School District Funding Amendments

8
53F-10-501
53F-10-502
53F-10-503
53F-10-504
53G-3-302
0
School District Funding Amendments
2026 GENERAL SESSION
STATE OF UTAH
Chief Sponsor: Emily Buss
House Sponsor: Tracy J. Miller
LONG TITLE
General Description:
This bill establishes a framework for addressing enrollment growth disparities when school
districts reorganize.
Highlighted Provisions:
This bill:
authorizes successor districts to create voluntary high growth transition loan
arrangements;
establishes criteria for identifying high growth successor districts;
requires high growth transition planning during asset allocation;
directs the State Board of Education to track and report on growth patterns in
reorganizations; and
authorizes the State Board to develop model policies and guidance.
Money Appropriated in this Bill:
None
Other Special Clauses:
None
Utah Code Sections Affected:
AMENDS:
53G-3-302
, as last amended by Laws of Utah 2025, Chapter 33
ENACTS:
53F-10-501
, Utah Code Annotated 1953
53F-10-502
, Utah Code Annotated 1953
53F-10-503
, Utah Code Annotated 1953
53F-10-504
, Utah Code Annotated 1953
Be it enacted by the Legislature of the state of Utah:
Section 1. Section
53F-10-501
is enacted to read:
5. High Growth Framework for School District Reorganizations
53F-10-501
. General provisions -- Definitions.
(1)
"ADM" means average daily membership, as defined in Section 53F-2-102.
(2)
"Allocation date" means the same as that term is defined in Section 53G-3-102.
(3)
"Creation date" means the same as that term is defined in Section 53G-3-102.
(4)
"Divided school district" means the same as that term is defined in Section 53G-3-102.
(5)
"High growth successor district" means a successor district that meets the criteria
described in Section 53F-10-502.
(6)
"New school district" means the same as that term is defined in Section 53G-3-102.
(7)
"Reorganization" means the creation of a new school district under Section
53G-3-301.1, 53G-3-301.3, or 53G-3-301.4.
(8)
"Reorganized new school district" means the same as that term is defined in Section
53G-3-102.
(9)
"Successor district" means a new school district or reorganized new school district.
Section 2. Section
53F-10-502
is enacted to read:
53F-10-502
. High growth successor district criteria -- State Board identification
and reporting.
(1)
For purposes of this part, a successor district is a high growth successor district if:
(a)
the successor district has been in operation for at least two full fiscal years since the
allocation date and has had an average annual enrollment increase of at least 3%; or
(b)
for a successor district that has been in operation for less than two full fiscal years
since the allocation date, the successor district demonstrates projected enrollment
growth of at least 5% annually based on:
(i)
residential construction permits issued within the successor district's boundaries;
(ii)
population growth projections from the Utah Population Committee created in
Section 63C-20-103;
(iii)
new housing development plans;
(iv)
historical enrollment trends from the geographic area; and
(v)
other relevant demographic data.
(2)
The State Board of Education shall, using existing enrollment data collection processes:
(a)
identify which successor districts meet the high growth criteria annually;
(b)
calculate each successor district's proportional share of the divided school district
based on the methodology established in Section 53G-3-302; and
(c)
notify successor districts of their high growth status.
(3)
The State Board shall report annually to the Public Education Appropriations
Subcommittee regarding:
(a)
the number of reorganizations that have occurred;
(b)
which successor districts qualify as high growth successor districts;
(c)
enrollment growth patterns and trends in successor districts;
(d)
facility capacity challenges identified in high growth transition plans submitted
under Subsection 53G-3-302(13);
(e)
strategies successor districts have used to address high growth, including any
voluntary loan arrangements; and
(f)
recommendations for supporting equitable transitions during reorganizations.
Section 3. Section
53F-10-503
is enacted to read:
53F-10-503
. Voluntary high growth transition loan arrangements authorized --
Proportional repayment methodology.
(1)
Successor districts from the same divided school district may enter into interlocal
agreements under Title 11, Chapter 13, Interlocal Cooperation Act, to create voluntary
transition loan arrangements to address enrollment growth disparities.
(2)
An interlocal agreement under this section may provide for:
(a)
pooling of discretionary assets, as that term is defined in Section 53G-3-302, from
the divided school district;
(b)
loans to high growth successor districts for:
(i)
acquiring land and facilities;
(ii)
constructing, expanding, or renovating facilities; or
(iii)
expanding transportation infrastructure;
(c)
enhanced borrowing authority for high growth successor districts up to:
(i)
150% of the high growth district's proportional share of pooled assets; or
(ii)
up to 200% of the proportional share with approval of all participating successor
districts;
(d)
proportional repayment, calculated as:
(i)
each loan payment multiplied by the borrowing district's proportional share
represents that district's repayment obligation; and
(ii)
the remainder of each payment is credited back to the pool or distributed to other
successor districts;
(e)
loan terms not exceeding twelve years from the allocation date;
(f)
acceleration of repayment if the borrowing district issues bonds for school
construction; and
(g)
loan application periods limited to before the borrowing district has authority to issue
bonds.
(3)
Successor districts are not required to enter into interlocal agreements under this section.
(4)
Participation in an interlocal agreement under this section does not affect:
(a)
the transition funding provided under Subsection 53G-3-301(6);
(b)
the asset allocation process under Section 53G-3-302;
(c)
assistance from municipalities under Subsection 53G-3-301.3(9); or
(d)
assistance from interlocal agreement participants under Subsection 53G-3-301.4(11).
Section 4. Section
53F-10-504
is enacted to read:
53F-10-504
. State Board guidance and technical assistance.
(1)
The State Board of Education may, using existing staff and resources, develop and
make available to school districts:
(a)
model interlocal agreement templates for voluntary high growth transition loan
arrangements;
(b)
guidance on calculating proportional shares;
(c)
sample high growth determination methodologies;
(d)
best practices for addressing enrollment growth disparities during reorganizations;
(e)
examples of proportional repayment structures; and
(f)
sample loan agreement provisions, including acceleration clauses.
(2)
The State Board may, upon request and using existing resources, provide technical
assistance to successor districts developing high growth transition plans under
Subsection 53G-3-302(12) or considering voluntary loan arrangements under Section
53F-10-503.
(3)
Nothing in this section requires the State Board to develop any specific materials or
provide any specific technical assistance.
Section 5. Section
53G-3-302
is amended to read:
53G-3-302
. Election of local school board members -- Allocation of assets and
liabilities -- Startup costs -- Transfer of title.
(1)
As used in this section:
(a)
"Associated property" means furniture, equipment, or supplies located in or
specifically associated with a physical asset.
(b)
(i)
"Discretionary asset or liability" means an asset or liability that is not tied to a
specific project, school, student, or employee by law or school district accounting
practice.
(ii)
"Discretionary asset or liability" does not include a physical asset, associated
property, a vehicle, an employee, or bonded indebtedness.
(c)
(i)
"Nondiscretionary asset or liability" means an asset or liability that is tied to a
specific project, school, student, or employee by law or school district accounting
practice.
(ii)
"Nondiscretionary asset or liability" does not include a physical asset, associated
property, a vehicle, or bonded indebtedness.
(d)
"Physical asset" means a building, land, or water right together with revenue derived
from the lease or use of the building, land, or water right.
(e)
(i)
"Physical liability" means a liability associated with a physical asset, including:
(A)
a seismic safety evaluation or mitigation; or
(B)
deferred maintenance.
(ii)
"Physical liability" does not include a liability associated with any debt, including
a general obligation or lease revenue bond.
(2)
(a)
If voters approve a proposal to create a new school district under this part:
(i)
the legislative body of each county where all or a part of the new school district
and the reorganized new school district are located shall hold elections, during the
year immediately following the year in which the voters approve the proposal or
municipal legislative bodies or interlocal agreement participants create a new
school district, to elect members to the local school board of the new school
district and to the local school board of the reorganized new school district, as
follows:
(A)
the filing period for a declaration of candidacy is the same as the filing period
for the next regular or municipal general election for the given year;
(B)
the primary election is held on the same day as the primary election for the
next regular or municipal general election for the given year; and
(C)
the general election is held on the same day as the next regular or municipal
general election for the given year;
(ii)
any new school district and reorganized new school district shall divide the assets
and liabilities of the divided school district between the school districts in
accordance with Subsection
(4)
and Section
53G-3-307
;
(iii)
any new school district and reorganized new school district shall treat the
employment of transferred employees from the divided school district in
accordance with Sections
53G-3-205
and
53G-3-308
;
(iv)
an individual residing within the boundaries of a new school district or
reorganized new school district at the time the new school district is created may,
for six school years following the creation of the new school district, elect to
enroll in a secondary school located outside the boundaries of the school district if:
(A)
the individual resides within the boundaries of the secondary school on the
day before the creation of the new school district; and
(B)
the individual would have been eligible to enroll in the secondary school if not
for the creation of the new school district;
(C)
the new school district shall provide educational services, including, if
provided before the creation of the new school district, busing to each
individual making an election under Subsection
(2)(a)(iv)
for each school year
for which the individual makes the election; and
(v)
within one year following the date on which the new school district begins
providing educational services, the superintendent of each affected school district
shall meet, together with the state superintendent, to determine if further boundary
changes should take place in accordance with Section
53G-3-501
.
(b)
(i)
The county or municipal legislative bodies that conduct redistricting for the
new school district and the reorganized new school district shall, at the meeting
where the county or municipal legislative bodies adopt the final redistricting
maps, adjust the initial terms of the board members for the new school district and
the reorganized new school district, by lot, so that approximately half of the board
members on each board will have an initial term of three years with the other
members having an initial term of five years.
(ii)
Notwithstanding the existence of the new school district local school board and
the reorganized new school district local school board under Subsection
(2)(a)(i)
,
the divided school district local school board shall continue to function and
exercise authority as a local school board until the allocation date to the extent
necessary to continue to provide educational services to the entire divided school
district.
(iii)
An individual may simultaneously serve as or be elected to be a member of the
local school board of a divided school district and a member of the local school
board of:
(A)
a new school district; or
(B)
a reorganized new school district.
(iv)
On the allocation date, the divided school district and the associated local school
board cease to exist.
(c)
(i)
On the Tuesday immediately following certification of the election results for
the first election for the members of the local school board described in
Subsection
(2)(a)(i)
, the newly elected members of the local school board for the
new school district or reorganized new school district shall take the oath of office
and begin serving.
(ii)
If the term of a member of the local school board of the divided school district
ends within one year of the allocation date, the member's term shall extend to the
allocation date.
(3)
(a)
The divided school district local school board shall:
(i)
within 60 days after the creation date prepare an initial inventory of the divided
school district's:
(A)
assets, both tangible and intangible, real and personal; and
(B)
liabilities;
(ii)
on or before December 1 of the year following the creation date:
(A)
prepare an asset inventory, with records, of the divided school district's assets
and the location of each associated property, discretionary asset,
nondiscretionary asset, and physical asset; and
(B)
prepare an inventory of the divided school district's liabilities, with records,
that includes a description of any liability, including an estimated cost to
resolve the liability, for each associated property, discretionary asset,
nondiscretionary asset, physical asset, and unresolved demands, claims, or suits
with an estimated cost to resolve each liability;
(iii)
mutually agree with the local school board of each relevant district to establish a
regular schedule for the divided school district local school board to, between the
creation date and the allocation date, prepare regular updates including any change
in the information required in the inventory and liability reports described in this
Subsection
(3)(a)
; and
(iv)
deliver the reports described in this Subsection
(3)(a)
to:
(A)
the Office of the Legislative Auditor General; and
(B)
the local school board of each relevant new school district and reorganized
new school district.
(b)
Following the local school board election date described in Subsection
(2)(a)
, the
new school district and reorganized new school district local school boards shall:
(i)
in cooperation with the local school board of each new school district and
reorganized new school district, determine the allocation of the divided school
district's assets and, except for indebtedness under Section
53G-3-307
, liabilities
of the new school district and reorganized new school district in accordance with
Subsection
(4)
;
(ii)
prepare a written report detailing the allocation under Subsection
(3)(b)(i)
;
(iii)
prepare a written report of the disposition of assets and liabilities upon which the
local school boards could not agree; and
(iv)
deliver a copy of the written report to the Office of the Legislative Auditor
General and the local school board of the divided school district.
(c)
The new school district and reorganized new school district local boards shall
determine the allocation under Subsection
(3)(b)
and deliver the report required under
Subsection
(3)(b)
on or before December 15 of the year following the school board
election date described in Subsection
(2)(a)
, unless that deadline is extended by
mutual agreement of the local school boards of the new school district and
reorganized new school district.
(4)
(a)
Except as provided under Subsection
(4)(c)
, the new school district and
reorganized new school district local school boards shall allocate all assets and
liabilities the divided school district owns on the allocation date, both tangible and
intangible, real and personal, allocating:
(i)
a physical asset, physical liability, and associated property asset to the school
district in which the physical asset is located;
(ii)
a discretionary asset or liability between the new school district and reorganized
new school district in proportion to the student population of the school districts;
(iii)
vehicles used for pupil transportation:
(A)
according to the transportation needs of schools, as measured by the number
and assortment of vehicles used to serve eligible state supported transportation
routes serving schools within the new school district and the reorganized new
school district; and
(B)
in a manner that gives each school district a fleet of vehicles for pupil
transportation that is equivalent in terms of age, condition, and variety of
carrying capacities; and
(iv)
other vehicles:
(A)
in proportion to the student population of the school districts; and
(B)
in a manner that gives each district a fleet of vehicles that is similar in terms
of age, condition, and carrying capacities.
(b)
Each new and reorganized new school district retains the buildings, land, and water
rights of the divided district within the boundaries of the relevant new or reorganized
new school district.
(c)
By mutual agreement, the new school district and reorganized new school district
local school boards may allocate an asset or liability in a manner different than the
allocation method specified in Subsection
(4)(a)
.
(5)
(a)
(i)
After the creation date, the local school board of the divided district may
issue a lease revenue bond, in accordance with Section
11-14-103
:
(A)
that records the date, terms, and amount of the lease revenue bond the divided
school district provides;
(B)
that designates the new and reorganized new school districts that are the joint
recipients of the bond proceeds, in proportion to the property tax values within
each district, as the local political subdivisions receiving the bond proceeds;
(C)
that obligates the new and reorganized new school districts receiving the bond
proceeds to proportionally repay the remainder of the bond debt after the
allocation date, in proportion to the portion of the bond proceeds each new or
reorganized new school district receives;
(D)
that prohibits the bond from inclusion in the outstanding bond indebtedness of
the divided school district, in accordance with Section
53G-3-307
;
(E)
to which, if the relevant local school board has been seated, the local school
board of the new school district or reorganized new school district consents in
writing; and
(F)
that provides that the divided school district is responsible for the bond
payments until the allocation date and that each new and reorganized new
school district receiving the bond proceeds under this section is responsible for
a proportional share of the bond payments after the allocation date.
(ii)
This Subsection
(5)(a)
applies retrospectively to a lease revenue bond that a
divided school district issued after November 4, 2024.
(b)
(i)
After the creation date, the local school board of the divided school district may
issue a general obligation bond for the interlocal agreement participants on behalf
of the relevant new and reorganized new school district within the divided school
district, in accordance with Section
11-14-103
.
(ii)
The local school board shall ensure that the resolution submitting the question of
the issuance of the bond by the divided school district, in accordance with Section
11-14-201
:
(A)
designates the new and reorganized new school districts that are the joint
recipients of the bond proceeds, in proportion to the property tax values within
each district, as the local political subdivisions receiving the bond proceeds;
(B)
obligates the new and reorganized new school districts receiving the bond
proceeds to proportionally repay the remainder of the bond debt after the
allocation date, in proportion to the portion of the bond proceeds each new or
reorganized new school district receives;
(C)
prohibits the bond from inclusion in the outstanding bonded indebtedness of
the divided school district, in accordance with Section
53G-3-307
;
(D)
provides that the divided school district may not issue the bond unless the
majority of the qualified voters of the divided school district who vote on the
bond proposition approve the issuance of the bond; and
(E)
provides that the divided school district is responsible for the bond payments
until the allocation date and that each new and reorganized new school district
receiving the bond proceeds under this section is responsible for a proportional
share of the bond payments after the allocation date.
(iii)
This Subsection
(5)(b)
applies retrospectively to a general obligation bond that a
divided school district issued after November 4, 2024.
(c)
(i)
If, within the preceding three years, voters within the divided school district
rejected a general obligation bond for which a majority of voters within the area
now included in a new or reorganized new school district voted in favor of the
general obligation bond, the local school board of the divided district shall issue a
lease revenue bond in accordance with Subsection
(5)(a)(i)
for the relevant new or
reorganized new school district.
(ii)
A lease revenue bond described in Subsection
(5)(c)(i)
is not subject to the
combined total limitation described in Subsection
11-14-103(6)(b)(i)
due to the
prior approval of voters within the new or reorganized new school district for the
general obligation bond.
(d)
The local school board of each new and reorganized new school district may access
and spend funds made available under Subsections
53G-3-301.3(9)
and
53G-3-301.4(11)
and under this Subsection
(5)
.
(6)
(a)
The divided school district shall transfer title or, if applicable, partial title of
property to the new school district and the reorganized new school district in
accordance with the allocation of property as stated in the report under Subsection
(3)(b)(ii)
.
(b)
The divided school district shall complete each transfer of title or, if applicable,
partial title to real property and vehicles on the allocation date, except as that date is
changed by the mutual agreement of:
(i)
the local school board of the divided school district;
(ii)
the local school board of the reorganized new school district; and
(iii)
the local school board of the new school district.
(c)
The divided school district shall complete the transfer of all property not included in
Subsection
(6)(b)
on the allocation date.
(d)
Except as provided in this Subsection
(6)
, a divided school district may not transfer
or agree to transfer title to district property beginning on the creation date, without
the prior consent of:
(i)
before the election of local school boards for the new or reorganized new school
district:
(A)
the legislative body of the municipality in which the boundaries for the new
school district or reorganized new school district are entirely located; or
(B)
the legislative bodies of all interlocal agreement participants in which the
boundaries of the new school district or reorganized new school district are
located; or
(ii)
after the election of local school boards for the new or reorganized new school
district, the local school board of the school district where the physical property is
located.
(e)
(i)
A divided district may:
(A)
sell property associated with a career and technical education program; and
(B)
use proceeds from a sale described in this Subsection
(6)(e)
to fund the
following year's career and technical education program project.
(ii)
A divided district shall distribute any proceeds from a sale described in this
Subsection
(6)(e)
two years after the inaugural election of local school board
members for the new and reorganized new school districts based on student
population.
(7)
(a)
On July 1 of the second year following the local school board election date
described in Subsection
(2)(a)
, the new school district or the reorganized new school
district that receives title to the physical asset of the divided school district main
office that existed at the creation date shall become the successor district to the
records of the divided school district, unless the local school boards of any relevant
new school district and reorganized new school district agree to a chosen successor
district.
(b)
As described in Subsection
63G-2-206(1)(a)
, the successor district shall serve as a
repository of archives for purposes of historical preservation, administrative
maintenance, or destruction of all the divided school district's books, accounts, and
records.
(c)
For one year after the allocation date, each new school district or reorganized new
school district within the divided school district may access the records of the divided
school district through an interlocal agreement and without cost.
(8)
(a)
Upon the creation date, a divided school district may not, except by mutual
agreement of the local school boards of the new and reorganized new school districts:
(i)
destroy a school district record;
(ii)
enter into any employment agreement without including a statement providing
that the contract does not bind any new school district or reorganized new school
district;
(iii)
pay any severance or bonuses, issue a retirement package, or provide buy-out
compensation to any employee unless under a written agreement or policy that
was executed before the creation date; or
(iv)
increase compensation for any school district employee, other than:
(A)
a yearly cost-of-living adjustment; or
(B)
any pay structure increases the divided district established before the creation
date for longevity, years of experience, or additional education and
professional development.
(b)
Notwithstanding Subsection
53G-4-402(24)
, upon the creation of a new school
district or a reorganized new school district, a divided school district may not close a
school, except with the consent of the relevant local school board of the new school
district or relevant reorganized new school district once the members of the local
school board take the oath of office.
(c)
Any agreement or policy contrary to this Subsection
(8)
is void, including
retrospective operation to any agreement or policy that a divided school district
created after November 4, 2024.
(9)
The newly elected local school boards of any new school district and any reorganized
new school district, by December 15 in the year following the local school board
election for the new and reorganized new school districts, shall establish a transition
plan with the local school board of the divided school district.
(10)
Unless otherwise specified in this section, the following bear all costs and expenses to
create a new school district or a reorganized new school district and to comply with this
section:
(a)
for costs that a new school district incurs, the new school district;
(b)
for costs that a reorganized new school district incurs, the reorganized new school
district; and
(c)
for costs that a divided school district incurs, the divided school district.
(11)
(a)
A mutually agreed upon arbiter shall resolve any disagreements between local
school boards of the divided school district, any new school district, and any
reorganized new school district.
(b)
If the local school boards do not agree on an arbiter, the state board shall appoint an
arbiter.
(c)
The Office of the Legislative Auditor General shall provide information the office
receives under this part to local school boards and the arbiter described in this
Subsection
(11)
during the dispute resolution process.
(12)
(a)
As part of the asset allocation process under this section, the local school boards
of the new school district and reorganized new school district shall develop a high
growth transition plan that addresses enrollment growth disparities among successor
districts.
(b)
The plan shall include:
(i)
projected enrollment for each successor district for the first five fiscal years after
the allocation date, including documentation supporting the projections;
(ii)
identification of any successor districts projected to have average annual
enrollment growth of 5% or more;
(iii)
assessment of facility capacity in each successor district relative to projected
enrollment;
(iv)
identification of facility or transportation infrastructure needs in high growth
areas; and
(v)
potential strategies for addressing high growth needs, which may include
voluntary loan arrangements using discretionary assets.
(c)
The high growth transition plan shall be:
(i)
completed before the allocation date;
(ii)
provided to the State Board of Education within 30 days after the allocation date;
and
(iii)
made available to the public upon request.
(d)
Development of the plan does not create any obligation for successor districts to
implement any particular strategy identified in the plan.
Section 6.
Effective Date.
This bill takes effect on
May 6, 2026
.
3-3-26 10:06 AM