AB304: Bill Text

LRB-1627/1

MJL:kaf:jlb

1997 - 1998 LEGISLATURE

1997 Assembly BILL 304

April 17, 1997 - Introduced by Representatives Olsen, Jeskewitz, Albers, Duff, Grothman, Hahn, Huebsch, Jensen, M. Lehman, Ott and Owens, cosponsored by Senators Darling, Huelsman, Schultz and Welch. Referred to Committee on Education.

AB304,2,2 An Act to renumber 121.07 (6) (e) and 121.07 (7) (e); to renumber and amend 117.30 (1), 120.06 (2), 121.90 (2), 121.905 (3) (a) and 121.905 (3) (b); to amend 67.12 (12) (e) 2., 117.05 (1m), 117.05 (2) (a), 117.05 (4) (a) (intro.), 117.05 (5) (a), 117.05 (8), 117.05 (9) (title), 117.05 (9) (a) (intro.), 117.05 (9) (b), 117.05 (10), 117.14 (1) (b), 117.15 (2m), 117.15 (6), 117.17 (1) (a), 117.20 (1), 117.22 (2) (a) 1., 117.22 (2) (d), 120.42 (1) (a), 121.84 (1) (b) and 121.905 (4); and to create 67.05 (6a) (bg), 67.05 (7) (j), 67.12 (12) (e) 2r., 67.12 (12) (h), 117.05 (4) (d), 117.05 (9) (a) 1. and 2., 117.105, 117.17 (1) (bm), 117.22 (2) (bm), 117.22 (3), 117.25 (4), 117.30 (1) (b) and (c), 120.06 (2) (b), 120.42 (1) (c), 121.07 (6) (e) 2., 121.07 (7) (e) 2., 121.78 (2) (bm), 121.78 (2) (br), 121.90 (2) (b), 121.905 (3) (a) 2., 121.905 (3) (b) 2., 121.91 (2m) (e), 121.91 (4) (c) 3. and 121.91 (4) (f) of the statutes; relating to: procedures to create a school district out of the territory of one or more existing school districts and information provided to persons filing a petition for a referendum on the detachment of large territory from one school district and its attachment to another school district.

Analysis by the Legislative Reference Bureau

This bill creates the following procedures under which a new school district may be created out of a portion or portions of the territory of one or more existing school districts and the following provisions applicable after the creation of the new school district.

A. REORGANIZATION PROCEDURES

1. Initiation of reorganization

The reorganization may be initiated by either of the following:

(a) The adoption of resolutions to create the new school district by the school boards of all the affected school districts (school districts containing territory within the proposed district); or

(b) The filing of a petition to create the new school district signed by electors who include at least 20% of the total number of electors residing in all the affected school districts and 5% of the electors residing in each affected school district. The petition must include the approximate boundaries of the proposed school district.

2. Public hearing, precise boundaries and allocation of assets and liabilities

Each school board must hold a public hearing on the proposed reorganization. Two or more school boards of the affected school districts may hold a joint public hearing.

After the public hearing, the school boards of the affected school districts may agree on the precise boundaries and the allocation of assets and liabilities between the affected school districts and the new school district if the school boards of a majority of the affected school districts adopt resolutions by November 1 following the initiation of reorganization. If a majority of the school boards fails to agree on the precise boundaries and fails to allocate the assets and liabilities by that date, the school district boundary appeal board (SDBAB) must draw the precise boundaries and allocate the assets and liabilities. In addition, the department of public instruction (DPI) must charge the affected school boards a fee sufficient to reimburse DPI for the costs of SDBAB. In determining the precise boundaries, neither the school board nor SDBAB may detach territory from any additional school districts.

The assets and liabilities of the affected school districts must be allocated among the affected school districts and the new school district in proportion to the equalized valuations of all taxable property in the affected school districts and the new school district. The boards of the affected school districts may establish an alternative method to apportion assets and liabilities.

3. Decision of the school boards

After the precise boundaries have been drawn and the assets and liabilities have been allocated, the school board of each affected school district must adopt a resolution granting or denying the reorganization. The resolution must state the school board's rationale and include an evaluation of the following factors:

(a) The geographical and topographical characteristics of the affected school districts, including the estimated travel time to and from school for pupils in the school districts.

(b) The educational needs of all the children residing in the affected school districts, the educational programs currently offered by each affected school district and the ability and commitment of each school district to meet those needs and continue to offer those educational programs.

(c) Whether the creation of the new school district will have any adverse effect on the programs currently offered by the affected school districts.

(d) The testimony of and written statements filed by the residents of the affected school districts.

(e) The estimated fiscal effect of the proposed reorganization on the affected school districts, including the effect of the apportionment of assets and liabilities.

(f) Whether the proposed creation of a new school district will make any part of an affected school district's territory noncontiguous.

(g) The socioeconomic level and racial composition of the pupils who reside or will reside in territory proposed to be included in the new school district; the proportion of the pupils who reside in such territory who are children at risk; and the effect that the pupils will have on the present and future socioeconomic level and racial composition of the affected school districts and on the proportion of the affected school district's enrollments that will be children at risk.

(h) Other appropriate factors.

The failure of a school board to adopt a resolution either ordering or denying the creation of the school district before the required date constitutes a denial of the creation of the school district by that school board. If any of the affected school boards denies the reorganization and no electors file a petition for review by SDBAB of the school boards' decision, the process ends and the reorganization does not occur. If all the affected school boards grant the reorganization and the electors do not file a petition for review, a referendum is held.

4. Review by SDBAB

If all the affected school boards grant the reorganization, a petition for review by SDBAB may be filed if it is signed by 10% or more of the electors residing in the territory of the affected school districts that is not located within the proposed new school district. If any of the affected school districts denies the reorganization, a petition for review by SDBAB may be filed if it is signed by 10% or more of the electors residing in each affected school district.

If a petition for review is filed, SDBAB must hold a public hearing. After the hearing and after consulting with the affected school boards, SDBAB may modify the proposed boundaries and the allocation of assets and liabilities, unless SDBAB drew the boundaries and made the allocation. If SDBAB modifies the proposed boundaries or allocation of assets and liabilities, the school boards of the affected school districts have another opportunity to vote on the proposed reorganization before SDBAB issues its decision.

SDBAB must issue a written decision granting or denying the reorganization, which states its rationale and evaluation of each of the factors listed in section A.3. If SDBAB does not grant the reorganization, there is no reorganization. If SDBAB grants the reorganization, a referendum of electors is held.

DPI may charge the person filing the petition for review a fee sufficient to reimburse DPI for the costs of SDBAB.

5. Referendum for final approval; election of school board; effective date of reorganization; appeal to court

If the affected school boards or SDBAB grants the reorganization, the proposed reorganization must also be approved at a referendum by electors residing in the territory of the proposed new school district. If the referendum fails to approve the reorganization, no reorganization occurs. If the referendum approves the reorganization, the reorganization takes effect either on the next July 1 or on the 2nd July 1, if the members of the new school board, who are elected at the spring election, choose to delay the effective date of the reorganization for one year. Members of the school board of the new school district who are elected at the first election must reside in the territory of the school district that will be created. If a person elected to the school board of the new school district is also a member of a school district from which territory was detached to create the new school district, he or she is not eligible to serve on the school board of the new school district unless he or she resigns as a member of the school board of the other school district.

Any person aggrieved by SDBAB's granting or denial of the proposed reorganization may appeal to circuit court.

B. PROVISIONS APPLICABLE AFTER THE REORGANIZATION

1. Revenue limits and state aid

School districts from which territory was detached to create the new school district receive state equalization aid based on their previous year's per member equalized valuations, enrollments and costs, as current law provides. In addition:

(a) In the school year in which the reorganization takes effect, the existing school districts' revenue limits are increased by an amount equal to 10% of their state aid; and

(b) In each of the following 4 school years, the school districts' primary and secondary cost ceilings per member and their primary, secondary and tertiary guaranteed valuations per member are multiplied by 1.1. The additional state aid generated by these 10% adjustments is not subject to revenue limits.

The 3-year rolling membership average used to reflect changes of membership under the current revenue limits applies to a school district's loss of membership due to the loss of territory to the new school district created by the reorganization.

The revenue limit for the new school district for its first year of operation is calculated by multiplying the previous year's per pupil revenue for each existing school district by the number of pupils enrolled in that school district during the previous school year who resided in territory that was detached from that school district to create the new school district. The per pupil revenues of each existing school district are then added and the sum is divided by the total number of pupils residing in the detached territory who were enrolled in the previous school year in the school district from which the territory was detached. The allowable revenue increase for the current school year is added and the resulting sum is multiplied by the greater of:

(a) The total number of pupils residing in the detached territory who were enrolled in the previous school year in the school district from which the territory was detached; or

(b) The number of pupils enrolled in the new school district as determined by its 3rd Friday of September pupil count for the current school year.

After the first year of operation of the new school district, its revenue limit is computed as the revenue limit for other school districts is computed, with appropriate adjustments to reflect that pupil counts cannot be averaged over 3 years until a school district has been in operation for that long.

2. Referenda for borrowing to finance the allocation of assets and liabilities

Under current law, if a school district proposes to borrow through the issuance of promissory notes in excess of $5,000 or through the issuance of bonds in any amount, a referendum may be required if the amount to be borrowed causes the school district's outstanding indebtedness incurred without a referendum (excluding debt incurred before August 9, 1989) to exceed the lesser of $1,000,000 or 1.5% of the statewide average equalized valuation per member multiplied by the school district's membership.

This bill creates an exception to these referenda provisions that allows both the new school district and the school districts from which territory was detached, without holding a referendum, to issue bonds or promissory notes to finance any assets or liabilities apportioned to them under the reorganization or to finance any assets, including cash, apportioned to another school district. In addition, the revenue limits of the school districts issuing the notes or bonds is increased by the amount of the funds needed to pay the general obligation debt service on the borrowed amounts.