" means the result obtained for the state by
123 dividing the fiscal year 1985 actual appropriations of the state less debt monies, less $55 million
124 appropriated for flooding and less $14.2 million appropriated for capital projects in Section 3 of
125 Chapter 265, Laws of Utah 1985 General Session, by:
126 (a) the state's July 1, 1983 population; and
127 (b) the fiscal year 1983 inflation index divided by 100.
128 (3) "Calendar year" means the time period beginning on January 1 of any given year and
129 ending on December 31 of the same year.
130 (4) "Fiscal emergency" means an extraordinary occurrence requiring immediate
131 expenditures and includes the settlement under Chapter 4, Laws of Utah 1988, Fourth Special
132 Session.
133 (5) "Fiscal year" means the time period beginning on July 1 of any given year and ending
134 on June 30 of the subsequent year.
135 (6) "Fiscal year 1985 actual base year appropriations" means fiscal year 1985 actual capital
136 and operations appropriations from general, uniform school, and transportation fund sources, less
137 debt monies, less $55 million appropriated for flooding, and less $14.2 million appropriated for
138 capital projects in Section 3, Chapter 265, Laws of Utah 1985.
139 (7) "Inflation index" means the change in the general price level of goods and services as
140 measured by the Gross National Product Implicit Price Deflator of the Bureau of Economic
141 Analysis, U.S. Department of Commerce calculated as provided in Section 63-38c-202 .
142 (8) (a) "Maximum allowable appropriations limit" means the appropriations that could be,
143 or could have been, spent in any given year under the limitations of this chapter.
144 (b) "Maximum allowable appropriations limit" does not mean actual appropriations spent
145 or actual expenditures.
146 (9) "Most recent fiscal year's inflation index" means the fiscal year inflation index two
147 fiscal years previous to the fiscal year for which the maximum allowable inflation and population
148 appropriations limit is being computed under this chapter.
149 (10) "Most recent fiscal year's personal income" means the fiscal year personal income two
150 fiscal years previous to the fiscal year for which the maximum allowable personal income
151 appropriations limit is being computed under this chapter.

152 (11) "Most recent fiscal year's population" means the fiscal year population two fiscal
153 years previous to the fiscal year for which the maximum allowable inflation and population
154 appropriations limit is being computed under this chapter.
155 (12) "Personal income" means the total personal income of the state as calculated by the
156 Office of Planning and Budget according to the procedures and requirements of Section
157 63-38c-202 .
158 (13) "Population" means the number of residents of the state as of July 1 of each year as
159 calculated by the Office of Planning and Budget according to the procedures and requirements of
160 Section 63-38c-202 .
161 (14) "Revenues" means the revenues of the state from every tax, penalty, receipt, and other
162 monetary exaction and interest connected with it that are recorded as unrestricted revenue of the
163 General Fund, Uniform School Fund, and Transportation Fund, except as specifically exempted
164 by this chapter.
165 (15) "Security" means any bond, note, warrant, or other evidence of indebtedness, whether
166 or not the bond, note, warrant, or other evidence of indebtedness is or constitutes an "indebtedness"
167 within the meaning of any provision of the constitution or laws of this state.
168 Section 4. Effective date.
169 This act takes effect on July 1, 2002.




Legislative Review Note
as of 1-28-02 12:16 PM

A limited legal review of this legislation raises no obvious constitutional or statutory concerns.

Office of Legislative Research and General Counsel