FOR AN ACT ENTITLED, An Act to provide for expenditures for early learning services from the special education fund.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF SOUTH DAKOTA:
    Section 1. That chapter 13-37 be amended by adding thereto a NEW SECTION to read as follows:

    Up to fifteen percent of the local need as defined in subdivision 13-37-35.1(18) may be used to develop and implement coordinated, early intervening services for students in kindergarten through grade twelve who are not currently identified as needing special education or special education and related services, but who need additional academic and behavioral interventions to succeed in a general education environment to prevent them from being identified as having a special education disability.

    Coordinated, early intervening services include:

            (1)    Professional development for teachers and other school staff to enable them to deliver scientifically-based academic instruction and behavioral interventions, including scientifically-based literacy instruction, and, if appropriate, instruction on

the use of adaptive and instructional software; and

            (2)    Providing educational and behavioral evaluations, services and supports, including scientifically-based literacy instruction.
    Section 2. That chapter 13-37 be amended by adding thereto a NEW SECTION to read as follows:

    A school district seeking to use funds pursuant to section 1 of this Act shall apply for approval for the use of such funds from the Department of Education on forms provided by the department.
    Section 3. That chapter 13-37 be amended by adding thereto a NEW SECTION to read as follows:

    Any school district that uses funds pursuant to section 1 of this Act shall annually report to the Department of Education on:

            (1)    The number of students who receive coordinated, early intervening services; and

            (2)    The number of students who received early intervening services, and who subsequently receive special education or special education and related services within two years after receiving the coordinated, early intervening services.
    Section 4. That chapter 13-37 be amended by adding thereto a NEW SECTION to read as follows:

    The Board of Education shall promulgate rules pursuant to chapter 1-26 establishing the application process, the application timelines, the criteria the department will use in approving a district's use of special education funds pursuant to section 1 of this Act, and the collection of data on children served pursuant to section 3 of this Act.
    Section 5. That chapter 13-37 be amended by adding thereto a NEW SECTION to read as follows:

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    A school district that provides early intervening services pursuant to section 1 of this Act is not eligible for funding from the money set aside pursuant to § 13-37-40 within a period of three years following the expenditure of such funds.
    Section 6. That § 13-37-2.1 be amended to read as follows:
    13-37-2.1. As used in this chapter, the term, surrogate parent, means any individual certified by the Department of Education assigned by the district to act in place of the parent of a child in need of special education when the school district cannot identify or locate the parent or the child is a ward of the state.
    Section 7. That § 13-37-16 be amended to read as follows:
    13-37-16. For taxes payable in 1997 2014, and each year thereafter, the school board shall levy no more than one dollar and forty fifty-five and two tenths cents per thousand dollars of taxable valuation, as a special levy in addition to all other levies authorized by law for the amount so determined to be necessary, and such levy shall be spread against all of the taxable property of the district. The proceeds derived from such levy shall constitute a school district special education fund of the district for the payment of costs for the special education of all children in need of special education or special education and related services who reside within the district pursuant to the provisions of §§ 13-37-8.2 to 13-37-8.10, inclusive. The levy in this section shall be based on valuations such that the median level of assessment represents 85% of market value as determined by the Department of Revenue. The total amount of taxes that would be generated at the levy pursuant to this section shall be considered local effort. Money in the special education fund may be expended for the purchase or lease of any assistive technology that is directly related to special education and specified in a student's individualized education plan. This section does not apply to real property improvements.

    For taxes payable in 2011, 2012, 2013, 2014, and 2015, the levy limitation of one dollar and forty cents per thousand dollars of taxable valuation does not apply to any school district.
    Section 8. That § 13-37-16.2 be amended to read as follows:
    13-37-16.2. If local effort increases on a statewide aggregate basis by a greater percentage

than local need on a statewide aggregate basis from any one year to the next, for the following year, the levy specified in subdivision 13-37-35.1(19) 13-37-35.1(7) shall be reduced proportionally so that the percentage increase in local effort on a statewide aggregate basis equals the percentage increase in need on a statewide aggregate basis.
    Section 9. That § 13-37-16.3 be amended to read as follows:
    13-37-16.3. Any adjustments in the levy specified in subdivision 13-37-35.1(19) 13-37-35.1(7) made pursuant to § 13-37-16.2 shall be based on maintaining the relationship between statewide local effort as a percentage of statewide local need in the fiscal year succeeding the fiscal year in which the adjustment is made. However, for fiscal year 2014, and each year thereafter, if the levy specified in subdivision 13-37-35.1(7) is not adjusted to maintain this relationship, the funding allocation for each disability level as defined in § 13-37-35.1 shall be reduced proportionally to maintain the relationship between statewide local effort as a percentage of statewide local need.
    Section 10. That § 13-37-18 be amended to read as follows:
    13-37-18. Special education costs and statistical information shall be included in the annual application for state aid financial report as provided in § 13-13-37.
    Section 11. That § 13-37-35.1 be amended to read as follows:
    13-37-35.1. Terms used in chapter 13-37 mean:

            (1)    "Level one disability," a mild disability;

            (2)    "Level two disability," cognitive disability or emotional disorder;

            (3)    "Level three disability," hearing impairment, deafness, visual impairment, deaf-blindness, orthopedic impairment, or traumatic brain injury;

            (4)    "Level four disability," autism;

            (5)    "Level five disability," multiple disabilities;

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            (5A)    "Level six disability," prolonged assistance;

            (6)    "Index factor," is the annual percentage change in the consumer price index for urban wage earners and clerical workers as computed by the Bureau of Labor Statistics of the United States Department of Labor for the year before the year immediately preceding the year of adjustment or three percent, whichever is less;

            (7)    "Local effort," shall be calculated for taxes payable in 2011 and shall be the amount of revenue that could have been generated for the taxes payable in 2010 using a special education levy of one dollar and twenty cents per one thousand dollars of valuation increased by the lesser of three percent or the index factor, as defined in § 10-13-38, plus a percentage increase of value resulting from any improvements or change in use of real property, annexation, minor boundary changes, and any adjustments in taxation of real property separately classified and subject to statutory adjustments and reductions under chapters 10-4, 10-6, 10-6A, and 10-6B, except § 10-6-31.4, only if assessed the same as property of equal value.

                For taxes payable in 2012, 2013, 2014, and 2015, the total amount of local effort shall be increased by the lesser of three percent or the index factor, established pursuant to § 10-13-38 plus a percentage increase of value resulting from any improvements or change in use of real property, annexation, minor boundary changes, and any adjustments in taxation of real property separately classified and subject to statutory adjustments and reductions under chapters 10-4, 10-6, 10-6A, and 10-6B, except § 10-6-31.4, only if assessed the same as property of equal value 2014 and thereafter using a special education levy of one dollar and thirty-five and two tenths cents per one thousand dollars of valuation;

            (8)    "Allocation for a student with a level one disability," for the school fiscal year

beginning July 1, 2012, is $4,525. For each school year thereafter, the allocation for a student with a level one disability shall be the previous fiscal year's allocation for such child increased by the lesser of the index factor or three percent;

            (9)    "Allocation for a student with a level two disability," for the school fiscal year beginning July 1, 2012, is $11,124. For each school year thereafter, the allocation for a student with a level two disability shall be the previous fiscal year's allocation for such child increased by the lesser of the index factor or three percent;

            (10)    "Allocation for a student with a level three disability," for the school fiscal year beginning July 1, 2012, is $14,788. For each school year thereafter, the allocation for a student with a level three disability shall be the previous fiscal year's allocation for such child increased by the lesser of the index factor or three percent;

            (11)    "Allocation for a student with a level four disability," for the school fiscal year beginning July 1, 2012, is $13,204. For each school year thereafter, the allocation for a student with a level four disability shall be the previous fiscal year's allocation for such child increased by the lesser of the index factor or three percent;

            (12)    "Allocation for a student with a level five disability," for the school fiscal year beginning July 1, 2012, is $19,993. For each school year thereafter, the allocation for a student with a level five disability shall be the previous fiscal year's allocation for such child increased by the lesser of the index factor or three percent;

            (12A)    "Allocation for a student with a level six disability," for the school fiscal year beginning July 1, 2012, is $7,205. For each school year thereafter, the allocation for a student with a level six disability shall be the previous fiscal year's allocation for such child increased by the lesser of the index factor or three percent;

            (13)    "Child count," is the number of students in need of special education or special

education and related services according to criteria set forth in rules promulgated pursuant to §§ 13-37-1.1 and 13-37-46 submitted to the Department of Education in accordance with rules promulgated pursuant to § 13-37-1.1;

            (14)    "Fall enrollment," the number of kindergarten through twelfth grade pupils enrolled in all schools operated by the school district on the last Friday of September of the previous school year minus the number of students for whom the district receives tuition, except any nonresident student who is in the care and custody of a state agency and is attending a public school and any student for whom tuition is being paid pursuant to § 13-28-42.1, plus the number of students for whom the district pays tuition;

            (15)    "Nonpublic school," a sectarian organization or entity which is accredited by the secretary of education for the purpose of instructing children of compulsory school age. This definition excludes any school that receives a majority of its revenues from public funds;

            (16)    "Nonpublic fall enrollment," until June 30, 2008, the number of children under age sixteen, and beginning July 1, 2009, the number of children under age eighteen, who are approved for alternative instruction pursuant to § 13-27-2 on the last Friday of September of the previous school year plus:

            (a)    For nonpublic schools located within the boundaries of a public school district with a fall enrollment of six hundred or more on the last Friday of September of the previous school year, the number of kindergarten through twelfth grade pupils enrolled on the last Friday of September of the previous regular school year in all nonpublic schools located within the boundaries of the public school district;

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            (b)    For nonpublic schools located within the boundaries of a public school district with a fall enrollment of less than six hundred on the last Friday of September of the previous school year, the number of resident kindergarten through twelfth grade pupils enrolled on the last Friday of September of the previous school year in all nonpublic schools located within the State of South Dakota;

            (17)    "Special education fall enrollment," fall enrollment plus nonpublic fall enrollment;

            (18)    "Local need," an amount to be determined as follows:

            (a)    Multiply the special education fall enrollment by 0.1004 and multiply the result by the allocation for a student with a level one disability;

            (b)    Multiply the number of students having a level two disability as reported on the child count for the previous school fiscal year by the allocation for a student with a level two disability;

            (c)    Multiply the number of students having a level three disability as reported on the child count for the previous school fiscal year by the allocation for a student with a level three disability;

            (d)    Multiply the number of students having a level four disability as reported on the child count for the previous school fiscal year by the allocation for a student with a level four disability;

            (e)    Multiply the number of students having a level five disability as reported on the child count for the previous school fiscal year by the allocation for a student with a level five disability;

            (f)    Multiply the number of students having a level six disability as reported on the child count for the previous school fiscal year by the allocation for a student with a level six disability;

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            (g)    When calculating local need at the statewide level, include the amount set aside for extraordinary costs defined in § 13-37-40;

            (h)    Sum the results of (a) through (f) to (g), inclusive;

            (19)    "Effort factor," for taxes payable in 2011, 2012, 2013, 2014, and 2015, the effort factor is the amount of taxes payable for the year divided by the amount of local effort as calculated in subdivision (7) the school district's special education tax levy in dollars per thousand divided by $1.352. The maximum effort factor is 1.0.
    Section 12. That § 13-37-36.1 be amended to read as follows:
    13-37-36.1. To establish the school district special education fund statutory carryover excluding federal funds, the following calculations shall be performed:

            (3)    Deduct the amount of federal revenue calculated in (2) from the special education fund balance, deduct from the total ending fund balance the amount of Title VIII of the Elementary and Secondary Education Act funds receipted or transferred to the special education fund.
    Section 13. That § 13-37-40 be amended to read as follows:
    13-37-40. Subject to the limitation in § 13-37-42, the secretary of the Department of Education shall, for school fiscal year 1999 2014 and each year thereafter, set aside 5.75% four million dollars of the state aid to districts for special education appropriation for extraordinary expenses incurred in providing special education programs or services to one or more children with disabilities, with expenditures to be made as recommended by an oversight board and

approved by the secretary of the Department of Education. Any funds not expended or obligated pursuant to this section shall not be subject to reversion pursuant to § 4-8-19. The maximum amount not subject to reversion is equal to 5.75% of the state special education appropriation. The total amount set aside for extraordinary expenses each fiscal year plus the total amount not reverted from previous fiscal years may not exceed five million five hundred thousand dollars.

    The amount appropriated for extraordinary expenses shall be recalculated at the same time as the amount of the allocations for disability levels as provided in § 13-37-35.2.
    Section 14. That § 13-37-40.1 be amended to read as follows:
    13-37-40.1. A school district is not eligible for funding from the money set aside in §§ 13-37-38 to 13-37-40, inclusive, unless the school district certifies to the secretary of education that its ending special education fund balance will not exceed five ten percent of its special education expenditures for the current fiscal year.
    Section 15. That § 13-37-44 be amended to read as follows:
    13-37-44. A school district's state aid for special education as calculated pursuant to § 13-37-36.1 or 13-37-51 shall be reduced by the amount which its ending special education fund balance exceeds twenty twenty-five percent of its special education expenditures for the prior fiscal year or fifty one hundred thousand dollars, whichever is greater, if the school district did not receive money set aside in § 13-37-40 during the prior fiscal year; or the amount which its ending special education fund balance exceeds five ten percent of its special education expenditures for the prior fiscal year if the school district received money set aside in §§ 13-37-38 to 13-37-40, inclusive, during the prior fiscal year.
    Section 16. That § 13-37-48.1 be repealed.
    13-37-48.1. In addition to the purposes specified in § 13-37-40, money set aside pursuant to § 13-37-40 may be used by the Department of Education to establish and maintain a program

to assist school districts with legal matters relating to special education, to employ personnel to audit school districts for compliance with the provisions of §§ 13-37-36.1 to 13-37-52, to establish and maintain state protocols to assist school districts in developing individualized education plans, to support activities under Part C of the Individuals with Disabilities Education Act, Infants and Toddlers with Disabilities, or to purchase assistive technology for students with a level two, three, four, or five disability.

    Any approved K-12 application under the extraordinary cost fund must be funded prior to funding the Part C requests.
    Section 17. That § 13-37-51 be repealed.
    13-37-51. For the transition period from school fiscal year 2000 through school fiscal year 2003, state aid for special education shall be determined according to the following calculations:

            (6)    State aid for special education is the greater of the result of subdivision (2) or the result of subdivision (5).

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    Section 18. That § 13-37-53 be repealed.
    13-37-53. If the parents or guardian of a child assigned to and enrolled in an out of district special education residential or tuition day program move to another South Dakota school district and that school district provides special education services to the child, the Department of Education shall allocate any state aid to special education attributable to the child received or scheduled to be received by the resident school district as defined by § 13-28-9.1 to the school district to which the parents or guardian have moved for the period of time that the resident school district is not providing special education services to the child. For the purposes of §§ 13-28-9.1 and 13-37-54, an approved special education program includes out-of-district residential programs and tuition day programs.
    Section 19. That § 13-37-54 be amended to read as follows:
    13-37-54. The Department of Education may promulgate rules pursuant to chapter 1-26 to provide for the reallocation of state aid to special education as provided for in §§ § 13-28-9.1 and 13-37-53.
    Section 20. That § 13-16-7.1 be amended to read as follows:
    13-16-7.1. For taxes payable in 2011, 2012, 2013, 2014, and 2015, the provisions of §§ 13-10-6, and 13-16-7, 13-37-16, and 13-37-35.1 that limit the maximum amount of revenue that may be generated by the pension, and capital outlay, and special education tax levies do not apply to any school district that has less than a ten percent change in the total taxable valuation from the previous year of all real property in the school district, not including the increase of value resulting from any improvements or change in use of real property.