H.F. 404 Section 1. Section 257.7, subsection 1, Code 2017, is 1 amended to read as follows: 2 1. Budgets. School districts are subject to chapter 24 . 3 The authorized expenditures of a school district during a 4 base year shall not exceed the lesser of the budget for that 5 year certified under section 24.17 , including any adjustment 6 required by section 257.17A, plus any allowable amendments 7 permitted in this section , or the authorized budget, which 8 is the sum of the combined district cost for that year, the 9 actual miscellaneous income received for that year, and the 10 actual unspent balance from the preceding year , including any 11 adjustment required by section 257.17A . 12 Sec. 2. NEW SECTION . 257.17A Regular program state 13 foundation aid adjustment —— transportation costs. 14 1. a. For the budget year beginning July 1, 2018, the 15 department of management shall, following the determination 16 of the total amount of state foundation aid payable to each 17 school district under section 257.16, subsection 1, and 18 notwithstanding the minimum foundation aid provisions in 19 section 257.1, subsection 2, reduce the total amount of regular 20 program state foundation aid payable to each school district 21 by an amount equal to the school district’s budget enrollment 22 multiplied by twelve and one-half percent of the state average 23 transportation costs per pupil, as calculated in section 24 257.31, subsection 17. 25 b. For the budget year beginning July 1, 2019, the 26 department of management shall, following the determination 27 of the total amount of state foundation aid payable to each 28 school district under section 257.16, subsection 1, and 29 notwithstanding the minimum foundation aid provisions in 30 section 257.1, subsection 2, reduce the total amount of regular 31 program state foundation aid payable to each school district 32 by an amount equal to the school district’s budget enrollment 33 multiplied by twenty-five percent of the state average 34 transportation costs per pupil, as calculated in section 35 -1- LSB 2338YH (3) 87 md/sc 1/ 11

H.F. 404 257.31, subsection 17. 1 c. For the budget year beginning July 1, 2020, the 2 department of management shall, following the determination 3 of the total amount of state foundation aid payable to each 4 school district under section 257.16, subsection 1, and 5 notwithstanding the minimum foundation aid provisions in 6 section 257.1, subsection 2, reduce the total amount of regular 7 program state foundation aid payable to each school district 8 by an amount equal to the school district’s budget enrollment 9 multiplied by thirty-seven and one-half percent of the state 10 average transportation costs per pupil, as calculated in 11 section 257.31, subsection 17. 12 d. For the budget year beginning July 1, 2021, the 13 department of management shall, following the determination 14 of the total amount of state foundation aid payable to each 15 school district under section 257.16, subsection 1, and 16 notwithstanding the minimum foundation aid provisions in 17 section 257.1, subsection 2, reduce the total amount of regular 18 program state foundation aid payable to each school district 19 by an amount equal to the school district’s budget enrollment 20 multiplied by fifty percent of the state average transportation 21 costs per pupil, as calculated in section 257.31, subsection 22 17. 23 e. For the budget year beginning July 1, 2022, the 24 department of management shall, following the determination 25 of the total amount of state foundation aid payable to each 26 school district under section 257.16, subsection 1, and 27 notwithstanding the minimum foundation aid provisions in 28 section 257.1, subsection 2, reduce the total amount of regular 29 program state foundation aid payable to each school district 30 by an amount equal to the school district’s budget enrollment 31 multiplied by sixty-two and one-half percent of the state 32 average transportation costs per pupil, as calculated in 33 section 257.31, subsection 17. 34 f. For the budget year beginning July 1, 2023, the 35 -2- LSB 2338YH (3) 87 md/sc 2/ 11

H.F. 404 department of management shall, following the determination 1 of the total amount of state foundation aid payable to each 2 school district under section 257.16, subsection 1, and 3 notwithstanding the minimum foundation aid provisions in 4 section 257.1, subsection 2, reduce the total amount of regular 5 program state foundation aid payable to each school district 6 by an amount equal to the school district’s budget enrollment 7 multiplied by seventy-five percent of the state average 8 transportation costs per pupil, as calculated in section 9 257.31, subsection 17. 10 g. For the budget year beginning July 1, 2024, the 11 department of management shall, following the determination 12 of the total amount of state foundation aid payable to each 13 school district under section 257.16, subsection 1, and 14 notwithstanding the minimum foundation aid provisions in 15 section 257.1, subsection 2, reduce the total amount of regular 16 program state foundation aid payable to each school district 17 by an amount equal to the school district’s budget enrollment 18 multiplied by eighty-seven and one-half percent of the state 19 average transportation costs per pupil, as calculated in 20 section 257.31, subsection 17. 21 h. For the budget year beginning July 1, 2025, and 22 each succeeding budget year, the department of management 23 shall, following the determination of the total amount of 24 state foundation aid payable to each school district under 25 section 257.16, subsection 1, and notwithstanding the minimum 26 foundation aid provisions in section 257.1, subsection 2, 27 reduce the total amount of regular program state foundation 28 aid payable to each school district by an amount equal to 29 the school district’s budget enrollment multiplied by the 30 state average transportation costs per pupil, as calculated in 31 section 257.31, subsection 17. 32 2. The department of management shall annually notify each 33 school district of the amount of the adjustment in regular 34 program state foundation aid under this section. This section 35 -3- LSB 2338YH (3) 87 md/sc 3/ 11

H.F. 404 shall not result in the recalculation of other state aid 1 amounts or the recalculation of any property tax levy rate for 2 the budget year. 3 3. The department of education and the department of 4 management shall adopt rules necessary to implement this 5 section, including rules that prescribe all necessary reporting 6 requirements for school districts. 7 Sec. 3. NEW SECTION . 257.17B Transportation equity program 8 —— fund —— appropriation. 9 1. A transportation equity program is established to 10 provide prioritized funding for school districts with average 11 transportation costs per pupil that exceed the statewide 12 minimum transportation costs per pupil for the same budget 13 year. 14 2. a. For the budget year beginning July 1, 2018, and 15 each succeeding budget year, the department of management 16 shall annually determine a statewide adjusted transportation 17 costs per pupil that is not lower than the statewide minimum 18 transportation costs per pupil. The statewide adjusted 19 transportation costs per pupil shall be annually determined, 20 by taking into account amounts appropriated under subsection 21 3, for the purpose of providing transportation equity aid for 22 those school districts with the highest transportation costs 23 per pupil differential. 24 b. Each school district that satisfies the criteria of 25 subsection 1 shall receive transportation equity aid in 26 an amount equal to the school district’s budget enrollment 27 multiplied by the difference between the school district’s 28 transportation costs per pupil for the budget year and the 29 statewide adjusted transportation costs per pupil for the 30 budget year. 31 c. For purposes of this section: 32 (1) “Average transportation costs per pupil” means the same 33 as calculated for districts under section 257.31, subsection 34 17. 35 -4- LSB 2338YH (3) 87 md/sc 4/ 11

H.F. 404 (2) “Statewide minimum transportation costs per pupil” means 1 the lowest district average transportation costs per pupil 2 among all school districts in the state. 3 (3) “Transportation costs per pupil differential” means the 4 difference between a district’s average transportation costs 5 per pupil and the statewide minimum transportation costs per 6 pupil for the same budget year. 7 3. a. A transportation equity fund is created as a separate 8 and distinct fund in the state treasury under the control of 9 the department of management. Moneys in the fund include 10 revenues credited to the fund, appropriations made to the fund, 11 and other moneys deposited in the fund. For each fiscal year 12 beginning on or after July 1, 2018, there is appropriated all 13 moneys in the fund to the department of management for purposes 14 of making transportation equity aid payments under this 15 section, as calculated under subsection 2, and transportation 16 base funding payments under subsection 4. 17 b. (1) For the budget year beginning July 1, 2018, there 18 is appropriated from the general fund of the state to the 19 department of management to be credited to the transportation 20 equity fund, an amount equal to twelve and one-half percent of 21 the amount of total actual costs for all children transported 22 in all districts used to calculate the state average 23 transportation costs per pupil under section 257.31, subsection 24 17. 25 (2) For the budget year beginning July 1, 2019, there 26 is appropriated from the general fund of the state to the 27 department of management to be credited to the transportation 28 equity fund, an amount equal to twenty-five percent of the 29 amount of total actual costs for all children transported 30 in all districts used to calculate the state average 31 transportation costs per pupil under section 257.31, subsection 32 17. 33 (3) For the budget year beginning July 1, 2020, there 34 is appropriated from the general fund of the state to the 35 -5- LSB 2338YH (3) 87 md/sc 5/ 11

H.F. 404 department of management to be credited to the transportation 1 equity fund, an amount equal to thirty-seven and one-half 2 percent of the amount of total actual costs for all children 3 transported in all districts used to calculate the state 4 average transportation costs per pupil under section 257.31, 5 subsection 17. 6 (4) For the budget year beginning July 1, 2021, there 7 is appropriated from the general fund of the state to the 8 department of management to be credited to the transportation 9 equity fund, an amount equal to fifty percent of the amount 10 of total actual costs for all children transported in all 11 districts used to calculate the state average transportation 12 costs per pupil under section 257.31, subsection 17. 13 (5) For the budget year beginning July 1, 2022, there 14 is appropriated from the general fund of the state to the 15 department of management to be credited to the transportation 16 equity fund, an amount equal to sixty-two and one-half 17 percent of the amount of total actual costs for all children 18 transported in all districts used to calculate the state 19 average transportation costs per pupil under section 257.31, 20 subsection 17. 21 (6) For the budget year beginning July 1, 2023, there 22 is appropriated from the general fund of the state to the 23 department of management to be credited to the transportation 24 equity fund, an amount equal to seventy-five percent of the 25 amount of total actual costs for all children transported 26 in all districts used to calculate the state average 27 transportation costs per pupil under section 257.31, subsection 28 17. 29 (7) For the budget year beginning July 1, 2024, there 30 is appropriated from the general fund of the state to the 31 department of management to be credited to the transportation 32 equity fund, an amount equal to eighty-seven and one-half 33 percent of the amount of total actual costs for all children 34 transported in all districts used to calculate the state 35 -6- LSB 2338YH (3) 87 md/sc 6/ 11

H.F. 404 average transportation costs per pupil under section 257.31, 1 subsection 17. 2 (8) For the budget year beginning July 1, 2025, and 3 each succeeding budget year, there is appropriated from the 4 general fund of the state to the department of management 5 to be credited to the transportation equity fund, an amount 6 equal to the amount of total actual costs for all children 7 transported in all districts used to calculate the state 8 average transportation costs per pupil under section 257.31, 9 subsection 17. 10 c. (1) If the balance of the fund exceeds the amount 11 necessary to make all transportation equity aid payments under 12 subsection 2, moneys remaining in the fund shall be used for 13 transportation base funding payments under subsection 4. 14 (2) If the balance of the fund exceeds the amount necessary 15 to make all transportation equity aid payments under subsection 16 2, and all transportation base funding payments under 17 subsection 4, moneys remaining in the fund at the end of a 18 fiscal year shall revert to the general fund of the state as 19 provided under section 8.33. 20 4. For budget years beginning on or after July 1, 2018, if 21 funding is available as provided in subsection 3, paragraph 22 “c” , subparagraph (1), each school district in the state shall 23 receive a transportation base funding payment in an amount 24 equal to the school district’s budget enrollment multiplied by 25 the statewide minimum transportation costs per pupil for the 26 budget year. If an amount appropriated for a budget year is 27 insufficient to pay all transportation base funding payments, 28 the department of management shall prorate such payment 29 amounts. 30 5. Transportation equity aid payments and transportation 31 base funding payments shall be paid by the department at the 32 same time and in the same manner as foundation aid is paid 33 under section 257.16. 34 6. Transportation equity aid payments and transportation 35 -7- LSB 2338YH (3) 87 md/sc 7/ 11

H.F. 404 base funding payments received under this section are 1 miscellaneous income and shall be deposited in the general 2 fund of the school district. Transportation equity aid 3 and transportation base funding payments under this section 4 shall not affect the receipt of transportation assistance aid 5 received under section 257.31, subsection 17. 6 EXPLANATION 7 The inclusion of this explanation does not constitute agreement with 8 the explanation’s substance by the members of the general assembly. 9 This bill relates to public school funding by establishing 10 a transportation equity program and requiring adjustments to 11 regular program state foundation aid amounts payable to school 12 districts. 13 Under the bill, for budget years beginning on or after July 14 1, 2018, the department of management is required to reduce the 15 total amount of regular program state foundation aid payable 16 to each school district under the school foundation funding 17 formula. The amount of the reductions are phased in over eight 18 budget years. The amount of the reduction is equal to the 19 school district’s budget enrollment multiplied by a specified 20 percentage of the state average transportation costs per pupil. 21 For the budget year beginning July 1, 2018, the percentage is 22 12.5 percent. For the budget year beginning July 1, 2019, 23 the percentage is 25 percent. For the budget year beginning 24 July 1, 2020, the percentage is 37.5 percent. For the budget 25 year beginning July 1, 2021, the percentage is 50 percent. 26 For the budget year beginning July 1, 2022, the percentage is 27 62.5 percent. For the budget year beginning July 1, 2023, the 28 percentage is 75 percent. For the budget year beginning July 29 1, 2024, the percentage is 87.5 percent. For the budget year 30 beginning July 1, 2025, and each succeeding budget year, the 31 percentage is 100 percent. 32 The department of management is required to notify each 33 school district annually of the amount of the reduction to 34 regular program state foundation aid. The bill does not 35 -8- LSB 2338YH (3) 87 md/sc 8/ 11

H.F. 404 permit the recalculation of other state aid amounts or the 1 recalculation of any property tax levy rate for the budget year 2 following the adjustments imposed under the bill. 3 The bill also establishes a transportation equity program to 4 provide prioritized funding for school districts with average 5 transportation costs per pupil that exceed the statewide 6 minimum transportation costs per pupil. For the budget year 7 beginning July 1, 2018, and each succeeding budget year, the 8 department of management is required to determine a statewide 9 adjusted transportation costs per pupil that is not lower than 10 the statewide minimum transportation costs per pupil. The 11 statewide adjusted transportation costs per pupil shall be 12 annually determined for the purpose of providing transportation 13 equity aid for those school districts with the highest 14 transportation costs per pupil differentials. Each qualified 15 school district receives transportation equity aid in an amount 16 equal to the school district’s budget enrollment multiplied by 17 the difference between the school district’s transportation 18 costs per pupil and the statewide adjusted transportation costs 19 per pupil, as those terms are defined in the bill. 20 The bill creates a transportation equity fund under the 21 control of the department of management. For the budget year 22 beginning July 1, 2018, the appropriation is equal to 12.5 23 percent of the amount of total actual costs for all children 24 transported in all districts used to calculate the state 25 average transportation costs per pupil. For the budget year 26 beginning July 1, 2019, the appropriation is equal to 25 27 percent of the amount of total actual costs for all children 28 transported in all districts used to calculate the state 29 average transportation costs per pupil. For the budget year 30 beginning July 1, 2020, the appropriation is equal to 37.5 31 percent of the amount of total actual costs for all children 32 transported in all districts used to calculate the state 33 average transportation costs per pupil. For the budget year 34 beginning July 1, 2021, the appropriation is equal to 50 35 -9- LSB 2338YH (3) 87 md/sc 9/ 11

H.F. 404 percent of the amount of total actual costs for all children 1 transported in all districts used to calculate the state 2 average transportation costs per pupil. For the budget year 3 beginning July 1, 2022, the appropriation is equal to 62.5 4 percent of the amount of total actual costs for all children 5 transported in all districts used to calculate the state 6 average transportation costs per pupil. For the budget year 7 beginning July 1, 2023, the appropriation is equal to 75 8 percent of the amount of total actual costs for all children 9 transported in all districts used to calculate the state 10 average transportation costs per pupil. For the budget year 11 beginning July 1, 2024, the appropriation is equal to 87.5 12 percent of the amount of total actual costs for all children 13 transported in all districts used to calculate the state 14 average transportation costs per pupil. For the budget year 15 beginning July 1, 2025, and each budget year thereafter, the 16 appropriation is equal to the amount of total actual costs for 17 all children transported in all districts used to calculate 18 the state average transportation costs per pupil. The bill 19 appropriates moneys in the fund to the department of management 20 for purposes of making transportation equity aid payments and, 21 if sufficient moneys are available in the fund, transportation 22 base funding payments. 23 For budget years beginning on or after July 1, 2018, if 24 funding is available in the transportation equity fund, each 25 school district in the state receives a transportation base 26 funding payment in an amount equal to the school district’s 27 budget enrollment multiplied by the statewide minimum 28 transportation costs per pupil. If an amount appropriated for 29 a budget year is insufficient to pay all transportation base 30 funding payments, the department of management is required to 31 prorate such payment amounts. 32 Transportation equity aid payments and transportation base 33 funding payments received under the bill are miscellaneous 34 income and must be deposited in the general fund of the school 35 -10- LSB 2338YH (3) 87 md/sc 10/ 11