FOR AN ACT ENTITLED, An Act to provide for the creation of a new state accountability system and a new financial accountability rating system for public elementary and secondary schools.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF SOUTH DAKOTA:
    Section 1. That § 13-3-62 be amended to read as follows:
    13-3-62. A single, statewide state accountability system is established. The system shall hold public schools and public school districts accountable for the academic achievement of their students and shall ensure that all public schools and all public school districts make adequate yearly progress in continuously and substantially improving the academic achievement of their students.
    Section 2. That § 13-3-63 be amended to read as follows:
    13-3-63. The state accountability system shall be based on the South Dakota Content Standards in reading and mathematics approved by the South Dakota Board of Education. The yearly progress of students shall be measured by the state academic assessments as may be prescribed by the Legislature, and shall take into account the achievement of all public

elementary school and secondary school students in reading and mathematics annually. An additional academic indicator Additional indicators established pursuant to § 13-3-69 shall be used in the measurement of yearly progress: the additional academic indicator for the public K-8 elementary schools shall be the annual rate of student attendance; the additional academic indicator for public 9-12 high schools shall be the annual rate of graduation.
    Section 3. That § 13-3-64 be amended to read as follows:
    13-3-64. The state accountability system shall establish a timeline for adequate yearly progress that ensures that no later than the 2013-2014 school year, measure whether all students meet or exceed the state's proficient level of academic achievement as measured by the state's assessments. Annual measurable objectives in both reading and mathematics. Multiple indicators shall be established to ensure indicate continuous and substantial academic improvement of the achievement of all public school students as well as sub-groups of public school students, including economically disadvantaged students, students from major racial and ethnic groups, students with disabilities, and students with limited English proficiency. The annual measurable objectives shall identify a single minimum percentage of students who are required to meet or exceed the proficient level on the academic assessments. The objectives shall be applied separately in reading and mathematics and shall be applied to all students and to each sub-group of students described in this section. The annual measurable objectives shall be used for determining adequate yearly progress.
    Section 4. That § 13-3-65 be amended to read as follows:
    13-3-65. The state accountability system shall determine annually the progress of each public school and public school district, including the annual progress of sub-groups of students, using annual assessment data and data from one additional academic indicator. The school's progress in mathematics and reading shall be compared separately to the state's annual

objectives for adequate yearly progress in mathematics and reading. The results of the comparisons shall be used to determine the school's achievement level based on the state's achievement standards. The district's progress in mathematics and reading shall be compared separately to the state's annual objectives in mathematics and reading. The results of the comparisons shall be used to determine the district's achievement levels based on the state's achievement standards indicators.
    Section 5. That § 13-3-67 be amended to read as follows:
    13-3-67. The state accountability system shall include consequences interventions for schools and districts in the form of sanctions, rewards, and recognition. The consequences interventions shall be based on the school's or district's ranking on the state's achievement standards and additional indicators.
    Section 6. That § 13-3-69 be amended to read as follows:
    13-3-69. The South Dakota Board of Education may promulgate administrative rules pursuant to chapter 1-26 to establish the state accountability system, based on achievement and other indicators including:

            (1)    A definition of adequate yearly academic progress;

            (2)    A valid and reliable The method of calculating adequate yearly progress in mathematics and reading for all public schools and public school districts, including methods for determining both the status and improvement growth;

            (3)    A definition of four levels of student achievement, including a proficient level;

            (4)    Establishment of names and descriptors for the four levels of student achievement;

            (5)    Determination of cut scores within the scoring data from the state assessments in mathematics and reading for each of the four levels level of student achievement;

            (6)(5)    Establishment of the state's annual measurable objectives for academic progress

through 2013-2014 in both reading and mathematics;

            (7)(6)    Establishment of a system of consequences for public schools, including sanctions, rewards, and recognition;

            (8)(7)    Establishment of a system of consequences for public school districts, including sanctions, rewards, and recognition the process for teacher and principal evaluation;

            (9)(8)    Determination of a valid and reliable method for calculating a graduation rate the criteria to demonstrate student preparedness for college and career for each public high school;

            (10)(9)    Determination of a valid and reliable the method for calculating the attendance rate for each public elementary and middle school;

            (11)(10)    Establishment of an appeal process for public schools and public school districts; and

            (12)(11)    Establishment of a process whereby the state accountability system will be periodically reviewed to assure that it is fair and appropriate for the public schools of South Dakota, and is in compliance with federal law; and

            (13)    Any other administrative rule that is deemed necessary to fulfill the requirements of the federal education act, Public Law No. 107-110, § 1111(b)(2)(A), 115 Stat. 1425, as in effect on January 1, 2003.
    Section 7. Beginning in the 2014-2015 school year, the Department of Education shall develop and implement a financial accountability rating system for public school districts that distinguishes among school districts based on levels of financial performance and includes procedures to provide additional transparency to public education finance to enable the Department of Education and school administrators to provide meaningful financial oversight and improvement. The system shall include uniform indicators that measure school districts'

financial management performance.
    Section 8. Beginning in the 2014-2015 school year, the Department of Education shall identify school districts that demonstrate high academic achievement and cost-effective operations. In identifying school districts, the department shall:

            (1)    Integrate existing academic accountability and financial data; and

            (2)    Rank the results of the calculation in subdivision (1) to identify the relative performance of school districts.
    Section 9. Beginning on July 1, 2012, a work group shall provide input in developing the financial accountability rating system described in sections 8 and 9 of this Act. The work group shall consist of the following members:

            (1)    Five school district business managers appointed by the secretary of education;

            (2)    Three school superintendents appointed by the secretary of education;

            (3)    Three representatives of the business community with a knowledge of school finance appointed by the secretary of education;

            (4)    One representative of the School Administrators of South Dakota appointed by the secretary of education;

            (5)    One representative of the Associated School Boards of South Dakota appointed by the secretary of education;

            (6)    One member of the Senate appointed by the president pro tempore of the Senate; and

            (7)    One member of the House of Representatives appointed by the speaker of the House of Representatives.
    Section 10. The Board of Education shall promulgate rules pursuant to chapter 1-26 to provide for the implementation and administration of the financial accountability rating system established pursuant to section 7 of this Act.