In an early move, the 1997 Legislature repealed the formula allowance and appropriation caps that were put in place during the 1995 Special Session. The removal of the caps increased the general education open appropriation by about $337 million for the new biennium. In the 1997 Omnibus K-12 Education Bill, the Legislature approved an overall 11.9 percent increase in revenue over the previous biennium for K-12 education. The Legislature focused much of the new spending on increasing the basic formula amount and increased funding for low-income and high-risk students. The 1997 law also included a new education income tax credit and an increase in the income tax deduction for private school tuition. (The new income tax changes are described in more detail in the tax section.)

Formula Allowance. The 1997 Legislature increased the general education basic per-pupil revenue amount by $76 in FY 1998, and another $79 in FY 1999 and later, at a cost of $231 million for the new biennium.

Compensatory Revenue. The 1997 Legislature made a number of changes in the compensatory revenue. Beginning in FY 1998, compensatory revenue will be computed using building-level free and reduced lunch counts instead of district-wide AFDC counts. The resulting new formula will increase the number of sites eligible for compensatory revenue as well as increase the amount of compensatory revenue that many districts were receiving previously. These changes in the compensatory formula account for about $100 million in new revenue for the biennium. The new compensatory revenue must be allocated to the building sites where the students who have generated the revenue are served. Eligible sites will now include tribal contract schools and public and private alternative programs.

Basic Skills Revenue. Beginning in FY 1999, compensatory revenue, limited English proficiency (LEP) revenue, and assurance of mastery revenue will be combined into a new basic skills revenue. The LEP portion will contain a new concentration revenue for districts with high numbers of LEP students.

General Education Levy. The Omnibus Bill set the general education levy for FY 1998 at $1,359,000 and $1,385,000 for FY 1999 and later. The general education tax rate will decrease from 37.4 percent of net tax capacity in FY 1998 to 35.5 percent in FY 1999.

Property Tax Shift. The calculation for the property tax shift was simplified by only counting against the general education levy. The new shift percentage is set at 7 percent for FY 1997 and later. $18.7 million was appropriated for the reduction in the shift due to the simplification.

Special Education

First Grade Preparedness. The 1997 Legislature appropriated $10 million to continue the First Grade Preparedness pilot program established in 1996. Approximately $7.4 million of the appropriation is for school sites that were in the program in 1996. The remaining appropriation is used to expand the program to more sites, based on the number of students on the free and reduced lunch program.

Homeless Student Programs. A new funding mechanism and a capital grant program were created to help districts deal with homeless students. School districts will receive an additional $100 per homeless pupil. School districts with high numbers of homeless pupils will also be able to apply for capital grants to improve education services at facilities that serve homeless children.

Magnet Schools. The 1997 Legislature appropriated $7.5 million for capital grants to expand or build new magnet school facilities in the metro area.

Education Excellence

Charter Schools. The Omnibus Bill contained two new programs to provide additional funding for charter schools. About $2.6 million was appropriated for charter school lease aid and $1.5 million for charter school startup grants. The Legislature also approved a $3.3 million grant for a community-based school in St. Paul.

Laboratory Schools. Both public and private postsecondary institutions will be eligible to receive grants from a $2.5 million appropriation to establish laboratory schools for K-12 students.

Statewide Testing. The Legislature appropriated $5 million to the Department of Children, Families, and Learning to develop and implement the statewide tests that were part of the bill that repealed the general education funding caps. The new statewide tests will be given in grades 3, 5, 8, and one secondary grade.

Graduation Rule Implementation. Each school district will receive an extra $10 per pupil unit in FY 1998 for graduation rule acceleration. This is a one-time appropriation for $10 million.

Technology

The Legislature appropriated almost $90 million for technology-related programs, which is about a $59 million increase over the previous biennium. The appropriation includes a one-time $24 per pupil additional technology revenue ($25 million total appropriation), $14 million for site-based competitive technology grants, and $23 million for telecommunication connections.

The Department of Children, Families, and Learning also received a $6 million appropriation to establish a computer refurbishing program in state corrections institutions. The program will refurbish computers that are donated by businesses for schools. These computers will be used by school districts.

Other Education Programs

Other significant appropriations include:

Increase of $4.5 million for school-to-work initiatives;


$4.7 million for flood-related damages in public schools (additional flood relief revenue for schools was approved in the 1997 Special Session Flood Relief Bill);



• About $1 million for Targeted Breakfast grants; and

  
  
$2 million for a "Learn and Earn" graduation achievement program for youths who live in high-crime areas.

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