D.__District services, including system administration and maintenance operations.

3.__Specialized student populations. In recognition that educational needs can be more costly for some student populations than for others, modified per-pupil guarantee amounts must be calculated for specialized student populations.__The specialized student populations to be addressed are:

A.__Special education students;

B.__Limited English proficiency students;

C.__Economically disadvantaged youth; and

D.__Students in kindergarten to grade 2.

4.__Educational cost components outside the per-pupil guarantee. A per-pupil guarantee is not a suitable method for allocation of all educational cost components.__These components may include, but are not limited to, debt service, transportation, bus purchases, vocational education, small school adjustments, teacher educational attainment and adjustments to general purpose aid.__The commissioner and the state board shall provide separate recommendations for the funding methodology of these educational cost components based on available research.

5.__Regional cost differentials.__Legitimate regional cost differentials must be recognized in the school funding formula.__ The Maine Education Policy Research Institute shall examine what basis there may be for recognizing legitimate regional differences.

6.__Local control of expenditures. Except for those components that are targeted funds, funds provided in accordance with the essential programs and services described in this section must be distributed as general purpose aid for local schools, and each school administrative unit shall make its own determination regarding the configuration of resources best suited for its pupils and how to allocate available funds for these resources.

7.__Targeted funds. Funds for technology, assessment and the costs of additional investments in educating children in kindergarten to grade 2 must be provided as targeted grants.

School administrative units submit a plan for the use of these funds and shall receive funding based on approval of the plan by the commissioner.

Sec. 2. Phase-in. Following the completion of the 4-year plan of targeted increases to the per-pupil guarantee and progress on the subsidy reduction percentage as provided in the Maine Revised Statutes, Title 20-A, chapter 606-A, the essential programs and services approach to school funding must be phased in over a 4- year period beginning in fiscal year 2003-04 and fully implemented in fiscal year 2006-07.

Sec. 3. Subsidy cushions. During the phase-in period described in section 2 of this Act, the impact of any reduction in subsidy between consecutive years for any school administrative unit must be cushioned. Because such cushions are inequitable, the level of the cushion must decline each year.

Sec. 4. Best practices. The State Board of Education shall provide for ongoing research to identify those best practices in schools that increase student performance or improve efficient operation and use of resources. The State Board of Education, in its report on essential programs and services to the joint standing committee of the Legislature having jurisdiction over education and cultural affairs, shall include benchmarks for best practices and methods for promoting the use of these benchmarks.

Sec. 5. Report. By January 15, 2002, the State Board of Education and the Commissioner of Education shall report to the Joint Standing Committee on Education and Cultural Affairs with recommendations for full implementation of a system of school funding and accountability for resources based on essential programs and services, including comprehensive revisions to the current school finance laws. In conjunction with the State Board of Education, the Maine Education Policy Research Institute shall examine what basis there may be for recognizing legitimate regional differences. The report must include, but is not limited to, recommendations on methods of determining costs for each of the components described in this Act; periodic adjustments to these components and to the calculated costs; strategies for implementing the findings and recommendations of follow-up studies on essential programs and services previously directed by the Legislature; and a transition plan to full implementation of this new funding system beginning in fiscal year 2003-04 and completed no later than fiscal year 2006-07.

SUMMARY

This bill establishes a timeline for a transition to a new school funding approach, based on essential programs and services, in order to provide all children with an equitable opportunity to access the resources necessary to achieve the high standards of Maine's system of learning results. The bill defines the core components of essential programs and services, including those elements to be funded on a per-pupil basis, resources for specialized student populations, major cost components to be determined on other than a per-pupil basis and targeted grants. The bill provides that funding essential programs and services is a state-local partnership, and that local school administrative units retain the authority to determine how to expend funds once they are received from the State, with the exception of the targeted grants. The bill provides for a report from the State Board of Education and the Commissioner of Education on a comprehensive transition plan, including revisions to the school finance laws, to be submitted in January 2002.