FOR AN ACT ENTITLED, An Act to revise the funding of special education.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF SOUTH DAKOTA:
     Section  1.  That subdivision (9) of section 1 of chapter 108 of the 1996 Session Laws be repealed.
     Section  2.  That section 2 of chapter 108 of the 1996 Session Laws be amended to read as follows:

     This Section 1 of this Act is effective July 1, 1999.
     Section  3.  That section 3 of chapter 108 of the 1996 Session Laws be repealed.
     Section  4.  That section 4 of chapter 108 of the 1996 Session Laws be amended to read as follows:

     A school district is not eligible for funding from the money set aside in § §  13-37-38 to 13- 37-40, inclusive, if the school district's unless the school district certifies to the secretary of education and cultural affairs that its ending special education fund balance exceeds will not exceed five percent of its special education expenditures for the prior current fiscal year.
     Section  5.  That § 13-37-44 be amended to read as follows:

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     13-37-44.   A school district's state aid for special education shall be reduced by the amount which its ending special education fund balance exceeds twenty percent of its special education expenditures for the prior fiscal year or fifty thousand dollars, whichever is greater, if the school district did not receive money set aside in § §  13-37-38 to 13-37-40, inclusive, during the prior fiscal year; or the amount which its ending special education fund balance exceeds five percent of its special education expenditures for the prior fiscal year if the school district received money set aside in § §  13-37-38 to 13-37-40, inclusive, during the prior fiscal year .
     Section  6.  Section 5 of this Act is effective July 1, 1999.
     Section  7.  That § 13-37-43 be amended to read as follows:
     13-37-43.   For the transition period from January 1, 1997, through school fiscal year 1999, state aid to special education shall be determined according to the following calculations:

             (1)      For the period January 1, 1997, through June 30, 1997, state aid for special education is the greater of (a) state aid for special education as calculated in §   13-37-36, or (b) actual school special education expenditures for fiscal year 1994 less federal revenues for special education less local effort, the result which is multiplied times 0.59;

             (2)      For school fiscal year 1998, state aid for special education is the greater of (a) state aid for special education as calculated in §   13-37-36, or (b) actual school special education expenditures for fiscal year 1994 less federal revenues for special education less local effort, the result which is multiplied times 0.95;

             (3)      For school fiscal year 1999, state aid for special education is the greater of (a) state aid for special education as calculated in §   13-37-36, or (b) actual school special education expenditures for fiscal year 1994 less federal revenues for special education less local effort, the result which is multiplied times 0.48 0.95 .

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     Section  8.  That § 13-37-35 be amended to read as follows:
     13-37-35.   Terms used in § §   13-37-35 to 13-37-47, inclusive, mean:

             (1)      "Average daily membership," the average number of kindergarten through twelfth grade pupils enrolled in all schools operated by the school district during the previous regular school year minus the average number of pupils for whom the district receives tuition and plus the average number of pupils for whom the district pays tuition;

             (2)      "Index factor," is the annual percentage change in the consumer price index for urban wage earners and clerical workers as computed by the Bureau of Labor Statistics of the United States Department of Labor for the year before the year immediately preceding the year of adjustment or three percent, whichever is less;

             (3)      "Local effort," is the amount of taxes payable each year, using the maximum levy for the special education fund of a school district of one dollar and forty cents per thousand dollars of taxable valuation. The levy shall be based on valuations including valuations pursuant to § §   13-13-10.2 and 13-13-20.4 such that the median level of assessment represents 85% of market value as determined by the Department of Revenue. For the period January 1, 1997, through June 30, 1997, local effort shall be one-half of the amount of taxes payable in calendar year 1997, using the maximum levy for the special education fund of a school district of one dollar and forty cents per thousand dollars of taxable valuation. The levy shall be based on valuations such that the median level of assessment represents 85% of market value as determined by the Department of Revenue;

             (4)      "Allocation for a student with a mild disability," for the period January 1, 1997, through June 30, 1997, is $807. For school fiscal year beginning July 1, 1997, the

allocation for a student with a mild disability shall be $1,614 increased by the lesser of the index factor or three percent. For each school year thereafter, the allocation for a student with a mild disability shall be the previous fiscal year's allocation for such child increased by the lesser of the index factor or three percent;

             (5)      "Allocation for a student with a severe disability," for the period January 1, 1997, through June 30, 1997, is $9,682. For school fiscal year beginning July 1, 1997, the allocation for a child with a severe disability shall be $19,364 increased by the lesser of the index factor or three percent. For each school year thereafter, the allocation for a child with a severe disability shall be the previous fiscal year's allocation for such child increased by the lesser of the index factor or three percent;

             (6)      "Local need," an amount to be determined as follows:

             (a)      For a school district with an average daily membership of less than 13,000:

             (i)      Multiply the average daily membership times 0.1025;

             (ii)      Multiply the result of (i) times the allocation for a student with a mild disability;

             (iii)      Multiply the average daily membership times 0.015;

             (iv)      Multiply the result of (iii) times the allocation for a student with a severe disability;

             (v)      Add together the result of (ii) and the result of (iv);

             (b)      For a school district with an average daily membership greater than 13,000:

             (i)      Multiply the average daily membership times 0.1025;

             (ii)      Multiply the result of (i) times the allocation for a student with a mild disability;

             (iii)      Subtract 13,000 from the average daily membership, the difference of

which is multiplied times 0.0000034, the result of which is added to 0.015;

             (iv)      Multiply the average daily membership times the lesser of the result of (iii) or 0.03 0.027 ;

             (v)      Multiply the result of (iv) times the allocation for a student with a severe disability;

             (vi)      Add together the result of (ii) and the result of (v);

             (7)      "Student with mild disability," is a student whose performance level is not sufficient to demonstrate success in the regular education environment without the provision of special education, who meets eligibility criteria under Part B, IDEA, and who has been identified as a student in need of special education or special education and related services according to criteria set forth in rules promulgated pursuant to §   13-37-46;

             (8)      "Student with severe disability," is a student with a low-incidence disability who:

             (a)      Meets eligibility criteria under Part B, IDEA;

             (b)      Has been identified as a student in need of special education or special education and related services according to criteria set forth in rules promulgated pursuant to §   13-37-46; and

             (c)      Presents needs which require intervention skills which are substantially different from those provided to nondisabled students, in that the skills are disability-specific and require special training, equipment, and facilities to perform;

             (9)      "Effort factor," the school district's special education tax levy in dollars per thousand divided by $1.40.

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     Section  9.  That section 12 of chapter 34 of the 1997 Session Laws be amended to read as follows:
State Aid for Special Education
    Personal Services $0        $0    $0    $0
    Operating Expenses $37,875,924 $37,038,226     $0    $0     $37,875,924 $37,038,226
    Total     $37,875,924 $37,038,226     $0    $0     $37,875,924 $37,038,226 0.0
     Section  10.  That § 13-37-39 be amended to read as follows:
     13-37-39.   Subject to the limitation in §   13-37-42, the secretary of the Department of Education and Cultural Affairs shall, for school fiscal year 1998, set aside four percent (4%) of the state special education appropriation for extraordinary expenses incurred in providing special education programs or services to one or more children with disabilities, with expenditures to be made as recommended by an oversight board and approved by the secretary of the Department of Education and Cultural Affairs. Any funds not expended or obligated pursuant to this section shall not be subject to reversion pursuant to §  4-8-19. The maximum amount not subject to reversion is equal to 5.75% of the state special education appropriation.
     Section  11.  Sections 9 and 10 of this Act are effective June 15, 1998.
     Section  12.  That § 13-37-40 be amended to read as follows:
     13-37-40.   Subject to the limitation in §   13-37-42, the secretary of the Department of Education and Cultural Affairs shall, for school fiscal year 1999 and each year thereafter, set aside 5.75% of the state special education appropriation for extraordinary expenses incurred in providing special education programs or services to one or more children with disabilities, with expenditures to be made as recommended by an oversight board and approved by the secretary of the Department of Education and Cultural Affairs. Any funds not expended or obligated pursuant to this section shall not be subject to reversion pursuant to §  4-8-19. The maximum

amount not subject to reversion is equal to 5.75% of the state special education appropriation.

     Section  13.  That chapter 13-16 be amended by adding thereto a NEW SECTION to read as follows:

     The South Dakota Board of Education may promulgate rules pursuant to chapter 1-26 to identify allowable expenditures from the special education fund.
     Section  14.  That chapter 13-16 be amended by adding thereto a NEW SECTION to read as follows:

     Each school district shall file the annual financial report pursuant to §  13-8-47 using the uniform accounting system as defined in the accounting manual developed pursuant to §  4-11-6. Reports not filed prior to August fifteenth are considered past due and are subject to the past-due provisions of §  13-13-38.

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BILL HISTORY
1/21/98 First read in Senate and referred to Education.   S.J.   136
2/4/98 Scheduled for Committee hearing on this date.
2/4/98 Education Deferred to another day.
2/9/98 Scheduled for Committee hearing on this date.
2/9/98 Education Do Pass Amended, Passed, AYES 7, NAYS 0.   S.J.   380