FOR AN ACT ENTITLED, An Act to  require that sixty-five percent of a school district's operating budget be expended for instructional purposes.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF SOUTH DAKOTA:
     Section  1.  This Act shall be known and may be cited as the First Class Education for South Dakota Act.
     Section  2.  Terms used in this Act mean:

             (1)    "Classroom instructional expenditures," expenditures directly related to classroom instruction, including instructional materials, the salary and employment benefits paid to instructional and classroom personnel, activities involving interaction between students and teachers or other instructional or classroom personnel, special education instruction, tutors, books, classroom computers, general supplies, instructional aides, class activities such as field trips, athletics, arts, music, and multidisciplinary learning, and extracurricular activities;

             (2)    "Operational expenditures," all expenditures made by a school district except expenditures for capital construction, debt or bond payments, interest payments on

debt or bonds, and rental or lease payments for facilities.
     Section  3.  A school district shall spend at least sixty-five percent of its operational expenditures on classroom instructional expenditures.
     Section  4.  If a school district does not spend at least sixty-five percent of its operational expenditures on classroom instructional expenditures in fiscal year 2008, the school district, for fiscal year 2009 and each fiscal year thereafter, shall increase the percentage of its operational expenditures that it spends on classroom instructional expenditures by at least two percent until the school district spends at least sixty-five percent of its operational expenditures on classroom instructional expenditures as required by this Act.
     Section  5.  Each school district shall submit its annual budget showing the district's classroom instructional expenditures as a percentage of its operational expenditures to the secretary of education, who shall verify that the planned classroom instructional expenditures of the school district meet the requirements of this Act.
     Section  6.  That chapter 13-13 be amended by adding thereto a NEW SECTION to read as follows:

     Any school district that fails to meet the requirements of this Act and is not granted a waiver pursuant to section 7 of this Act, shall receive foundation program state aid, distributed according to the provisions of § §  13-13-10.1 to 13-13-41, based not on the per student allocation as defined in subsection 13-13-10.1(4) for the current school fiscal year, but on the per student allocation for the prior school fiscal year, and the school district's foundation program state aid funding shall remain at that level until the secretary of education verifies that the school district is meeting the requirements of this Act.
     Section  7.  A school district unable to meet the requirements of this Act may apply for a one- year waiver from the secretary of education. The school district's application for waiver shall

include the facts and circumstances surrounding the district's inability to meet the requirement, and the secretary of education shall notify the school district if the waiver has been granted or not within thirty days of receiving the application. When determining whether to grant the waiver, the secretary of education shall consider such factors as the transportation costs of the district, the district's geographic size, and the distribution of students throughout the district.
     Section  8.  In administering the First Class Education for South Dakota Act, the secretary of education shall develop model budgetary plans for school districts and provide tools to help school districts meet the requirements of this Act.
     Section  9.  The secretary of education may promulgate rules, pursuant to chapter 1-26, establishing the waiver application process, application time lines, and the criteria to be used in granting waivers.