SF4022

Purpose

• To modify how compensatory education aid is calculated and distributed for fiscal years 2024–2027 and beyond, with a focus on building-level measures, statewide totals, and how funds are allocated to schools and districts. The bill also adjusts related definitions and provisions that govern compensatory revenue, allocations to cooperative and alternative programs, and the effective date of previous laws.

Key Provisions and What They Do

• Building-level compensatory revenue pupil units (Section 1)

  • introduces the compensation revenue concentration percentage for each school building, based on Oct 1 counts:
  • concentration = 100 × (pupils eligible for free meals + 0.5 × pupils eligible for reduced-price meals) ÷ total pupils in the building on the previous Oct 1
  • defines the compensation revenue pupil weighting factor for a building as the lesser of 1 or (concentration ÷ 80)
  • calculates compensation revenue pupil units for a building as:
  • (free-meals count + 0.5 × reduced-price meals count) × 2 × (weighting factor)
  • contains special rules for voluntary prekindergarten programs, charter schools, and contracted alternative programs in the first year of operation (data used may be current-year data; prorating if starting after Oct 1)
  • requires counts to be based on individual pupils (not building averages)
  • includes “greater of” rules for 2025, 2026, and 2027 to preserve higher values from 2024 or 2025 as applicable

• Compensatory education revenue by building (Section 2)

  • For 2024–2027 (through 2027): building compensatory revenue equals the formula allowance minus 839 times the compensation revenue pupil units (CRPUs)
  • For 2027–2028 and later: building compensatory revenue equals the building’s compensatory pupils times the building compensatory allowance
  • If a district contracts with an alternative program or a change in area learning center occurs, revenue follows the current-year district (not prior-year) and paid to the appropriate contracting or fiscal agent district
  • If the total computed compensatory revenue is below a state-target amount (specific dollar figures in the bill), the commissioner must proportionally increase revenue to each building to reach the target
  • Transitional floors: the state sets minimum total compensatory revenue targets (different dollar amounts apply to 2026 and to 2027+), and the statewide total is adjusted to meet those floors

• Statewide compensatory allowance (Section 3)

  • For 2027–2028, a set statewide compensatory allowance amount is established
  • For 2028–2029 and later, the statewide allowance equals the prior-year statewide allowance multiplied by the ratio of the current-year formula allowance to the prior-year formula allowance (rounded to the nearest dollar)

• Building allocation and flexibility (Section 4)

  • At least 80% of compensatory revenue must be allocated to each school building where the generating students are served
  • Up to 20% may be allocated to school sites under a board-adopted plan that meets specified purposes
  • “Building” is defined as an education site; compensatory revenue from cooperative units must go to the cooperative
  • Districts or cooperatives may reallocate compensatory revenue among sites to reflect openings/closings or changes in attendance areas or demographics, with required reporting to the department
  • In fiscal years 2026–2028, districts may allocate up to 40% of compensatory revenue to school sites under a board-adopted plan (a temporary expansion of site-level allocation)
  • Provisions apply to cooperative units and special program structures like area learning centers and alternative programs

• Effective date adjustments (Section 5)

  • Updates the effective date language related to Laws 2023 chapter 55 article 1 section 37, as amended by later legislation

Significant Changes from Existing Law

• Recalculates compensatory revenue at the building level using a new concentration metric based on free and reduced-price meal eligibility (Oct 1 counts) and applies a weighting factor to convert to compensatory pupil units.
• Introduces a multi-year “greater of” approach to preserve higher values from prior years (2024, 2025, 2026, 2027) for certain years.
• Sets annual adjustments to compensatory revenue at the building level by subtracting a multiplier of CRPUs from a formula allowance (for 2024–2027) and switches to a pupil-based calculation (CRPUs × building compensatory allowance) for 2027–2028 onward.
• Establishes statewide minimum totals (floors) that require proportional increases if the calculated total falls short, with specific dollar targets for 2026 and 2027+.
• Expands flexibility in allocating compensatory revenue (up to 40% to school-site allocations during 2026–2028) and clarifies how allocations should be treated when buildings open/close or when programs change.
• Adjusts rules governing how compensatory revenue is paid when districts contract with alternative programs or when the fiscal agent district for an area learning center changes.

Practical Implications (for schools/districts)

• Schools’ share of compensatory funds will increasingly depend on the density of students eligible for free or reduced-price meals at the building level, not just district-wide or building-average counts.
• Some years include floor protections to ensure districts don’t fall below a minimum level of compensatory funding, with adjustments made to reach those floors.
• Districts have more defined control and reporting requirements for reallocating compensatory funds across buildings, with a higher potential (in certain years) to direct funds toward site-level needs.
• There are transitional rules for new programs (like preK, charter schools, or contracted alternate programs) that determine how compensatory funds are calculated in the first year of operation.
• The statewide baseline amount for compensatory aid is set for 2027–2028 and then adjusted annually based on a formula linking to the year’s formula allowance.

Potential Impacts to Watch

• Budget planning will need to account for building-level eligibility shifts (free/reduced-price meal counts) and the weighting factor changes.
• Districts may adjust site-level allocations within the 80/20 framework, especially in years with a 40% site-allocations allowance.
• Changes in programs or district structures (e.g., area learning centers, cooperative units, alternatives) could alter where compensatory funds are paid and how they are distributed.

Relevant Terms - compensatory revenue pupil units (CRPUs) - compensation revenue concentration percentage - compensation revenue pupil weighting factor - free meals - reduced-price meals - Oct. 1 count (previous fiscal year) - building (education site) - formula allowance - 80 percent / 20 percent allocation rule - cooperative unit - area learning center - fiscal agent district - alternative program - compensatory education revenue - statewide compensatory allowance - maximum site allocation (40 percent in specified years) - reframing of effective dates for related laws - reallocation and reporting requirements - floors/targets for total compensatory revenue (baseline dollar amounts)

Relevant Terms (plain list) - compensatory revenue - pupil units - building - free meals - reduced-price meals - Oct 1 count - concentration percentage - weighting factor - formula allowance - cooperative unit - area learning center - fiscal agent district - alternative program - building allocation - 80%/20% split - site-level allocation - reporting requirements - statewide allowance - floors/targets - transition rules - effective date