Under current law, a school district’s operating referendum aid and levy are calculated based on three factors: 1) the district’s school board and voter approved referendum allowance, 2) the district’s referendum market value per resident pupil unit, and 3) a set of statutory equalization factors. The factors are $880,000 for first tier equalization, $510,000 for second tier equalization, and $290,000 for third tier equalization.

Some other school levies are calculated and equalized on the basis of a uniform rate. Under these equalization systems, every district levies the same percentage of its tax base. In districts with more taxable property, this uniform levy raises more money than in districts with less taxable property. If the uniform levy raises less than the district’s total revenue entitlement, the state pays equalization aid equal to the remaining balance.

This proposal adds a second-level, uniform rate-based levy cap on the existing referendum equalization levy program. The cap reduces the referendum levy in districts with especially high local referendum tax rates as adjusted for local board and voter decisions about the level of the district’s referendum allowance. In districts subject to the new levy cap, the state provides additional equalization aid.

Section 1. Referendum equalization levy. For fiscal year 2021 and later, for each of the first, second, and third tier equalization levies, caps the referendum levy at a percentage of the district’s referendum market value. This cap is adjusted for the district’s referendum allowance.

Section 2. Appropriation. Appropriates additional general education aid to pay for the increased equalization aid generated under section 1.