D.__School administrative unit services, including system administration and operation and maintenance of plant.

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 or weighted pupil counts 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 students; 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 longevity of service and adjustments to general purpose aid.__The funding methodology of these educational cost components must be established based on available research.

5.__Local control of expenditures. Except for those components that are targeted funds, funds provided for 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.

6.__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 shall submit a plan for the use of these funds and shall receive funding based on approval of the plan by the commissioner.

Sec. 2. Recommended funding levels for fiscal year 2003-04. In addition to the fiscal year 2003-04 funding level

that is recommended by the Commissioner of Education to the Governor as prescribed in the Maine Revised Statutes, Title 20-A, section 15605, the Commissioner of Education shall also recommend at the same time an alternative funding level for fiscal year 2003-04 for consideration by the State Board of Education, the Governor and the Legislature.

1. Basis. The alternative funding level for fiscal year 2003-04 must be based on the essential programs and services funding model, as described in the Maine Revised Statutes, Title 20-A, chapter 606-B, and must contain the elements described in more detail in the report issued by the State Board of Education to the 119th Legislature pursuant to Public Law 1997, chapter 24, Part X, with any refinements and updates to those elements that have been endorsed by the State Board of Education prior to the time of the Commissioner of Education's recommendation for fiscal year 2003-04, provided those refinements and updates are consistent with the report on school funding issued in January 2002 by the Joint Standing Committee on Education and Cultural Affairs.

2. Public input. Prior to the determination by the State Board of Education of the elements of essential programs and services to be used in the Commissioner of Education's recommended alternative funding level for fiscal year 2003-04, the State Board of Education in conjunction with the Commissioner of Education shall hold such public forums on the proposed elements as are appropriate to inform and solicit input from key stakeholders and the public.

3. Issues identified by Commissioner of Education. If the Commissioner of Education, in developing the recommended alternative funding level for fiscal year 2003-04, identifies issues that have not been sufficiently addressed by the prior reports and actions of the State Board of Education, then the commissioner may recommend resolutions to these issues in the presentation of the alternative funding level for fiscal year 2003-04.

4. Revisions to school finance laws. With the recommended alternative funding level for fiscal year 2003-04, the Commissioner of Education shall present to the State Board of Education and to the Legislature any proposed statutory language necessary to implement the essential programs and services funding model, beginning in fiscal year 2003-04. This proposed statutory language must include the consolidation and simplification of existing laws regarding school finance.

Sec. 3. Phase-in. The essential programs and services approach to school funding must be phased in over a period of time beginning in fiscal year 2003-04. The essential programs and services approach must be fully implemented by fiscal year 2007-08. The details of this phase-in plan must be presented to the State Board of Education and the Legislature in conjunction with the Commissioner of Education's recommended alternative funding level for fiscal year 2003-04. The phase-in plan must address the relation between the essential program and services funding model and the levels of state funding necessary to reach a state share of funding of at least 50% of eligible general fund education costs statewide, exclusive of federal funds accounted for under the model.

Sec. 4. Subsidy cushions. During the phase-in period described in 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, with cushions related to the phase-in of the essential programs and services approach to school funding ending no later than fiscal year 2007-08.

Sec. 5. 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 provide information about best methods for promoting the use of these practices in school administrative units.

Sec. 6. Report. By January 15, 2003, the State Board of Education and the Commissioner of Education shall report to the joint standing committee of the Legislature having jurisdiction over education and cultural affairs with recommendations and proposed statutory language 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 Education Research Institute shall examine what basis there may be for recognizing legitimate regional differences. The report and the accompanying proposed statutory language must include, but are not limited to, recommendations on methods of determining costs for each of the components described in this Act; periodic adjustments to these component 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; findings and recommendations on the feasibility and appropriateness of a regional cost adjustment for legitimate regional differences in the cost of components; findings and recommendations on the appropriateness and feasibility of adjustments for educator recruitment and retention through equitable compensation; 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 2007-08. The State Board of Education and the Commissioner of Education may introduce legislation related to their report to the First Regular Session of the 121st Legislature at the time of submission of their report.

SUMMARY

The Joint Standing Committee on Education and Cultural Affairs is reporting out this bill to the House pursuant to Joint Order H.P. 1579.

The committee bill proposes to accomplish the following.

1. It 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.

2. It defines essential programs and services, including those elements to be funded on a per-pupil basis, addresses resources for specialized student populations, defines major cost components to be determined on other than a per-pupil basis and provides for targeted grants.

3. It 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.

4. It directs the Commissioner of Education and the State Board of Education to prepare an alternative recommended funding level based on essential programs and services for fiscal year 2003-04, in addition to the recommended funding level for fiscal year 2003-04 as provided under current law.

5. It provides for a report from the State Board of Education and the Commissioner of Education on a comprehensive transition plan, including proposed revisions to the school finance laws, to be submitted to the joint standing committee of the Legislature having jurisdiction over education and cultural affairs in January 2003.