GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1993

H	1 

HOUSE BILL 1623*

Short Title:  Supplemental Funding Changes.	(Public)
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Sponsors: Representatives Rogers, Barnes, Black, Esposito, Fussell, Gray, Oldham; Cummings, Kuczmarski, McLawhorn, and Sexton.
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Referred to:  Appropriations.
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May 25, 1994

A BILL TO BE ENTITLED
AN ACT TO DEFINE "SUPPLANT" IN THE SUPPLEMENTAL FUNDING FORMULA FOR LOW-WEALTH AND SMALL SCHOOL SYSTEMS AND TO MAKE CHANGES TO REPORTING REQUIREMENTS.
The General Assembly of North Carolina enacts:
Section 1.  Subsection (c) of Section 138 of Chapter 321 of the 1993 Session Laws reads as rewritten:
"(c)	Definitions. – As used in this section:
(1)	'Anticipated county property tax revenue availability' means the county adjusted property tax base multiplied by the effective State average tax rate.
(2)	'Anticipated total county revenue availability' means the sum of the
a.	Anticipated county property tax revenue availability,
b.	Local sales and use taxes received by the county that are levied under Chapter 1096 of the 1967 Session Laws or under Subchapter VIII of Chapter 105 of the General Statutes,
c.	Food stamp exemption reimbursement received by the county under G.S. 105-164.44C,
d.	Homestead exemption reimbursement received by the county under G.S. 105-277.1A,
e.	Inventory tax reimbursement received by the county under G.S. 105-275.1 and G.S. 105-277A,
f.	Intangibles tax distribution and reimbursement received by the county under G.S. 105-213 and G.S. 105-213.1, and
g.	Fines and forfeitures deposited in the county school fund,
	for the most recent year for which data are available.
(3)	'Anticipated total county revenue availability per student' means the anticipated total county revenue availability for the county divided by the average daily membership of the county.
(4)	'Anticipated State average revenue availability per student' means the sum of all anticipated total county revenue availability divided by the average daily membership for the State.
(5)	'Average daily membership' means average daily membership as defined in the North Carolina Public Schools Allotment Policy Manual, adopted by the State Board of Education.  If a county contains only part of a local school administrative unit, the average daily membership of that county includes all students who reside within the county and attend that local school administrative unit.
(6)	'County adjusted property tax base' shall be computed as follows:
a.	Subtract the present-use value of agricultural land, horticultural land, and forestland in the county, as defined in G.S. 105-277.2, from the total assessed real property valuation of the county,
b.	Adjust the resulting amount by multiplying by a weighted average of the three most recent annual sales assessment ratio studies,
c.	Add to the resulting amount the:
1.	Present-use value of agricultural land, horticultural land, and forestland, as defined in G.S. 105-277.2,
2.	Value of property of public service companies, determined in accordance with Article 23 of Chapter 105 of the General Statutes, and
3.	Personal property value,
	for the county.
(7)	'County adjusted property tax base per square mile' means the county adjusted property tax base divided by the number of square miles of land area in the county.
(8)	'County wealth as a percentage of State average wealth' shall be computed as follows:
a.	Compute the percentage that the county per capita income is of the State per capita income and weight the resulting percentage by a factor of five-tenths,
b.	Compute the percentage that the anticipated total county revenue availability per student is of the anticipated State average revenue availability per student and weight the resulting percentage by a factor of four-tenths,
c.	Compute the percentage that the county adjusted property tax base per square mile is of the State adjusted property tax base per square mile and weight the resulting percentage by a factor of one-tenth,
d.	Add the three weighted percentages to derive the county wealth as a percentage of the State average wealth. 
(9)	'Effective county tax rate' means the actual county tax rate multiplied by a weighted average of the three most recent annual sales assessment ratio studies.
(10)	'Effective State average tax rate' means the average of effective county tax rates for all counties.
(10a)	'Local current expense funds' means the most recent county current expense appropriations to public schools, as reported by counties in the annual county financial information report to the State Treasurer.
(11)	'Per capita income' means the average for the most recent three years for which data are available of the per capita income according to the most recent report of the United States Department of Commerce, Bureau of Economic Analysis, including any reported modifications for prior years as outlined in the most recent report.
(12)	'Sales assessment ratio studies' means sales assessment ratio studies performed by the Department of Revenue under G.S. 105-289(h).
(13)	'State average current expense appropriations per student' means the most recent State total of county current expense appropriations to public schools, as reported by counties in the annual county financial information report to the State Treasurer, divided by the total State average daily membership.
(14)	'State average adjusted property tax base per square mile' means the sum of the county adjusted property tax bases for all counties divided by the number of square miles of land area in the State.
(14a)	'Supplant' means to decrease local per student current expense appropriations from one fiscal year to the next fiscal year.
(15)	'Weighted average of the three most recent annual sales assessment ratio studies' means the weighted average of the three most recent annual sales assessment ratio studies in the most recent years for which county current expense appropriations and adjusted property tax valuations are available.  If real property in a county has been revalued one year prior to the most recent sales assessment ratio study, a weighted average of the two most recent sales assessment ratios shall be used.  If property has been revalued the year of the most recent sales assessment ratio study, the sales assessment ratio for the year of revaluation shall be used."
Sec. 2.  Subsection (d) of Section 138 of Chapter 321 of the 1993 Session Laws reads as rewritten:
"(d)	Eligibility for funds. – Except as provided in subsection (h) of this section, the State Board of Education shall allocate these funds to local school administrative units located in whole or in part in counties in which the county wealth as a percentage of the State average wealth is less than one hundred percent (100%)."
Sec. 3.  Subsection (h) of Section 138 of Chapter 321 of the 1993 Session Laws reads as rewritten:
"(h)	Nonsupplant requirement. – A county in which a local school administrative unit receives funds under this section shall use the funds to supplement local current expense funds and shall not supplant local current expense funds. After July 1, 1994, the State Board of Education shall not allocate funds under this section to a county found to have used these funds to supplant local per student current expense funds.  Unless a county can show either (i) that extraordinary circumstances caused the county to supplant local current expense funds with funds allocated under this section; or (ii) that it has remedied any deficiency, the State Board of Education shall make a finding that a county has used these funds to supplant local current expense funds in the prior year, or the year for which the most recent data are available, if the average of the local per student current expense appropriation for the three most recent years is less than ninety-five percent (95%) of the greater of either (i) the local per student current expense appropriation for the 1991-92 fiscal year; or (ii) the average local per student current expense appropriation of the county for the three fiscal years immediately prior to the current year. The State Board of Education shall adopt rules to implement this section.
	."
Sec. 4.  Subsection (i) of Section 138 of Chapter 321 of the 1993 Session Laws reads as rewritten:
"(i)	Reports. – Counties that receive funds under this section shall report to the State Board of Education before March 1 each year on how they are using the funds for the fiscal year.  The State Board of Education shall report to the Joint Legislative Education Oversight Committee prior to May 1, 1994, and May 1, 1995, and annually thereafter on how the funds are being used.  In its report the State Board shall analyze local appropriations and identify counties that supplant funds.
The Local Government Commission shall report on March 1, 1995, and annually thereafter on county appropriations to local school current expense funds to the State Board of Education and to the Appropriations Committees of the Senate and House of Representatives."
Sec. 5.  Section 138.1 of Chapter 321 of the 1993 Session Laws reads as rewritten:
"Sec. 138.1.  (a)	Funds for Small School Systems. – Except as provided in subsection (b) of this section, the State Board of Education shall allocate funds appropriated for small school system supplemental funding (i) to each county school administrative unit with an average daily membership of less than 3,000 students and (ii) to each county school administrative unit with an average daily membership of from 3,000 to 4,000 students if the county in which the local school administrative unit is located has a county adjusted property tax base per student that is below the State adjusted property tax base per student and if the total average daily membership of all local school administrative units located within the county is from 3,000 to 4,000 students.  The allocation formula shall:
(1)	Round all fractions of positions to the next whole position.
(2)	Provide four additional regular classroom teachers in counties in which the average daily membership per square mile is greater than four and six additional regular classroom teachers in counties in which the average daily membership per square mile is four or less.
(3)	Provide additional program enhancement teachers adequate to offer the standard course of study.
(4)	Change the duty-free period allocation to one teacher assistant per 400 average daily membership.
(5)	Provide a base for the consolidated funds allotment of at least one hundred fifty thousand dollars ($150,000), excluding textbooks.
(6)	Allot vocational education funds for grade 6 as well as for grades 7-12.
If funds appropriated for each fiscal year for small school system supplemental funding are not adequate to fund fully the program, the State Board of Education shall reduce the amount allocated to each county school administrative unit on a pro rata basis.  This formula is solely a basis for distribution of supplemental funding for certain county school administrative units and is not intended to reflect any measure of the adequacy of the educational program or funding for public schools.  The formula is also not intended to reflect any commitment by the General Assembly to appropriate any additional supplemental funds for such county administrative units.
(b)	Nonsupplant requirement. – A county in which a local school administrative unit receives funds under this section shall use the funds to supplement local current expense funds and shall not supplant local current expense funds. After July 1, 1994, the State Board of Education shall not allocate funds under this section to a county found to have used these funds to supplant local per student current expense funds.  Unless a county can show either (i) that extraordinary circumstances caused the county to supplant local current expense funds with funds allocated under this section; or (ii) that it has remedied any deficiency, the State Board of Education shall make a finding that a county has used these funds to supplant local current expense funds in the prior year, or the year for which the most recent data are available, if the average of the local per student current expense appropriation for the three most recent years is less than ninety-five percent (95%) of the greater of either (i) the local per student current expense appropriation for the 1991-92 fiscal year; or (ii) the average local per student current expense appropriation of the county for the three fiscal years immediately prior to the current year. The State Board of Education shall adopt rules to implement this section.
(c)	Definitions. – As used in this section:
(1)	'Average daily membership' means average daily membership as defined in the North Carolina Public Schools Allotment Policy Manual, adopted by the State Board of Education.
(2)	'County adjusted property tax base per student' means the total assessed property valuation for each county, adjusted using a weighted average of the three most recent annual sales assessment ratio studies, divided by the total number of students in average daily membership who reside within the county.
(2a)	'Local current expense funds' means the most recent county current expense appropriations to public schools, as reported by counties in the annual county financial information report to the State Treasurer.
(3)	'Sales assessment ratio studies' means sales assessment ratio studies performed by the Department of Revenue under G.S. 105-289(h).
(4)	'State adjusted property tax base per student' means the sum of all county adjusted property tax bases divided by the total number of students in average daily membership who reside within the State.
(4a)	'Supplant' means to decrease local per student current expense appropriations from one fiscal year to the next fiscal year.
(5)	'Weighted average of the three most recent annual sales assessment ratio studies' means the weighted average of the three most recent annual sales assessment ratio studies in the most recent years for which county current expense appropriations and adjusted property tax valuations are available.  If real property in a county has been revalued one year prior to the most recent sales assessment ratio study, a weighted average of the two most recent sales assessment ratios shall be used.  If property has been revalued the year of the most recent sales assessment ratio study, the sales assessment ratio for the year of revaluation shall be used.
(d)	Reports. – Counties that receive funds under this section shall report to the State Board of Education before March 1 each year on how they are using the funds for the fiscal year.  The State Board of Education shall report to the Joint Legislative Education Oversight Committee prior to May 1, 1994, and May 1, 1995, and annually thereafter on how the funds are being used. In its report the State Board shall analyze local appropriations and identify counties that supplant funds.
The Local Government Commission shall report on March 1, 1995, and annually thereafter on county appropriations to local school current expense funds to the State Board of Education and to the Appropriations Committees of the Senate and House of Representatives."
Sec. 6.  This act becomes effective July 1, 1994.