small school adjustment; overrides; revisions

HB2672 - 572R - I Ver

REFERENCE TITLE:
small school adjustment; overrides; revisions

State of Arizona

House of Representatives

Fifty-seventh Legislature

Second Regular Session

2026

HB 2672

Introduced by

Representatives
Hernandez C: Hernandez A, Luna-N�jera, Volk

AN
ACT

amending sections 15-481 and 15-949,
Arizona Revised Statutes; relating to school district budgeting.

(TEXT OF BILL BEGINS ON NEXT PAGE)

Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 15-481, Arizona Revised
Statutes, is amended to read:

START_STATUTE
15-481.

Override election; budget increases; informational pamphlet;
notice; ballot; effect

A. If a proposed budget
of a school district exceeds the aggregate budget limit for the budget year, at
least ninety days before the proposed election the governing board shall order
an override election to be held on the first Tuesday following the first Monday
in November as prescribed by section 16-204, subsection F for the purpose
of presenting the proposed budget to the qualified electors of the school
district who by a majority of those voting either shall affirm or reject the
budget. At the same time as the order of the election, the governing
board shall publicly declare the deadline for submitting arguments, as set by
the county school superintendent pursuant to subsection B, paragraph 9 of this
section, to be submitted in the informational pamphlet and shall immediately
post the deadline in a prominent location on the district's
website. In addition, the governing board shall prepare an alternate
budget that does not include an increase in the budget of more than the amount
allowed as provided in section 15-905. If the qualified
electors approve the proposed budget, the governing board of the school
district shall follow the procedures prescribed in section 15-905 for
adopting a budget that includes the authorized increase. If the
qualified electors disapprove the proposed budget, the governing board shall
follow the procedures prescribed in section 15-905 for adopting a budget
that does not include the proposed increase or the portion of the proposed
increase that exceeds the amount authorized by a previously approved budget
increase as prescribed in subsection P of this section.

B. The county school
superintendent shall prepare an informational pamphlet on the proposed increase
in the budget and a sample ballot and, at least forty days before the election,
shall transmit the informational pamphlet and the sample ballot to the
governing board of the school district. The governing board, on
receipt of the informational pamphlet and the ballot, shall mail or distribute
the informational pamphlet and the ballot to the households in which qualified
electors reside within the school district at least thirty-five days
before the election. Any distribution of material concerning the
proposed increase in the budget shall not be conducted by children enrolled in
the school district. The informational pamphlet shall contain the
following information:

1. The date of the
election.

2. The voter's polling
place and the times it is open.

3. The proposed total
increase in the budget that exceeds the amount allowed pursuant to section 15-905.

4. The total amount of
the current year's budget, the total amount of the proposed budget and the
total amount of the alternate budget.

5. If the override is
for a period of more than one year, a statement indicating the number of years
the proposed increase in the budget would be in effect and the percentage of
the school district's revenue control limit that the district is requesting for
the future years.

6. The proposed total
amount of revenues that will fund the increase in the budget and the amount
that will be obtained from a levy of taxes on the taxable property within the
school district for the first year for which the budget increase was adopted.

7. The proposed amount
of revenues that will fund the increase in the budget and that will be obtained
from other than a levy of taxes on the taxable property within the school
district for the first year for which the budget increase was adopted.

8. The dollar amount and
the purpose for which the proposed increase in the budget is to be expended for
the first year for which the budget increase was adopted. The
purpose statement shall only present factual information in a neutral manner.�
Advocacy for the expenditures is strictly limited to the arguments submitted
pursuant to paragraph 9 of this subsection.

9. At least two
arguments, if submitted, but not more than ten arguments for and two arguments,
if submitted, but not more than ten arguments against the proposed increase in
the budget. The arguments shall be in a form prescribed by the
county school superintendent, and each argument shall not exceed two hundred
words. Arguments for the proposed increase in the budget shall be
provided in writing and signed by the governing board. The ballot
arguments for the proposed increase in the budget shall be signed as the
governing board of the school district without listing any member's individual
name for the arguments for the proposed increase. If submitted,
additional arguments in favor of the proposed increase in the budget shall be
provided in writing with a signed, sworn statement by those in
favor. Arguments against the proposed increase in the budget shall
be provided in writing with a signed, sworn statement by those in
opposition. If the argument is submitted by an organization, it
shall contain the sworn statement of two executive officers of the
organization. If the argument is submitted by a political committee,
it shall contain the sworn statement of the committee's chairperson or
treasurer. If the argument is submitted by an individual and not on
behalf of an organization, a political committee or any other group, the person
shall submit the argument with a sworn, notarized statement. The
names of persons and entities submitting written arguments shall be included in
the informational pamphlet. Persons signing the argument shall
identify themselves by giving their residence address and telephone number,
which may not appear in the informational pamphlet, except that the person's
city or town and state of residence shall appear in the
pamphlet. Any argument that is submitted and that does not comply
with this paragraph may not be included in the pamphlet. The county
school superintendent shall review all factual statements contained in the
written arguments and correct any inaccurate statements of fact. The
superintendent shall not review and correct any portion of the written
arguments that are identified as statements of the author's
opinion. The county school superintendent shall make the written
arguments available to the public as provided in title 39, chapter 1, article
2. A deadline for submitting arguments to be included in the
informational pamphlet shall be set by the county school superintendent.

10. A statement that the
alternate budget shall be adopted by the governing board if the proposed budget
is not adopted by the qualified electors of the school district.

11. The current limited
property value and the net assessed valuation provided by the department of
revenue, the first year tax rate for the proposed override and the estimated
amount of the secondary property taxes if the proposed budget is adopted for
each of the following:

(a) An owner-occupied
residence whose assessed valuation is the average assessed valuation of
property classified as class three, as prescribed by section 42-12003 for
the current year in the school district.

(b) An owner-occupied
residence whose assessed valuation is one-half of the assessed valuation
of the residence in subdivision (a) of this paragraph.

(c) An owner-occupied
residence whose assessed valuation is twice the assessed valuation of the
residence in subdivision (a) of this paragraph.

(d) A business whose
assessed valuation is the average of the assessed valuation of property
classified as class one, as prescribed by section 42-12001, paragraphs 12
and 13 for the current year in the school district.

12. If the election is
conducted pursuant to subsection L or M of this section, the following
information:

(a) An executive summary
of the school district's most recent capital improvement plan submitted to the
school facilities oversight board.

(b) A complete list of
each proposed capital improvement that will be funded with the budget increase
and a description of the proposed cost of each improvement, including a
separate aggregation of capital improvements for administrative purposes as
defined by the school facilities oversight board.

(c) The tax rate
associated with each of the proposed capital improvements and the estimated
cost of each capital improvement for the owner of a single family home that is
valued at $80,000.

C. For the purpose of this section, the school
district may use its staff, equipment, materials, buildings or other resources
only to distribute the informational pamphlet at the school district office or
at public hearings and to produce such information as required in subsection B
of this section.� This subsection does not preclude school districts from
holding or participating in any public hearings at which testimony is given by
at least one person for the proposed increase and one person against the proposed
increase. Any written information provided by the district
pertaining to the override election shall include financial information showing
the estimated first year tax rate for the proposed budget override amount.

D. If any amount of the
proposed increase will be funded by a levy of taxes in the district, the
election prescribed in subsection A of this section shall be held on the first
Tuesday following the first Monday in November as prescribed by section 16-204,
subsection F. If the proposed increase will be fully funded by
revenues from other than a levy of taxes, the elections prescribed in
subsection A of this section shall be held on any date prescribed by section 16-204. The
elections shall be conducted as nearly as practicable in the manner prescribed
in article 1 of this chapter, sections 15-422
,

through

15-423,
15-424 and
section
15-426, relating to special elections, except
that:

1. The notices required
pursuant to section 15-403 shall be posted not less than twenty-five
days before the election.

2. Ballots shall be
counted pursuant to title 16, chapter 4, article 10.

E. If the election is to
exceed the revenue control limit and if the proposed increase will be fully
funded by a levy of taxes on the taxable property within the school district,
the ballot shall contain the words "budget increase, yes" and
"budget increase, no", and the voter shall signify the voter's
desired choice. The ballot shall also contain the amount of the
proposed increase of the proposed budget over the alternate budget, a statement
that the amount of the proposed increase will be based on a percentage of the
school district's revenue control limit in future years, if applicable, as
provided in subsection P of this section and the following statement:

Any budget increase
authorized by this election shall be entirely funded by a levy of taxes on the
taxable property within this school district for the year for which adopted and
for ____ subsequent years, shall not be realized from monies furnished by the
state and shall not be subject to the limitation on taxes specified in article
IX, section 18, Constitution of Arizona. Based on the current net
assessed valuation used for secondary property tax purposes, to fund the
proposed increase in the school district's budget would require an estimated
tax rate of $_____________ per $100 of net assessed valuation used for
secondary property tax purposes and is in addition to the school district's tax
rate that will be levied to fund the school district's revenue control limit
allowed by law.

F. If the election is to
exceed the revenue control limit and if the proposed increase will be fully
funded by revenues from other than a levy of taxes on the taxable property
within the school district, the ballot shall contain the words "budget
increase, yes" and "budget increase, no", and the voter shall
signify the voter's desired choice.� The ballot shall also contain:

1. The amount of the
proposed increase of the proposed budget over the alternate budget.

2. A statement that the
amount of the proposed increase will be based on a percentage of the school
district's revenue control limit in future years, if applicable, as provided in
subsection P of this section.

3. The following
statement:

Any budget increase
authorized by this election shall be entirely funded by this school district
with revenues from other than a levy of taxes on the taxable property within
the school district for the year for which adopted and for ______ subsequent
years and shall not be realized from monies furnished by the state.

G. Except as provided in
subsection H of this section, the maximum budget increase that may be requested
and authorized as provided in subsection E or F of this section or the
combination of subsections E and F of this section is fifteen percent of the
revenue control limit as provided in section 15-947, subsection A for the
budget year.� If a school district requests an override pursuant to section 15-482
or to continue with a budget override pursuant to section 15-482 for
pupils in kindergarten programs and grades one through three that was
authorized before December 31, 2008, the maximum budget increase that may be
requested and authorized as provided in subsection E or F of this section or
the combination of subsections E and F of this section is ten percent of the
revenue control limit as provided in section 15-947, subsection A for the
budget year.

H. Special budget
override provisions for school districts with a student count of less than one
hundred fifty-four in kindergarten programs and grades one through eight
or with a student count of less than one hundred seventy-six in grades
nine through twelve are as follows:

1. The maximum budget
increase that may be requested and authorized as provided in subsections E and
F of this section is the greater of the amount prescribed in subsection G of
this section or a limit computed as follows:

(a) For common or
unified districts with a student count of less than one hundred fifty-four
in kindergarten programs and grades one through eight, the limit computed as
prescribed in item (i) or (ii) of this subdivision, whichever is appropriate:

(i)

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Count Limit
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School
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Base Level
���
Factor

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125
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+ (0.0005 x���� x
$
=
$

������������������������� (500 � Student Count))

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Isolated

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Down������������� School District

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�������
Elementary Limit

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$

����� =
$

(ii)

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Down

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���
Count Limit
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School
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���
Factor

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125

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$
=
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���������� Phase Down���� Phase Down��������������� School
District

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���������
Elementary Limit

���������� $150,000��� ��
$
����� =�
$

(b) For unified or union
high school districts with a student count of less than one hundred seventy-six
in grades nine through twelve, the limit computed as prescribed in item (i) or
(ii) of this subdivision, whichever is appropriate:

(i)

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Down

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���
Count Limit
���
School
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���
Base Level
��
Factor

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100
� x 1.468
+ (0.0005 x���� x
$
=
$ __

������������������������� (500 � Student Count))

��������������������������������������������������� Small
Isolated

���������� Phase Down���� Phase Down��������������� District

����������
Base
����
Reduction
Factor
���������
Secondary Limit

���������� $350,000��� ��
$

������ =�
$

(ii)

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Down

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���
Count Limit
��
School
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������
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��
Factor

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100

x� 1.398 + (0.0004 x���� x
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=
$

������������������������� (500 - Student Count))

��������������������������������������������������� Small

���������� Phase Down���� Phase
Down��������������� School District

����������
Base
����
Reduction
Factor
���������
Secondary Limit

���������� $350,000��� ��
$

������ =�
$

(c) If
both subdivisions (a) and (b) of this paragraph apply to a unified school
district, its limit for the purposes of this paragraph is the combination of
its elementary limit and its secondary limit.

(d) If only subdivision
(a) or (b) of this paragraph applies to a unified school district, the
district's limit for the purposes of this paragraph is the sum of the limit
computed as provided in subdivision (a) or (b) of this paragraph plus ten
percent of the revenue control limit attributable to those grade levels that do
not meet the eligibility requirements of th
is
subsection. If a school district budgets monies outside the revenue
control limit pursuant to section 15-949, subsection
E
or H
, the district's limit for the
purposes of this paragraph is only the ten
percent
of the revenue control limit attributable to those grade
levels that are not included under section 15-949, subsection
E
or H
. For the purposes of
this
subdivision, the revenue control limit is separated into elementary
and secondary components based on the weighted student count as provided in
section 15-971, subsection B, paragraph 2, subdivision (a).

2. If a school district
utilizes this subsection to request an override of more than one year, the
ballot shall include an estimate of the amount of the proposed increase in the
future years in place of the statement that the amount of the proposed increase
will be based on a percentage of the school district's revenue control limit in
future years, as prescribed in subsections E and F of this section.

3. Notwithstanding
subsection P of this section, the maximum period of an override authorized
pursuant to this subsection is five years.

4. Subsection P,
paragraphs 1 and 2 of this section do not apply to overrides authorized
pursuant to this subsection.

I. If the election is to
exceed the revenue control limit as provided in section 15-482 and if the
proposed increase will be fully funded by a levy of taxes on the taxable
property within the school district, the ballot shall contain the words
"budget increase, yes" and "budget increase, no", and the
voter shall signify the voter's desired choice.� The ballot shall also contain
the amount of the proposed increase of the budget over the alternate budget, a
statement that the amount of the proposed increase will be based on a
percentage of the school district's revenue control limit in future years, if
applicable, as provided in subsection Q of this section, and the following
statement:

Any budget increase
authorized by this election shall be entirely funded by a levy of taxes on the
taxable property within this school district for the year for which adopted and
for _____ subsequent years, shall not be realized from monies furnished by the
state and shall not be subject to the limitation on taxes specified in article
IX, section 18, Constitution of Arizona. Based on the current net
assessed valuation used for secondary property tax purposes, to fund the
proposed increase in the school district's budget that will be funded by a levy
of taxes on the taxable property within this school district would require an
estimated tax rate of $__________ per $100 of net assessed valuation used for
secondary property tax purposes and is in addition to the school district's tax
rate that will be levied to fund the school district's revenue control limit
allowed by law.

J. If the election is to
exceed the revenue control limit as provided in section 15-482 and if the
proposed increase will be fully funded by revenues other than a levy of taxes
on the taxable property within the school district, the ballot shall contain
the words "budget increase, yes" and "budget increase, no",
and the voter shall signify the voter's desired choice. The ballot
shall also contain the amount of the proposed increase of the proposed budget
over the alternate budget, a statement that the amount of the proposed increase
will be based on a percentage of the school district's revenue control limit in
future years, if applicable, as provided in subsection Q of this section and
the following statement:

Any budget increase
authorized by this election shall be entirely funded by this school district
with revenues from other than a levy of taxes on the taxable property within
the school district for the year for which adopted and for _____ subsequent
years and shall not be realized from monies furnished by the state.

K. The maximum budget
increase that may be requested and authorized as provided in subsection I or J
of this section, or a combination of both of these subsections, is five percent
of the revenue control limit as provided in section 15-947, subsection A
for the budget year. For a common school district not within a high
school district or a common school district within a high school district that
offers instruction in high school subjects as provided in section 15-447,
five percent of the revenue control limit means five percent of the revenue
control limit attributable to the weighted student count in preschool programs
for children with disabilities, kindergarten programs and grades one through
eight as provided in section 15-971, subsection B.� For a unified school
district, five percent of the revenue control limit means five percent of the
revenue control limit attributable to the weighted student count in preschool
programs for children with disabilities, kindergarten programs and grades one
through twelve. For a union high school district, five percent of
the revenue control limit means five percent of the revenue control limit
attributable to the weighted student count in grades nine through twelve.

L. If the election is to
exceed district additional assistance and if the proposed increase will be
fully funded by a levy of taxes on the taxable property within the school
district, the ballot shall contain the words "budget increase, yes"
and "budget increase, no", and the voter shall signify the voter's
desired choice. An election held pursuant to this subsection shall
be held on the first Tuesday after the first Monday of November. The
ballot shall also contain the amount of the proposed increase of the proposed
budget over the alternate budget and the following statement:

Any budget increase
authorized by this election shall be entirely funded by a levy of taxes on the
taxable property within this school district for the year in which adopted and
for _____ subsequent years, shall not be realized from monies furnished by the
state and shall not be subject to the limitation on taxes specified in article
IX, section 18, Constitution of Arizona. Based on the current net
assessed valuation used for secondary property tax purposes, to fund the
proposed increase in the school district's budget would require an estimated
tax rate of $____________ per $100 of net assessed valuation used for secondary
property tax purposes and is in addition to the school district's tax rate that
will be levied to fund the school district's district additional assistance
allowed by law.

M. If the election is to
exceed district additional assistance and if the proposed increase will be
fully funded by revenues from other than a levy of taxes on the taxable
property within the school district, the ballot shall contain the words
"budget increase, yes" and "budget increase, no", and the
voter shall signify the voter's desired choice.� An election held pursuant to
this subsection shall be held on the first Tuesday after the first Monday of
November.� The ballot shall also contain the amount of the proposed increase of
the proposed budget over the alternate budget and the following statement:

Any budget increase
authorized by this election shall be entirely funded by this school district
with revenues from other than a levy of taxes on the taxable property within
the school district for the year in which adopted and for ______ subsequent
years and shall not be realized from monies furnished by the state.

N. If the election is to
exceed a combination of the revenue control limit as provided in subsection E
or F of this section, the revenue control limit as provided in subsection I or
J of this section or district additional assistance as provided in subsection L
or M of this section, the ballot shall be prepared so that the voters may vote
on each proposed increase separately and shall contain statements required in
the same manner as if each proposed increase were submitted separately.

O. If the election
provides for a levy of taxes on the taxable property within the school
district, at least thirty days before the election, the department of revenue
shall provide the school district governing board and the county school superintendent
with the current net assessed valuation of the school district. The
governing board and the county school superintendent shall use the current net
assessed valuation of the school district to translate the amount of the
proposed dollar increase in the budget of the school district over that allowed
by law into a tax rate figure.

P. If the voters in a
school district vote to adopt a budget in excess of the revenue control limit
as provided in subsection E or F of this section, any additional increase shall
be included in the aggregate budget limit for each of the years
authorized. Any additional increase shall be excluded from the
determination of equalization assistance. The school district
governing board, however, may levy on the net assessed valuation used for
secondary property tax purposes of the property in the school district the
additional increase if adopted under subsection E of this section for the
period of one year, two years or five through seven years as authorized.� If an
additional increase is approved as provided in subsection F of this section,
the school district governing board may only use revenues derived from the
school district's prior year's maintenance and operation fund ending cash
balance to fund the additional increase.� If a budget increase was previously
authorized and will be in effect for the budget year or budget year and
subsequent years, as provided in subsection E or F of this section, the
governing board may request a new budget increase as provided in the same
subsection under which the prior budget increase was adopted, which shall not
exceed the maximum amount allowed under subsection G of this
section. If the voters in the school district authorize the new
budget increase amount, the existing budget increase no longer is in
effect. If the voters in the school district do not authorize the
budget increase amount, the existing budget increase remains in effect for the
time period for which it was authorized. The maximum additional
increase authorized as provided in subsection E or F of this section and the
additional increase that is included in the aggregate budget limit is based on
a percentage of a school district's revenue control limit in future years, if
the budget increase is authorized for more than one year. If the
additional increase:

1. Is for two years, the
proposed increase in the second year is equal to the initial proposed
percentage increase.

2. Is for five years or
more, the proposed increase is equal to the initial proposed percentage
increase in the following years of the proposed increase, except that in the
next to last year it is two-thirds of the initial proposed percentage
increase and it is one-third of the initial proposed percentage increase
in the last year of the proposed increase.

Q. If the voters in a
school district vote to adopt a budget in excess of the revenue control limit
as provided in subsection I or J of this section, any additional increase shall
be included in the aggregate budget limit for each of the years authorized.�
Any additional increase shall be excluded from the determination of
equalization assistance. The school district governing board,
however, may levy on the net assessed valuation used for secondary property tax
purposes of the property in the school district the additional increase if
adopted under subsection I of this section for the period of one year, two
years or five through seven years as authorized.� If an additional increase is
approved as provided in subsection J of this section, the increase may only be
budgeted and expended if sufficient monies are available in the maintenance and
operation fund of the school district. If a budget increase was
previously authorized and will be in effect for the budget year or budget year
and subsequent years, as provided in subsection I or J of this section, the
governing board may request a new budget increase as provided in the same
subsection under which the prior budget increase was adopted that does not
exceed the maximum amount permitted under subsection K of this
section. If the voters in the school district authorize the new
budget increase amount, the existing budget increase no longer is in
effect. If the voters in the school district do not authorize the
budget increase amount, the existing budget increase remains in effect for the
time period for which it was authorized. The maximum additional
increase authorized as provided in subsection I or J of this section and the
additional increase that is included in the aggregate budget limit is based on
a percentage of a school district's revenue control limit in future years, if
the budget increase is authorized for more than one year. If the additional
increase:

1. Is for two years, the
proposed increase in the second year is equal to the initial proposed
percentage increase.

2. Is for five years or
more, the proposed increase is equal to the initial proposed percentage
increase in the following years of the proposed increase, except that in the
next to last year it is two-thirds of the initial proposed percentage
increase and it is one-third of the initial proposed percentage increase
in the last year of the proposed increase.

R. If the voters in a
school district vote to adopt a budget in excess of district additional
assistance as provided in subsection L of this section, any additional increase
shall be included in the aggregate budget limit for each of the years
authorized. The additional increase shall be excluded from the
determination of equalization assistance. The school district
governing board, however, may levy on the net assessed valuation used for
secondary property tax purposes of the property in the school district the
additional increase for the period authorized but not to exceed ten years.� For
overrides approved by a vote of the qualified electors of the school district
at an election held from and after October 31, 1998, the period of the
additional increase prescribed in this subsection shall not exceed seven years
for any capital override election.

S. If the voters in a
school district vote to adopt a budget in excess of district additional
assistance as provided in subsection M of this section, any additional increase
shall be included in the aggregate budget limit for each of the years
authorized. The additional increase shall be excluded from the
determination of equalization assistance. The school district
governing board may only use revenues derived from the school district's prior
year's maintenance and operation fund ending cash balance and capital outlay
fund ending cash balance to fund the additional increase for the period
authorized but not to exceed ten years. For overrides approved by a
vote of the qualified electors of the school district at an election held from
and after October 31, 1998, the period of the additional increase prescribed in
this subsection shall not exceed seven years for any capital override election.

T. In addition to
subsections P and S of this section, from the maintenance and operation fund
and capital outlay fund ending cash balances, the school district governing
board shall first use any available revenues to reduce its primary tax rate to
zero and shall use any remaining revenues to fund the additional increase
authorized as provided in subsections F and M of this section.

U. If the voters in a
school district disapprove the proposed budget, the alternate budget that,
except for any budget increase authorized by a prior election, does not include
an increase in the budget in excess of the amount provided in section 15-905
shall be adopted by the governing board as provided in section 15-905.

V. The governing board
may request that any override election be cancelled if any change in chapter 9
of this title changes the amount of the aggregate budget limit as provided in
section 15-905.� The request to cancel the override election shall be
made to the county school superintendent at least eighty days before the date
of the scheduled override election.

W. For any election
conducted pursuant to subsection L or M of this section:

1. The ballot shall
include the following statement in addition to any other statement required by
this section:

The capital
improvements that are proposed to be funded through this override election are
to exceed the state standards and are in addition to monies provided by the
state.

___________ school
district is proposing to increase its budget by $__________ to fund capital
improvements over and above those funded by the state. Under the
students first capital funding system, _________ school district is entitled to
state monies for new construction and renovation of school buildings in
accordance with state law.

2. The ballot shall
contain the words "budget increase, yes" and "budget increase,
no", and the voter shall signify the voter's desired choice.

3. At least eighty-five
days before the election, the school district shall submit proposed ballot
language to the director of the Arizona legislative council. The
director of the Arizona legislative council shall review the proposed ballot
language to determine whether the proposed ballot language complies with this
section. If the director of the Arizona legislative council
determines that the proposed ballot language does not comply with this section,
the director, within ten calendar days after receiving the proposed ballot
language, shall notify the school district of the director's objections
,
and the school district shall
resubmit revised ballot language to the director for approval.

X. If the voters approve
the budget increase pursuant to subsection L or M of this section, the school
district shall not use the override proceeds for any purposes other than the
proposed capital improvements listed in the informational pamphlet, except that
up to ten percent of the override proceeds may be used for general capital
expenses, including cost overruns of proposed capital improvements.

Y. Each school district
that currently increases its budget pursuant to this section shall hold a
public meeting each year between September 1 and October 31 at which an update
of the programs or capital improvements financed through the override is
discussed and at which the public is allowed an opportunity to comment and:

1. If the increase is
pursuant to subsection L or M of this section, at a minimum, the update shall
include the progress of capital improvements financed through the override, a
comparison of the current status and the original projections on the
construction of capital improvements, the costs of capital improvements and the
costs of capital improvements in progress or completed since the prior meeting
and the future capital plans of the school district. The school
district shall include in the public meeting a discussion of the school
district's use of state capital aid and voter-approved bonding in funding
capital improvements, if any.

2. If the increase is
pursuant to subsection E, F, I or J of this section, the update shall include
at a minimum the amount expended in the previous fiscal year and the amount
included in the current budget for each of the purposes listed in the
informational pamphlet prescribed by subsection B of this section.

Z. If a budget in excess
of district additional assistance was previously adopted by the voters in a
school district and will be in effect for the budget year or budget year and
subsequent years, as provided in subsection L or M of this section, the
governing board may request an additional budget in excess of district
additional assistance. If the voters in a school district authorize the
additional budget in excess of district additional assistance, the existing
district additional assistance budget increase remains in effect.

AA. Notwithstanding any
other law, the maximum budget increase that may be authorized pursuant to
subsection L or M of this section is ten percent of the school district's
revenue control limit.

BB. If the election is
to continue to exceed the revenue control limit and if the proposed override
will be fully funded by a continuation of a levy of taxes on the taxable
property in the school district, the ballot shall contain the words "budget
override continuation, yes" and "budget override continuation,
no", and the voter shall signify the voter's desired choice.� The ballot
shall also contain the amount of the proposed continuation of the budget
increase of the proposed budget over the alternate budget, a statement that the
amount of the proposed increase will be based on a percentage of the school
district's revenue control limit in future years, if applicable, as provided in
subsection P of this section and the following statement:

Any budget increase
continuation authorized by this election shall be entirely funded by a levy of
taxes on the taxable property in this school district for the year for which
adopted and for _______ subsequent years, shall not be realized from monies furnished
by the state and shall not be subject to the limitation on taxes specified in
article IX, section 18, Constitution of Arizona. Based on the
current net assessed valuation used for secondary property tax purposes, to
fund the proposed continuation of the increase in the school district's budget
would require an estimated continuation of a tax rate of $______________ per
$100 of assessed valuation used for secondary property tax purposes and is in
addition to the school district's tax rate that will be levied to fund the
school district's revenue control limit allowed by law.

CC. If the election is
to continue to exceed the revenue control limit as provided in section 15-482
and if the proposed override will be fully funded by a continuation of a levy
of taxes on the taxable property in the school district, the ballot shall
contain the words "budget override continuation, yes" and
"budget override continuation, no", and the voter shall signify the
voter's desired choice.� The ballot shall also contain the amount of the
proposed continuation of the budget increase of the proposed budget over the
alternate budget, a statement that the amount of the proposed increase will be
based on a percentage of the school district's revenue control limit in future
years, if applicable, as provided in subsection P of this section and the following
statement:

Any budget increase
continuation authorized by this election shall be entirely funded by a levy of
taxes on the taxable property in this school district for the year for which
adopted and for ______ subsequent years, shall not be realized from monies furnished
by the state and shall not be subject to the limitation on taxes specified in
article IX, section 18, Constitution of Arizona. Based on the
current net assessed valuation used for secondary property tax purposes, to
fund the proposed continuation of the increase in the school district's budget
would require an estimated continuation of a tax rate of $______________ per
$100 of net assessed valuation used for secondary property tax purposes and is
in addition to the school district's tax rate that will be levied to fund the
school district's revenue control limit allowed by law.
END_STATUTE

Sec. 2. Section 15-949, Arizona Revised
Statutes, is amended to read:

START_STATUTE
15-949.

Small school districts; exemption from general budget limit;
budget revision

A. The governing board of a common school district
with a student count in kindergarten programs and grades one through eight of
one hundred twenty-five or less, the governing board of a high school
district with a student count of one hundred or less or the governing board of
a unified school district or the county school superintendent for an
accommodation school with a student count of one hundred twenty-five or
less in kindergarten programs and grades one through eight or with a student
count of one hundred or less in grades nine through twelve shall compute a
revenue control limit and a general budget limit, but the governing board or
the county school superintendent may:

1. Adopt a budget in excess of the general budget
limit without the necessity of an election under section 15-481, provided
that for a unified school district or for an accommodation school the excess
amount of expenditures shall be attributable to the student count in
kindergarten programs and grades one through eight or to the student count in
grades nine through twelve as provided in this subsection.

2. Revise its budget to include the costs for
additional pupils who were not anticipated when the budget was adopted, if it
receives permission as follows:

(a) If a governing board:

(i) The governing board shall send a petition to the
county school superintendent requesting authority to revise its budget
. The petition shall

and
include
a copy of the proposed budget
in the petition
.

(ii) The county school superintendent shall
recommend the action to be taken on the petition and forward the recommendation
and the petition to the board of supervisors.

(iii) The board of supervisors shall hold a hearing
on the petition within twenty days after receipt of the petition and shall
determine whether to allow the petition, allow the petition after revision or
deny the petition.

(b) If a county school superintendent, the county
school superintendent shall send the revised budget to the board of
supervisors, and the board of supervisors shall hold a hearing on the
recommendation within twenty days after receipt of the recommendation and shall
determine whether to allow the revised budget, allow the revised budget after
further revision or deny the revision.

B. If the board of supervisors revises or denies the
petition or recommendation presented pursuant to subsection A, paragraph 2,
subdivision (a), item (iii) or subdivision (b) of this section, the board shall
state the reasons for revision or denial in writing.

C. School districts that in any year after fiscal
year 1984-1985 but before fiscal year 1999-2000
have

operated under the provisions of the small school adjustment as provided for in
subsection A of this section and that
have
subsequently
exceeded the student count limits expressed in subsection A of this section may
continue in successive years to adopt a budget greater than the general budget
limit without
the necessity of
an election under section
15-481, except that the
amount greater than

adopted budget may not exceed
the general budget limit
shall not exceed fifty thousand dollars
by an
amount that is greater than $50,000
. The amount that is
adopted without the use of an election under section 15-481 and that is
greater than the general budget limit is specifically exempt from the revenue
control limit.

D. Notwithstanding subsection C of this section,
school districts that exceeded the student count limits prescribed in
subsection A of this section may adopt, in the first year that these limits are
exceeded, a budget that exceeds the general budget limit without an election
conducted pursuant to section 15-481 or pursuant to subsection E of this
section, except that the
amount that exceeds

adopted budget may not exceed
the general budget limit
shall not exceed the

by an amount that is greater
than the
amount authorized pursuant to subsection C of this section plus
the limit prescribed in subsection E of this section.� The amount that is
adopted without an election and that exceeds the general budget limit is exempt
from the revenue control limit.

E. School districts that in any year after fiscal
year 1998-1999
have
operated under the provisions of
the small school adjustment as provided in subsection A of this section and
that
have
subsequently exceeded the student count limits
prescribed in subsection A of this section may continue in successive years to
adopt a budget greater than the general budget limit subject to an election,
except that the
amount that is greater than

adopted budget may not exceed
the general budget limit
shall not exceed

by an amount that is greater
than
the amount that is prescribed in this subsection.� The amount that
is adopted pursuant to this subsection is specifically exempt from the revenue
control limit and shall be funded by a levy on secondary property taxes in the
school district.� The maximum amount that may be adopted pursuant to this
subsection is computed as follows:

1. For a unified school district, separate the
revenue control limit into elementary and secondary components based on the
weighted student count as provided in section 15-971, subsection B,
paragraph 2, subdivision (a).� Use the elementary component of the revenue
control limit for the purposes of paragraph 2 of this subsection and the
secondary component of the revenue control limit for the purposes of paragraph
3 of this subsection.

2. For a common or unified district that used the
provisions of subsection A of this section based on its elementary student
count, the amount is determined as follows:

(a) Subtract one hundred twenty-five from the
elementary student count.

(b) Multiply the difference in subdivision (a) of
this paragraph by 0.45 percent.

(c) Subtract the product determined in subdivision
(b) of this paragraph from thirty-five percent.� If the result is zero or
less than zero, the district is not eligible to use the provisions of this
paragraph.

(d) Multiply the difference determined in
subdivision (c) of this paragraph by the elementary revenue control limit.

3. For a high school or unified district that used
the provisions of subsection A of this section based on its secondary student
count, the amount is determined as follows:

(a) Subtract one hundred from the secondary student
count.

(b) Multiply the difference in subdivision (a) of
this paragraph by 0.65 percent.

(c) Subtract the product determined in subdivision
(b) of this paragraph from sixty-five percent.� If the result is zero or
less than zero, the district is not eligible to use the provisions of this
paragraph.

(d) Multiply the difference determined in
subdivision (c) of this paragraph by the secondary revenue control limit.

4. For a unified school district that used the
provisions of subsection A of this section for both its elementary and
secondary pupils, combine the amounts determined in paragraphs 2 and 3 of this
subsection.

F. For the purposes of subsection E of this section:

1. "Elementary" means kindergarten
programs and grades one through eight.

2. "Secondary" means grades nine through
twelve.

G. The governing board of a school
district with a student count in grades one through twelve of at least one
hundred TWENTY-FIVE but less than two hundred shall compute a revenue control
limit and a general budget limit, but the governing board may send a petition
to the county school superintendent requesting authority to adopt a budget in
excess of the general budget limit without an election under section 15-481.�
The governing board shall include a copy of the school district's proposed
budget in any petition that the governing board sends pursuant to this
subsection.� The county school superintendent shall forward the petition to the
county board of supervisors.� The board of supervisors shall hold a hearing on
the petition within twenty days after receiving the petition and shall
determine whether to either allow the petition, allow the petition after
revision or deny the petition.� If the board of supervisors revises or denies
the petition presented pursuant to this subsection, the board of supervisors
shall state the reasons for revision or denial in writing. A county
board of supervisors may not authorize a school district to adopt a budget
pursuant to this subsection that exceeds the school district's general budget
limit by more than:

1. Two hundred percent for a school
district with a student count of at least one hundred twenty-five but
less than one hundred fifty.

2. One hundred seventy-five
percent of the general budget limit for a school district with a student count
of at least one hundred fifty but less than one hundred seventy-five.

3. One hundred fifty percent for a
school district with a student count of at least one hundred seventy-five
but less than two hundred.

H. School districts that have
operated under the budget excess provisions of subsection G of this section and
that have a student count of at least two hundred but not more than two hundred
fifty may continue to adopt a budget greater than the general budget limit in
successive years, subject to an election, except that the adopted budget may
not exceed the school district's general budget limit by more than one hundred
twenty-five percent.� The amount of a school district's adopted budget
that exceeds the general budget limit pursuant to this subsection is
specifically exempt from the revenue control limit and shall be funded by a
levy on secondary property taxes in the school district.

G.

I.
The
part of the primary tax rate set to fund the small school district adjustment
as provided in subsections D
,

and
E
and H
of this section shall not be included in the computation
of additional state aid for education as prescribed in section 15-972.

H.

J.
The
election required pursuant to subsection E
or H
of this
section shall conform to the procedural requirements for calling the election,
preparing the informational pamphlet and preparing the ballot as prescribed in
section 15-481, subsections A, B, C and D.� The maximum number of years
that a budget override approved pursuant to subsection E

of
this section may be in effect is five years.

I.

k.
If
the proposed budget override will be fully funded by a levy of taxes on the
taxable property within the school district, the ballot shall contain the words
"budget
override
increase continuation
,
yes" and "budget
override

increase continuation
, no", and the voter shall signify the voter's
desired choice.� The ballot shall also contain the amount of the proposed
budget override compared to the amount the school district budgeted in the
preceding year and the amount the school district would be allowed to budget
for if the measure is not approved by the voters.� The statement shall also
include the estimated amount of the override for each year the override is
sought.� The ballot shall also include the following statement:

1. For an election required by
subsection E of this section:

The budget override authorized by this election allows the
_______________ school district to levy property taxes in excess of the
property tax levy allowed by law to fund the school district's revenue control
limit.� The property tax levy for the year for which adopted and for ____
subsequent years will be annually adjusted based on a formula that authorizes
the _______________ school district to exceed the revenue control limit by up
to thirty-five percent for kindergarten programs and grades one through eight
or up to sixty-five percent for grades nine through twelve.� The levy
shall not be realized from monies furnished by the state and shall not be
subject to the limitation on taxes specified in article IX, section 18,
Constitution of Arizona. Based on an estimate of assessed valuation
used for secondary property tax purposes, the proposed override in the
________________ school district's budget over that allowed by the revenue
control limit would result in an estimated increase in the school district's
tax rate of
$
_________________
dollars per
one hundred dollars
$100
of assessed valuation for
the secondary property tax purposes.

2. For an election required by
subsection H of this section:

The budget override authorized by this
election allows the _______________ school district to levy property taxes in
excess of the property tax levy allowed by law to fund the school district's
revenue control limit.� The property tax levy for the year for which adopted
and for ____ subsequent years will be annually adjusted based on a formula that
authorizes the _______________ school district to exceed the revenue control
limit by up to twenty-five percent.� The levy shall not be realized from
monies furnished by the state and shall not be subject to the limitation on
taxes specified in article IX, section 18, Constitution of Arizona.� Based on
an estimate of assessed valuation used for secondary property tax purposes, the
proposed override in the ________________ school district's budget over that
allowed by the revenue control limit would result in an estimated increase in
the school district's tax rate of $_________________ per $100 of assessed
valuation for the secondary property tax purposes.

J.

L.
If
the proposed budget override will be fully funded by revenues from other than a
levy of taxes on the taxable property within the school district, the ballot
shall contain the words "budget
override
increase continuation
, yes" and "budget
override
increase continuation
, no",
and the voter shall signify the voter's desired choice.� The ballot shall also
contain the amount of the proposed budget override compared to the amount the
school district budgeted in the preceding year and the amount the school
district would be allowed to budget for if the measure is not approved by the
voters.� The statement shall also include the estimated amount of the override
for each year the override is sought. The ballot shall also include
the following statement:

Any budget override authorized by this election shall be
entirely funded by this school district with revenues from other than a levy of
taxes on the taxable property within the school district for the year for which
adopted and for ______ subsequent years and shall not be realized from monies
furnished by the state.

K.

M.
For
the purposes of subsections
H

j
and

I
k
of this section, levy of
taxes on the taxable property does not include a levy of the government
property lease or park property lease excise taxes assessed pursuant to title
42, chapter 6, article 5.
END_STATUTE