H.B. 383

1

STATEWIDE CAPITAL OUTLAY
2 EQUALIZATION
3 2008 GENERAL SESSION
4 STATE OF UTAH
5 Chief Sponsor: Aaron Tilton
6 Senate Sponsor: ____________
7
8 LONG TITLE
9 General Description:
10 This bill enacts various changes related to school capital outlay funding.
11 Highlighted Provisions:
12 This bill:
13 . defines terms;
14 . creates the Capital Outlay Equalization Fund;
15 . requires certain school districts to impose a basic capital outlay levy that is
16 equalized;
17 . deposits revenues from the basic capital outlay levy into the Capital Outlay
18 Equalization Fund;
19 . makes allocations from the Capital Outlay Equalization Fund using specified
20 criteria;
21 . creates a certified tax rate calculation related to capital outlay for school districts for
22 purposes of truth in taxation;
23 . appropriates money for the Capital Outlay Foundation and Capital Outlay
24 Enrollment Growth Programs; and
25 . makes technical corrections.
26 Monies Appropriated in this Bill:
27 This bill appropriates:

28 . as an ongoing appropriation subject to future budget constraints, $27,288,900 from
29 the Uniform School Fund for fiscal year 2008-09 to the State Board of Education.
30 Other Special Clauses:
31 This bill takes effect July 1, 2008.
32 Utah Code Sections Affected:
33 AMENDS:
34 53A-21-102, as last amended by Laws of Utah 2003, Chapters 199 and 320
35 ENACTS:
36 53A-21-101.5, Utah Code Annotated 1953
37 53A-21-201, Utah Code Annotated 1953
38 53A-21-202, Utah Code Annotated 1953
39 53A-21-301, Utah Code Annotated 1953
40 53A-21-302, Utah Code Annotated 1953
41 53A-21-303, Utah Code Annotated 1953
42 53A-21-304, Utah Code Annotated 1953
43 53A-21-502, Utah Code Annotated 1953
44 RENUMBERS AND AMENDS:
45 53A-21-401, (Renumbered from 53A-21-104, as last amended by Laws of Utah 2007,
46 Chapter 344)
47 53A-21-501, (Renumbered from 53A-21-105, as last amended by Laws of Utah 2007,
48 Chapter 2)
49 REPEALS:
50 53A-21-103, as last amended by Laws of Utah 2003, Chapter 320
51 53A-21-103.5, as last amended by Laws of Utah 2005, Chapters 171 and 184
52
53 Be it enacted by the Legislature of the state of Utah:
54 Section 1. Section 53A-21-101.5 is enacted to read:
55 Part 1. General Provisions
56 53A-21-101.5. Definitions.
57 As used in this chapter:
58 (1) "ADM" or "pupil in average daily membership" is as defined in Section

59 53A-17a-103 .
60 (2) "Capital Outlay Equalization Fund" or "Fund" means the fund created in Section
61 53A-21-502 .
62 (3) "Combined capital levy certified tax rate" means a separate certified tax rate, as
63 calculated pursuant to Section 59-2-924 , for a school district's combined capital levy rate,
64 except that:
65 (a) when a school district's adjusted basic capital outlay increment increases compared
66 to the prior year, the amount of the basic capital outlay increment shall be subtracted from the
67 prior year's ad valorem property tax revenues; and
68 (b) when a school district's adjusted basic capital outlay increment decreases compared
69 to the prior year, the amount of the basic capital outlay increment shall be added to the prior
70 year's ad valorem property tax revenues.
71 (4) "Combined capital levy rate" means a rate that includes the sum of the following
72 property tax levies:
73 (a) the capital outlay levy authorized in Section 53A-16-107 ;
74 (b) the portion of the 10% of basic levy described in Section 53A-17a-145 that is
75 budgeted for debt service or capital outlay;
76 (c) the debt service levy authorized in Section 11-14-310 ;
77 (d) the voted capital outlay leeway authorized in Section 53A-16-110 ; and
78 (e) the basic capital outlay levy imposed under Section 53A-21-303 .
79 (5) "Derived net taxable value" means the total current property tax collections from
80 April 1 through the following March 31 for a school district, divided by the school district's
81 total tax rate for the same year.
82 (6) "Inflation index" means the annual producer price index for new school building
83 construction published by the Bureau of Labor Statistics of the United States Department of
84 Labor.
85 (7) "Property tax yield per ADM" means the quotient of:
86 (a) the product of:
87 (i) a school district's prior year derived net taxable value; multiplied by
88 (ii) .0024; divided by
89 (b) the school district's prior year ADM.

90 (8) "School district net taxable value per enrolled student" means the derived net
91 taxable value in a school district divided by student enrollment in the district as of the same
92 year's October 1 enrollment counts.
93 (9) "Statewide net taxable value per enrolled student" means the sum of the derived net
94 taxable value for each school district in the state, divided by statewide school district
95 enrollment as of the same year's October 1 enrollment counts.
96 Section 2. Section 53A-21-102 is amended to read:
97 53A-21-102. Capital outlay programs -- Use of funds.
98 [(1) The Capital Outlay Foundation Program and the Enrollment Growth Program are
99 established to provide revenues to school districts for the purposes of capital outlay bonding,
100 construction, and renovation.]
101 [(2) The Capital Outlay Loan Program is established to provide:]
102 [(a) short-term help to school districts to meet district needs for school building
103 construction and renovation; and]
104 [(b) assistance to charter schools to meet school building construction and renovation
105 needs.]
106 [(3) School districts shall] A school district may only use the monies provided [to
107 them] under [the programs established by this section solely] this chapter for school district
108 capital outlay and debt service purposes, including capital outlay bonding, construction, and
109 renovation.
110 Section 3. Section 53A-21-201 is enacted to read:
111 Part 2. Capital Outlay Foundation Program
112 53A-21-201. Capital Outlay Foundation Program -- Definitions.
113 (1) There is created the Capital Outlay Foundation Program to guarantee a certain
114 amount of capital outlay funding to a school district that makes a sufficient local tax effort and
115 generates local property tax revenues below a foundation guarantee funding level.
116 (2) As used in this part:
117 (a) "Foundation guarantee level per ADM" means a minimum revenue amount per
118 ADM generated by a combined capital levy rate of .0024, including the following:
119 (i) the revenue generated locally from a school district's combined capital levy rate; and
120 (ii) the revenue allocated by the State Board of Education in accordance with Section

121 53A-21-202 .
122 (b) "Qualifying school district" means a school district with a property tax yield per
123 ADM less than the foundation guarantee level per ADM.
124 Section 4. Section 53A-21-202 is enacted to read:
125 53A-21-202. Capital Outlay Foundation Program -- Allocations -- Distribution
126 Formulas.
127 (1) For fiscal years beginning on or after July 1, 2008, the State Board of Education
128 shall determine the foundation guarantee level per ADM that fully allocates the funds
129 appropriated to the State Board of Education for distribution under this section.
130 (2) If a qualifying school district imposes a current year combined capital levy rate of
131 at least .0024 per dollar of taxable value, the State Board of Education shall allocate to the
132 qualifying school district an amount equal to the product of the following:
133 (a) the qualifying school district's prior year ADM; multiplied by
134 (b) an amount equal to the difference between the following:
135 (i) the foundation guarantee level per ADM for that fiscal year, as determined in
136 accordance with Subsection (1); and
137 (ii) the qualifying school district's property tax yield per ADM.
138 (3) Except as provided in Subsection (4), if a qualifying school district imposes a
139 current year combined capital levy rate less than .0024 per dollar of taxable value, the State
140 Board of Education shall allocate to the qualifying school district an amount equal to the
141 product of the following:
142 (a) the qualifying school district's prior year ADM; multiplied by
143 (b) an amount equal to the difference between the following:
144 (i) the foundation guarantee level per ADM for that fiscal year, as determined in
145 accordance with Subsection (1); and
146 (ii) the qualifying school district's property tax yield per ADM; multiplied by
147 (c) a percentage equal to the school district's current year combined capital levy rate
148 divided by .0024.
149 (4) Notwithstanding Subsection (3), if a qualifying school district imposes a combined
150 capital levy rate less than .0024 per dollar of taxable value, the State Board of Education shall
151 allocate funds to the school district in accordance with the allocation methodology under

152 Subsection (2) if:
153 (a) the school district imposed a combined capital levy rate of at least .0024 in either of
154 the prior two years; and
155 (b) the school district imposes at least its combined capital levy certified tax rate.
156 Section 5. Section 53A-21-301 is enacted to read:
157 Part 3. Capital Outlay Enrollment Growth Program
158 53A-21-301. Capital Outlay Enrollment Growth Program -- Definitions.
159 (1) There is created the Capital Outlay Enrollment Growth Program to provide capital
160 outlay funding to school districts experiencing net enrollment increases.
161 (2) As used in this part:
162 (a) "Adjusted allocation amount per student" means the product of:
163 (i) the base allocation amount per student; and
164 (ii) the quotient of the prior year statewide net taxable value per enrolled student
165 divided by the prior year school district net taxable value per enrolled student.
166 (b) "Adjusted basic capital outlay increment" means:
167 (i) for a receiving district, the basic capital outlay increment less the amount of any rate
168 reduction limitation increment remitted to the State Board of Education; and
169 (ii) for a contributing district, the basic capital outlay increment plus any allocations
170 received pursuant to Subsection 53A-21-302 (6).
171 (c) "Base allocation amount per student" means $10,000 in fiscal year 2009-10,
172 adjusted in future years by the percentage difference between the inflation index for the
173 calendar year preceding the calendar year in which the fiscal year begins and the inflation index
174 for calendar year 2008.
175 (d) "Basic capital outlay increment" means an amount equal to the allocations made to
176 a participating school district pursuant to Subsection 53A-21-302 (1) minus the revenue
177 generated from the levy imposed under Section 53A-21-303 .
178 (e) "Contributing school district" means a participating school district that is entitled to
179 receive less for a fiscal year from the allocations made pursuant to Subsection 53A-21-302 (1)
180 than it generates from the levy it imposes under Section 53A-21-303 .
181 (f) "Participating school district" means:
182 (i) each school district in a county of the first, second, or third class, as defined in

183 Section 17-50-501 ; and
184 (ii) a school district in a county of the fourth, fifth, or sixth class, as defined in Section
185 17-50-501 , that elects to participate in the Capital Outlay Enrollment Growth Program under
186 this part by imposing the basic capital outlay levy under Section 53A-21-303 .
187 (g) "Rate reduction limitation increment" means, for a receiving district whose
188 combined capital levy certified tax rate would be less than .0024 were it not for the rate
189 reduction limitation under Subsections 53A-21-302 (4)(a) and 53A-21-304 (2)(b), the amount of
190 revenue equal to the difference between the following:
191 (i) the amount of revenue that would have been generated by the combined capital levy
192 certified tax rate in absence of the requirement under Subsections 53A-21-302 (4)(a) and
193 53A-21-304 (2)(b); and
194 (ii) the amount of revenue generated by a property tax rate of .0024 per dollar of
195 taxable value.
196 (h) "Receiving district" means a participating school district that is entitled to receive
197 more for a fiscal year from the allocations made pursuant to Subsection 53A-21-302 (1) than it
198 generates from the levy it imposes under Section 53A-21-303 .
199 Section 6. Section 53A-21-302 is enacted to read:
200 53A-21-302. Capital Outlay Equalization Fund -- Distribution of funds.
201 (1) (a) Except as provided in Subsection (2), beginning in fiscal year 2009-10, the State
202 Board of Education shall allocate funding from the Capital Outlay Equalization Fund created in
203 Section 53A-21-502 to a participating school district in an amount equal to the product of:
204 (i) the adjusted allocation amount per student; multiplied by
205 (ii) the average net enrollment increase in the participating school district over the prior
206 three years, based on the October 1 enrollment counts.
207 (b) When a new school district is created or school district boundaries are adjusted:
208 (i) the three-year average net enrollment increase for each affected school district shall
209 be based on school district enrollment over the prior three years in non-charter schools located
210 within that school district's newly created or adjusted boundaries, based on October 1
211 enrollment counts; and
212 (ii) the school district net taxable value per enrolled student for each affected school
213 district shall be based upon:

214 (A) the prior year derived net taxable value within each school district's newly created
215 or adjusted boundaries; and
216 (B) the prior year total enrollment in non-charter schools located within the district's
217 newly created or adjusted boundaries.
218 (c) The State Board of Education may not provide an allocation under this Subsection
219 (1) to a participating school district that does not have an average net enrollment increase over
220 the prior three years.
221 (2) If revenues deposited into the Capital Outlay Equalization Fund are insufficient to
222 fully fund the allocations under Subsection (1) for a fiscal year, the State Board of Education
223 shall proportionately reduce allocations to match available revenues.
224 (3) A participating school district shall remit to the State Board of Education an
225 amount equal to the revenue generated from the basic capital outlay tax rate imposed under
226 Section 53A-21-303 on or before the June 30 immediately following the end of the taxable year
227 in which the participating school district imposes the basic capital outlay tax rate under Section
228 53A-21-303 .
229 (4) (a) A receiving school district shall impose a combined capital levy rate of at least
230 .0024 per dollar of taxable value.
231 (b) A receiving school district with a combined capital levy certified tax rate that
232 would be less than .0024 per dollar of taxable value were it not for the requirement of
233 Subsections (4)(a) and 53A-21-304 (2)(b) shall remit the district's rate reduction limitation
234 increment to the State Board of Education.
235 (5) The State Board of Education shall deposit revenues received pursuant to
236 Subsections (3) and (4)(b) into the Capital Outlay Equalization Fund.
237 (6) The State Board of Education shall allocate the rate reduction limitation increment
238 funds deposited into the Capital Outlay Equalization Fund pursuant to Subsection (4)(b) to
239 contributing districts by allocating an amount that equally reduces each contributing district's
240 basic capital outlay increment by the same percentage.
241 (7) In lieu of making transfers of actual funds pursuant to this section, the State Board
242 of Education and the Division of Finance may implement accounting procedures to increase or
243 decrease other allocations that would otherwise be made to a participating school district, if the
244 accounting procedures properly account for the flow of funds to and from:

245 (a) the Capital Outlay Equalization Fund, consistent with this section; and
246 (b) the revenue source of any allocations adjusted pursuant to this Subsection (7).
247 Section 7. Section 53A-21-303 is enacted to read:
248 53A-21-303. Basic capital outlay tax rate.
249 For taxable years beginning on or after January 1, 2009, a participating school district
250 shall impose a basic capital outlay tax rate of .000698 per dollar of taxable value.
251 Section 8. Section 53A-21-304 is enacted to read:
252 53A-21-304. Adjustment to the certified tax rate calculation for capital outlay --
253 Notice and hearing requirements.
254 (1) A contributing school district is exempt from the requirements of Sections
255 59-2-918 and 59-2-919 if the school district:
256 (a) imposes a rate less than or equal to the certified tax rate calculated pursuant to
257 Section 59-2-924 ; and
258 (b) imposes a rate less than or equal to the combined capital levy certified tax rate
259 calculated pursuant to this section.
260 (2) (a) If a receiving district imposes a combined capital levy rate that exceeds the
261 combined capital levy certified tax rate, the school district is subject to the requirements of
262 Sections 59-2-918 and 59-2-919 .
263 (b) The combined capital levy certified tax rate for a receiving school district may not
264 be less than .0024 per dollar of taxable value.
265 Section 9. Section 53A-21-401 , which is renumbered from Section 53A-21-104 is
266 renumbered and amended to read:
267 Part 4. Capital Outlay Loan Program
268 [53A-21-104]. 53A-21-401. Capital Outlay Loan Program -- School
269 Building Revolving Account -- Access to the account.
270 (1) There is created:
271 (a) the "Capital Outlay Loan Program" to provide:
272 (i) short-term help to school districts to meet district needs for school building
273 construction and renovation; and
274 (ii) assistance to charter schools to meet school building construction and renovation
275 needs; and

276 (b) a nonlapsing "School Building Revolving Account" administered within the
277 Uniform School Fund by the state superintendent of public instruction in accordance with rules
278 adopted by the State Board of Education.
279 (2) [Monies received by a school district] The State Board of Education may not
280 allocate funds from the School Building Revolving Account [may not] that exceed [the] a
281 school district's bonding limit minus its outstanding bonds.
282 (3) In order to receive monies from the account, a school district [must do the
283 following] shall:
284 (a) levy a [tax of] combined capital levy rate of at least .0024 [for capital outlay and
285 debt service];
286 (b) contract with the state superintendent of public instruction to repay the monies,
287 with interest at a rate established by the state superintendent, within five years of [their] receipt,
288 using future state [building monies or] capital outlay allocations, local revenues, or both;
289 (c) levy sufficient ad valorem taxes under Section 11-14-310 to guarantee annual loan
290 repayments, unless the state superintendent of public instruction alters the payment schedule to
291 improve a hardship situation; and
292 (d) meet any other condition established by the State Board of Education pertinent to
293 the loan.
294 (4) (a) The state superintendent shall establish a committee, including representatives
295 from state and local education entities, to:
296 (i) review requests by school districts for loans under this section; and
297 (ii) make recommendations regarding approval or disapproval of the loan applications
298 to the state superintendent.
299 (b) If the committee recommends approval of a loan application under Subsection
300 (4)(a)(ii), the committee's recommendation shall include:
301 (i) the recommended amount of the loan;
302 (ii) the payback schedule; and
303 (iii) the interest rate to be charged.
304 (5) (a) There is established within the School Building Revolving Account the Charter
305 School Building Subaccount administered by the State Board of Education, in consultation
306 with the State Charter School Board, in accordance with rules adopted by the State Board of

307 Education.
308 (b) The Charter School Building Subaccount shall consist of:
309 (i) money appropriated to the subaccount by the Legislature;
310 (ii) money received from the repayment of loans made from the subaccount; and
311 (iii) interest earned on monies in the subaccount.
312 (c) The state superintendent of public instruction shall make loans to charter schools
313 from the Charter School Building Subaccount to pay for the costs of:
314 (i) planning expenses;
315 (ii) constructing or renovating charter school buildings;
316 (iii) equipment and supplies; or
317 (iv) other start-up or expansion expenses.
318 (d) Loans to new charter schools or charter schools with urgent facility needs may be
319 given priority.
320 (6) (a) The State Board of Education shall establish a committee, which shall include
321 individuals who have expertise or experience in finance, real estate, and charter school
322 administration, one of whom shall be nominated by the governor to:
323 (i) review requests by charter schools for loans under this section; and
324 (ii) make recommendations regarding approval or disapproval of the loan applications
325 to the State Charter School Board and the State Board of Education.
326 (b) If the committee recommends approval of a loan application under Subsection
327 (6)(a)(ii), the committee's recommendation shall include:
328 (i) the recommended amount of the loan;
329 (ii) the payback schedule; and
330 (iii) the interest rate to be charged.
331 (c) The committee members may not:
332 (i) be a relative, as defined in Section 53A-1a-518 , of a loan applicant; or
333 (ii) have a pecuniary interest, directly or indirectly, with a loan applicant or any person
334 or entity that contracts with a loan applicant.
335 (7) The State Board of Education, in consultation with the State Charter School Board,
336 shall approve all loans to a charter [schools] school under this section.
337 (8) [Loans] The term of a loan to a charter [schools] school under this section may not

338 exceed [a term of] five years.
339 (9) The State Board of Education may not approve loans to charter schools under this
340 section that exceed a total of $2,000,000 in any year.
341 Section 10. Section 53A-21-501 , which is renumbered from Section 53A-21-105 is
342 renumbered and amended to read:
343 Part 5. Fiscal Matters
344 [53A-21-105]. 53A-21-501. Capital outlay programs -- Appropriations.
345 [(1)] As an ongoing appropriation subject to future budget constraints, there is
346 appropriated from the Uniform School Fund for fiscal year [2007-08] 2008-09, $27,288,900 to
347 the State Board of Education [for the capital outlay programs created in Section 53A-21-102 ],
348 to be allocated pursuant to Section 53A-21-202 .
349 [(2) Of the monies appropriated in Subsection (1), the State Board of Education shall
350 distribute:]
351 [(a) $24,358,000 in accordance with the Capital Outlay Foundation Program described
352 in Section 53A-21-103 ; and]
353 [(b) $2,930,900 in accordance with the Enrollment Growth Program described in
354 Section 53A-21-103.5 .]
355 Section 11. Section 53A-21-502 is enacted to read:
356 53A-21-502. Capital Outlay Equalization Fund -- Source of revenues -- Interest --
357 Unexpended revenues.
358 (1) There is created a restricted special revenue fund known as the Capital Outlay
359 Equalization Fund.
360 (2) (a) The fund shall be funded by:
361 (i) revenues from the basic capital outlay levy deposited pursuant to Subsection
362 53A-21-302 (3);
363 (ii) revenues from the rate reduction limitation increment deposited pursuant to
364 Subsection 53A-21-302 (4)(b); and
365 (iii) appropriations from the Legislature.
366 (b) Any interest earned on the fund shall be deposited into the fund.
367 (3) The State Board of Education shall distribute revenues collected from the basic
368 capital outlay levy imposed pursuant to Section 53A-21-303 for the Capital Outlay Enrollment

369 Growth Program, in accordance with Section 53A-21-302 .
370 (4) A school district that receives an allocation from the Capital Outlay Equalization
371 Fund may only use the allocation for school capital outlay or debt service.
372 Section 12. Repealer.
373 This bill repeals:
374 Section 53A-21-103, Qualifications for participation in the foundation program --
375 Distribution of monies -- Distribution formulas.
376 Section 53A-21-103.5, Qualifications for participation in the Enrollment Growth
377 Program -- State Board of Education rules -- Distribution formula.
378 Section 13. Effective date.
379 This bill takes effect July 1, 2008.




Legislative Review Note
as of 2-4-08 12:44 PM

Office of Legislative Research and General Counsel