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SENATE FLOOR VERSION
April 15, 2025
AS AMENDED
ENGROSSED HOUSE
BILL NO. 1086 By: Lowe (Dick) of the House
and
Pugh of the Senate
[ schools – funding – funds – carryover – State Aid –
revenue – language – effective date –
emergency ]
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 70 O.S. 2021, Section 1 -117, is
amended to read as follows:
Section 1-117. A. The general fund of any school district is
hereby defined as a current expense f und and shall consist of all
revenue or monies that can legally be expended within a certain
specified fiscal year, but shall not be considered as including any
money derived from a special building fund levy made in accordance
with the provisions of Section 10 of Article X of the Oklahoma
Constitution, nor shall it include any monies derived from the sale
of bonds issued under the provisions of Section 26 of Article X of
the Oklahoma Constitution. All monies derived from the proceeds of
the school levies made pursuant to the provisions of Section 9 of
Article X of the Oklahoma Constitution shall be placed in the
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general fund provided by this section. Expenditures from the
general fund shall be noncapital in nature. All monies derived from
state-dedicated revenue, state-appropriated revenue unless otherwise
provided for by law, and county sources shall be placed in the
general fund provided for by this section. Except as provided for
in subsections F, K, and L of this section, a district shall not be
authorized to make capital expenditures as defined by this section
from the general fund.
B. For purposes of this section, state -dedicated revenue shall
be any registration or license fees, taxes, or penalties collected
at the state level and distri buted to common school districts.
County sources shall be all funds collected by the county and
distributed to common school districts but shall not include any
funds derived from the building fund levy made in accordance with
the provisions of Section 10 of Articl e X of the Oklahoma
Constitution or funds derived from the sinking fund levy made in
accordance with the provisions of Section 26 of Article X of the
Oklahoma Constitution.
C. For the purposes of this section, a capital expenditure
shall be an expenditure which results in the acquisition of fixed
assets or additions to fixed assets. Capital expenditures shall
include, but shall not be limited to, purchases of land or existing
buildings, purchases of real property, improvements of grounds and
sites for construction purposes, all expenditures for construction
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of buildings unless authorized by the State Board of Education or
the State Board of Career and Technology Education upon application
to the appropriate state board pursuant to subsection F of this
section, additions to buildings, remodeling of buildings if such
remodeling involves changes to roof structures or load -bearing
walls, professional services, salaries and expenses of architects
and engineers hired or assigned to capital projects except for suc h
services, salaries, and expenses as are applicable in preparation
for a bond issue, expenditures for the initial installation and
extension of service systems and built -in heat or air equipment to
existing buildings, expenditures for the replac ement of a building
which has been destroyed, installments and lease payments on
property, including interest, that have a terminal date and result
in the acquisition of property, and expenditures for preliminary
studies made prior to the time that authority to proc eed with a
construction project is given if authority is received within the
same fiscal year that the expenditure was made.
D. Noncapital expenditures shall include, but shall not be
limited to, expenditures for maintenance, repair , and replacement of
property and equipment, initial or additional purchases of furniture
and equipment, direct expenses for maintenance of plant , including
grounds, salaries for maintenance of plant , including salaries for
the upkeep of grounds, and repair and replacement of bu ilding
structures which do not add to existing facilities and which do not
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involve changes in roof structures or load -bearing walls and which
are not classified as a capital expenditure by this section.
E. The State Board of Education shall adop t and amend
regulations regarding the classification, definition , and financial
administration of funds, accounts , and expenditures in accordance
with the requirements of this section.
F. A school district shall be authorized to make capital
expenditures from the g eneral fund to defray the cost of rebuilding
a school building only if a school building or facility has been
destroyed by a fire or natural disaster, such as flood, tornado , or
other act of God, or by an act of a public enemy of the United
States or this state and monies received by the district through
insurance coverage, federal reimbursement, contributions , and
allocation from the State Board of Education from the State Public
Common School Building Equalization Fund are insufficient to rebuild
the facility. Capital expenditures from the general fund pursuant
to this subsection shall be limited to an amount necessary to defray
the cost of rebuilding the facility which exceeds monies received by
the school district through insurance, federal re imbursement,
contributions, and state allocations.
G. Schools which receive gifts or, donations, or state-
appropriated monies for the purpose of capital expenditures or
projects shall place such monies in the building fund, as provided
by Section 1-118 of this title, and not in the general fund. School
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districts which receive gifts, grants, or donations of monies for
noncapital expenditures may place the monies in the general fund,
and such monies shall not be required to be used during the year in
which the money was received but may accumulate from year to year
and shall not be considered a part of the general fund collections
when calculating the general fund carryover as provided for in
subsection G of Section 18 -200.1 of this title.
H. School districts which r eceive monies from rental, sale, or
lease of buildings, impact aid monies, or grants, gifts , or
donations for capital purposes, whether from state, federal, or
other sources, may place such monies in the building fund authorized
by Section 1-118 of this title or the general fund authorized by
this section.
I. Any construction of a building included as a capital
expenditure from the general fund of a school district which is
authorized and has had a contractual agreement concerning such
construction execute d prior to July 1, 1991, may be proceeded with
and completed as authorized prior to July 1, 1991, as a capital
expenditure from such general fund.
J. School districts receiving revenues authorized by Section 9B
of Article X of the Oklahoma Const itution shall be authorized to
make capital expenditures from the general revenue fund no greater
than the amount levied by the incentive millage.
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K. Upon the approval of the State Board of Education, a school
district shall be authorized to make capital expenditur es as defined
in this section from its general fund if:
1. A bond issue has been rejected at an election by the school
district electors voting on that question within the current school
year, as certified by the secretary of the county election board; or
2. The school district has voted indebtedness at any time
within the preceding three (3) school years through the issuance of
bonds or through approval by voters of issuance of new bonds for
more than eighty-five percent (85%) of the maximum allowable
pursuant to the provisions of Section 26 of Article X of the
Oklahoma Constitution as shown on the school district budget filed
with the State Board of Equalization for the current school year and
certifications by the Attorney General prior to Apr il 1 of the
current school year. The State Board of Education shall establish
the rules to administer the provisions of this subsection which
shall include, but not be limited to, specification of a maximum
amount of general fund monies to be used for capital expen ditures,
the purposes for which such funds may be expended , and the period of
time in which such funds shall be encumbered.
L. Other provisions of this section notwithstanding, a school
district shall be authorized to make capital expenditures f rom the
general fund if the total assessed property valuation per average
daily attendance is less than sixty percent (60%) of the state
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average total assessed property valuation per average daily
attendance and if, for each year in which general fund revenue is
used for capital expenditures, the district has voted the five -mill
building fund levy authorized in Section 10 of Article X of the
Oklahoma Constitution and has voted indebtedness through the
issuance of new bonds for at least eighty -five percent (85%) within
the last three (3) years of the maximum allowable pursuant to the
provisions of Section 26 of Article X of the Oklahoma Constitution
as shown on the school district budget filed with the State Board of
Equalization for the current school year and certifi cations by the
Attorney General prior to April 1 of the school year. Provided, the
maximum amount of general fund revenue used for capital expenditures
pursuant to this subsection shall not exceed five percent (5%) of
the total yearly revenue to the general fund. Said Such fund may
not be used for capital expenditures for more than five (5)
consecutive years and may only be utilized for remodeling or
construction of classroom facilities and such ancillary facilities
to said such classrooms as may be neces sary. Provided, further, the
State Superintendent of Public Instruction shall certify in writing,
prior to the expenditure of the funds for which provision is made in
this subsection, that such expenditures are in compliance with the
provisions of this subsection.
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SECTION 2. AMENDATORY 70 O.S. 2021, Section 18 -200.1, as
amended by Section 1, Chapter 280, O.S.L. 2023 (70 O.S. Supp. 2024,
Section 18-200.1), is amended to read as follows:
Section 18-200.1. A. Beginning with the 202 2-2023 school year,
and each school year thereafter, each school district shall have its
initial allocation of State Aid calculated based on the state
dedicated revenues actually collected during the preceding fiscal
year, the adjusted assessed v aluation of the preceding year, and the
weighted average daily membership for the school district of the
preceding school year. Each school district shall submit the
following data based on the first nine (9) weeks, to be used in the
calculation of the average dail y membership of the school district:
1. Student enrollment by grade level;
2. Pupil category counts; and
3. Transportation supplement data.
On or before December 30, the State Department of Education
shall determine each school district's curr ent year allocation
pursuant to subsection D of this section. The State Department of
Education shall complete an audit, using procedures established by
the Department, of the student enrollment by grade level data, pupil
category counts, and transportation supplem ent data to be used in
the State Aid Formula pursuant to subsection D of this section by
December 1 and by January 15 shall notify each school district of
the district's final State Aid allocation for the current school
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year. The January payment of State Aid and each subsequent payment
for the remainder of the school year shall be based on the final
State Aid allocation as calculated in subsection D of this section.
Except for reductions made due to the assessment of penalties by the
State Department of E ducation according to law, the January payment
of State Aid and each subsequent payment for the remainder of the
school year shall not decrease by an amount more than the amount
that the current chargeable revenue increases for that district.
B. The State Department of Education shall retain not less than
one and one-half percent (1 1/2%) of the total funds appropriated
for financial support of schools, to be used to make midyear
adjustments in State Aid and which shall be reflected in the final
allocations. If the amount of appropriated funds, including the one
and one-half percent (1 1/2%) retained, remaining after January 1 of
each year is not sufficient to fully fund the final allocations, the
Department shall recalculate each school district 's remaining
allocation pursuant to subsection D of this section using the
reduced amount of appropriated funds.
C. On and after July 1, 1997, the amount of State Aid each
district shall receive shall be the sum of the Foundation Aid, the
Salary Incentive Aid, and the Transportation Supplement, as adjusted
pursuant to the provisions of subsection G of this section and
Section 18-112.2 of this title; provided, no district having per
pupil revenue in excess of three hundred percent (300%) of the
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average per pupil revenue of all districts shall receive any State
Aid or Supplement in State Aid.
The July calculation of per pupil revenue shall be determined by
dividing the district's second preceding year's total weighted
average daily membership (ADM) into the district's second preceding
year's total revenues excluding federal revenue, insurance loss
payments, reimbursements, recovery of overpayments and refunds,
unused reserves, prior expenditures recovered, prior year surpluses,
and less the amount of any trans fer fees paid in that year.
The December calculation of per pupil revenue shall be
determined by dividing the district's preceding year's total
weighted average daily membership (ADM) into the district's
preceding year's total revenues excluding federal revenue, ins urance
loss payments, reimbursements, recovery of overpayments and refunds,
unused reserves, prior expenditures recovered, prior year surpluses,
and less the amount of any transfer fees paid in that year.
D. For the 1997-98 school year, and each school year
thereafter, Foundation Aid, the Transportation Supplement, and
Salary Incentive Aid shall be calculated as follows:
1. Foundation Aid shall be determined by subtracting the amount
of the Foundation Program Income from the cost of the Foundation
Program and adding to this difference the Transportation Supplement.
a. The Foundation Program shall be a district's higher
weighted average daily membership based on the first
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nine (9) weeks of the current school year or the
preceding school year of a school district, as
determined by the provisions of subsection A of
Section 18-201.1 of this title and paragraphs 1, 2, 3,
and 4 of subsection B of Section 18 -201.1 of this
title, multiplied by the Base Foundation Support
Level. However, for the portion of weighted
membership derived from nonresident, transferred
pupils enrolled in online courses, the Foundation
Program shall be a district's weighted average daily
membership of the preceding school year or the first
nine (9) weeks of the current school yea r, whichever
is greater, as determined by the provisions of
subsection A of Section 18 -201.1 of this title and
paragraphs 1, 2, 3, and 4 of subsection B of Section
18-201.1 of this title, multiplied by the Base
Foundation Support Level .
b. The Foundation Program Inc ome shall be the sum of the
following:
(1) The the adjusted assessed valuation of the
current school year of the school district, minus
the previous year protested ad valorem tax
revenues held as prescribed in Section 2884 of
Title 68 of the Okla homa Statutes, multiplied by
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the mills levied pursuant to subsection (c) of
Section 9 of Article X of the Oklahoma
Constitution, if applicable, as adjusted in
subsection (c) of Section 8A of Article X of the
Oklahoma Constitution. For purposes of this
subsection, the "adjusted assessed valuation of
the current school year" shall be the adjusted
assessed valuation on which tax revenues are
collected during the current school year, and
(2) Seventy-five seventy-five percent (75%) of the
amount received by the school district from the
proceeds of the county levy during the preceding
fiscal year, as levied pursuant to subsection (b)
of Section 9 of Article X of the Oklahoma
Constitution, and
(3) motor vehicle collections, and
(4) gross production tax, and
(5) state apportionment, and
(6) R.E.A. tax.
The items listed in divisions (3), (4), (5), and (6) of
this subparagraph shall consist of the amounts actually
collected from such sources during the preceding fiscal
year calculated on a per capita basis on the unit provided
for by law for the distribution of each such revenue.
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2. The Transportation Supplement shall be equal to the average
daily haul times the per capita allowance times the appropriate
transportation factor.
a. The average daily haul shall be the number of ch ildren
in a district who are legally transported and who live
one and one-half (1 1/2) miles or more from school.
b. The per capita allowance shall be determined using the
following chart:
PER CAPITA PER CAPITA
DENSITY FIGURE ALLOWANCE DENSITY FIGURE ALLOWANCE
3000 - .3083 $167.00 .9334 - .9599 $99.00
3084 - .3249 $165.00 .9600 - .9866 $97.00
3250 - .3416 $163.00 .9867 - 1.1071 $95.00
3417 - .3583 $161.00 1.1072 - 1.3214 $92.00
3584 - .3749 $158.00 1.3215 - 1.5357 $90.00
3750 - .3916 $156.00 1.5358 - 1.7499 $88.00
3917 - .4083 $154.00 1.7500 - 1.9642 $86.00
4084 - .4249 $152.00 1.9643 - 2.1785 $84.00
4250 - .4416 $150.00 2.1786 - 2.3928 $81.00
4417 - .4583 $147.00 2.3929 - 2.6249 $79.00
4584 - .4749 $145.00 2.6250 - 2.8749 $77.00
4750 - .4916 $143.00 2.8750 - 3.1249 $75.00
4917 - .5083 $141.00 3.1250 - 3.3749 $73.00
5084 - .5249 $139.00 3.3750 - 3.6666 $70.00
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5250 - .5416 $136.00 3.6667 - 3.9999 $68.00
5417 - .5583 $134.00 4.0000 - 4.3333 $66.00
5584 - .5749 $132.00 4.3334 - 4.6666 $64.00
5750 - .5916 $130.00 4.6667 - 4.9999 $62.00
5917 - .6133 $128.00 5.0000 - 5.5000 $59.00
6134 - .6399 $125.00 5.5001 - 6.0000 $57.00
6400 - .6666 $123.00 6.0001 - 6.5000 $55.00
6667 - .6933 $121.00 6.5001 - 7.0000 $53.00
6934 - .7199 $119.00 7.0001 - 7.3333 $51.00
7200 - .7466 $117.00 7.3334 - 7.6667 $48.00
7467 - .7733 $114.00 7.6668 - 8.0000 $46.00
7734 - .7999 $112.00 8.0001 - 8.3333 $44.00
8000 - .8266 $110.00 8.3334 - 8.6667 $42.00
8267 - .8533 $108.00 8.6668 - 9.0000 $40.00
8534 - .8799 $106.00 9.0001 - 9.3333 $37.00
8800 - .9066 $103.00 9.3334 - 9.6667 $35.00
9067 - .9333 $101.00 9.6668 or more $33.00
c. The formula transportation factor shall be 2.0.
3. Salary Incentive Aid shall be determined as follows:
a. Multiply the Incentive Aid guarantee by the dis trict's
higher weighted average daily membership based on the
first nine (9) weeks of the current school year or the
preceding school year of a school district, as
determined by the provisions of subsection A of
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Section 18-201.1 of this title and paragraphs 1, 2, 3,
and 4 of subsection B of Section 18 -201.1 of this
title.
b. Divide the district's adjusted assessed valuation of
the current school year minus the previous year's
protested ad valorem tax revenues held as prescribed
in Section 2884 of Title 68 o f the Oklahoma Statutes,
by one thousand (1,000) and subtract the quotient from
the product of subparagraph a of this paragraph. The
remainder shall not be less than zero (0).
c. Multiply the number of mills levied for general fund
purposes above the fifteen (15) m ills required to
support Foundation Aid pursuant to division (1) of
subparagraph b of paragraph 1 of this subsection, not
including the county four -mill levy, by the remainder
of subparagraph b of this paragraph. The product
shall be the Salary Incentive Aid of the district.
E. By June 30, 1998, the State Department of Education shall
develop and the Department and all school districts shall have
implemented a student identification system which is consistent with
the provisions of subsections C D and D E of Section 3111 of Title
74 of the Oklahoma Statutes. The student identification system
shall be used specifically for the purpose of reporting enrollment
data by school sites and by school districts, the administration of
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the Oklahoma School T esting Program Act, the collection of
appropriate and necessary data pursuant to the Oklahoma Educational
Indicators Program, determining student enrollment, establishing a
student mobility rate, allocation of the State Aid Formula, and
midyear adjustments in fundin g for student growth. This enrollment
data shall be submitted to the State Department of Education in
accordance with rules promulgated by the State Board of Education.
Funding for the development, implementation, personnel training, and
maintenance of the student identification system shall be set out in
a separate line item in the allocation section of the appropriation
bill for the State Board of Education for each year.
F. 1. In the event that ad valorem taxes of a school district
are determined to be uncollectible because of bankruptcy, clerical
error, or a successful tax protest, and the amount of such taxes
deemed uncollectible exceeds Fifty Thousand Dollars ($50,000.00) or
an amount greater than twenty -five percent (25%) of ad valorem t axes
per tax year, or the valuation of a district is lowered by order of
the State Board of Equalization, the school district's State Aid,
for the school year that such ad valorem taxes are calculated in the
State Aid Formula, shall be determined by subtracting the net
assessed valuation of the property upon which taxes were deemed
uncollectible from the assessed valuation of the school district and
the state. Upon request of the local board of education, it shall
be the duty of the county assessor to cert ify to the Director of
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Finance of the State Department of Education the net assessed
valuation of the property upon which taxes were determined
uncollectible.
2. In the event that the amount of funds a school district
receives for reimbursement from the Ad Valorem Reimbursement Fund is
less than the amount of funds claimed for reimbursement by the
school district due to insufficiency of funds as provided in Section
193 of Title 62 of the Oklahoma Statutes, then the school district's
assessed valuation for the school year that such ad valorem
reimbursement is calculated in the State Aid Formula shall be
adjusted accordingly.
G. 1. Notwithstanding the provisions of Section 18 -112.2 of
this title, a school district shall have its State Aid reduced by an
amount equal to the amount of carryover in the general fund of the
district as of June 30 of the preceding fiscal year, that is in
excess of the following standards for two (2) consecutive years:
Total Amount of Amount of
General Fund Collections, General Fund
Excluding Previous Year Balance
Cash Surplus as of June 30 Allowable
Less than $1,000,000 48%
$1,000,000 - $2,999,999 42%
$3,000,000 - $3,999,999 36%
$4,000,000 - $4,999,999 30%
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$5,000,000 - $5,999,999 24%
$6,000,000 - $7,999,999 22%
$8,000,000 - $9,999,999 19%
$10,000,000 or more 17%
2. By February 1 the State Department of Education shall send
by certified mail, with return receipt requested, to each school
district superintendent, auditor, and regional accreditation officer
a notice of and calculation sheet reflecting the general fund
balance penalty to be assessed against that school district.
Calculation of the general fund balance penalty shall not include
federal revenue. Within thirty (30) days of receipt of this written
notice the school district shall submit to the Department a written
reply either accepting or protesting the penalty to be assessed
against the district. If protesting, the school district shall
submit with its reply the reasons for rejecting the calculations and
documentation supporting those reasons. The Department shall review
all school district penalty protest documentation and notify each
district by March 15 of its finding and the final penalty to be
assessed to each district. General fund balance penalties shall be
assessed to all school districts by April 1.
3. Any school district which receives proceeds from a tax
settlement or a Federal Emergency Management Agency settlement
during the last two (2) months of the preceding fiscal year shall be
exempt from the penalties assessed in this subsection, if the
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penalty would occur solely as a result of receiving funds from the
tax settlement.
4. Any school district which receives an increase in State Aid
because of a change in Foundation and/or Salary Incentive Aid
factors during the last two (2) months of the preceding fiscal year
shall be exempt from the penalties assessed in this subsection, if
the penalty would occur solely as a result of receiving funds from
the increase in State Aid.
5. If a school district doe s not receive Foundation and/or
Salary Incentive Aid during the preceding fiscal year, the State
Board of Education may waive the penalty assessed in this subsection
if the penalty would result in a loss of more than forty percent
(40%) of the remaining State Aid to be allocated to the school
district between April 1 and the remainder of the school year and if
the Board determines the penalty will cause the school district not
to meet remaining financial obligations.
6. Any school district which receives g ross production revenue
apportionment during the 2002 -2003 school year or in any subsequent
school year that is greater than the gross production revenue
apportionment of the preceding school year shall be exempt from the
penalty assessed in this subsection, if the penalty would occur
solely as a result of the gross production revenue apportionment, as
determined by the State Board of Education.
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7. Beginning July 1, 2003, school districts that participate in
consolidation or annexation pursuant to the prov isions of the
Oklahoma School Consolidation and Annexation Act shall be exempt
from the penalty assessed in this subsection for the school year in
which the consolidation or annexation occurs and for the next three
(3) fiscal years.
8. Any school district which rec eives proceeds from a sales tax
levied by a municipality pursuant to Section 22 -159 of Title 11 of
the Oklahoma Statutes or proceeds from a sales tax levied by a
county pursuant to Section 1370 of Title 68 of the Oklahoma Statutes
during the 2003-2004 school year or the 2004-2005 school year shall
be exempt from the penalties assessed in this subsection, if the
penalty would occur solely as a result of receiving funds from the
sales tax levy.
9. Any school district which has an amount of carryover in the
general fund of the district in excess of the limits established in
paragraph 1 of this subsection during the fiscal years beginning
July 1, 2020, July 1, 2021, July 1, 2022, and July 1, 2023, and July
1, 2024, shall not be assessed a general fund balance penalty as
provided for in this subsection.
10. For purposes of calculating the general fund balance
penalty, the terms "carryover" and "general fund balance" shall not
include federal revenue.
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H. In order to provide startup funds for the implementation o f
early childhood programs, State Aid may be advanced to school
districts that initially start early childhood instruction at a
school site. School districts that desire such advanced funding
shall make application to the State Department of Edu cation no later
than September 15 of each year and advanced funding shall be awarded
to the approved districts no later than October 30. The advanced
funding shall not exceed the per pupil amount of State Aid as
calculated in subsection D of this section per antici pated Head
Start eligible student. The total amount of advanced funding shall
be proportionately reduced from the monthly payments of the
district's State Aid payments during the last six (6) months of the
same fiscal year.
I. 1. Beginning Jul y 1, 1996, the Oklahoma Tax Commission,
notwithstanding any provision of law to the contrary, shall report
monthly to the State Department of Education the monthly
apportionment of the following information:
a. the assessed valuation of property,
b. motor vehicle collections,
c. R.E.A. tax collected, and
d. gross productions tax collected.
2. Beginning July 1, 1997, the State Auditor and Inspector's
Office, notwithstanding any provision of law to the contrary, shall
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report monthly to the State Department o f Education the monthly
apportionment of the proceeds of the county levy.
3. Beginning July 1, 1996, the Commissioners of the Land
Office, notwithstanding any provision of law to the contrary, shall
report monthly to the State Department of Education the monthly
apportionment of state apportionment.
4. Beginning July 1, 1997, the county treasurers' offices,
notwithstanding any provision of law to the contrary, shall report
monthly to the State Department of Education the ad valorem tax
protest amounts for each county.
5. The information reported by the Tax Commission, the State
Auditor and Inspector's Office, the county treasurers' offices, and
the Commissioners of the Land Office, pursuant to this subsection
shall be reported by a school district on forms develope d by the
State Department of Education.
SECTION 3. This act shall become effective July 1, 2025.
SECTION 4. It being immediately necessary for the preservation
of the public peace, health or safety, an emergency is hereby
declared to exist, by reason whereof this act shall take effect and
be in full force from and after its passage and approval.
COMMITTEE REPORT BY: COMMITTEE ON EDUCATION
April 15, 2025 - DO PASS AS AMENDED