HOUSE 3rd Reading Unamended April 27, 2015 HOUSE Amended 2nd Reading April 23, 2015First Regular Session Seventieth General Assembly STATE OF COLORADO REENGROSSED This Version Includes All Amendments Adopted in the House of Introduction LLS NO. 15-0158.02 Julie Pelegrin x2700 HOUSE BILL 15-1201 HOUSE SPONSORSHIP Rankin and Buckner, Brown, DelGrosso, Dore, Garnett, Lundeen, Pettersen, Wilson SENATE SPONSORSHIP Todd, House Committees Senate Committees Education Appropriations A BILL FOR AN ACT Concerning providing centralized operating services through boards of cooperative services, and, in connection therewith, making an appropriation. Bill Summary (Note: This summary applies to this bill as introduced and does not reflect any amendments that may be subsequently adopted. If this bill passes third reading in the house of introduction, a bill summary that applies to the reengrossed version of this bill will be available at http://www.leg.state.co.us/billsummaries.) The bill creates a grant program to enable boards of cooperative services (BOCES) to provide centralized operating services (services) to small, rural school districts and rural school districts (eligible school districts) and charter schools located within the eligible school districts (eligible charter schools), with the goal of reducing operating overhead costs for eligible school districts and eligible charter schools that use the services and increasing the amount of time available to the administrators to support instruction in those eligible school districts and eligible charter schools. Eligible school districts and eligible charter schools may choose whether to use the services provided by a BOCES. The state board of education (state board) must promulgate rules to implement the grant program, including the process and required information for applying for grants. If a BOCES expects to provide the services beginning in the first grant year, it must submit a plan for providing the services as part of the grant application. A BOCES may ask, and the state board may allow the BOCES, to use the moneys received in the first grant year to create the plan to provide services and, if the department of education (department) approves the plan, begin providing services in the second grant year. The department will review the grant applications and recommend recipients to the state board, and the state board will select the grant recipients. The department and the state board must use specified criteria in selecting grant recipients, including the degree to which the BOCES will provide a wide range of services and the need demonstrated by the eligible school districts. The department will distribute up to $500,000 per grant year to each grant recipient; except that: A grant recipient that uses moneys in the first grant year to create a plan may receive up to $50,000; and Each grant recipient will receive moneys in the second and third grant years only if it can demonstrate that it is providing the services effectively, as determined by the department based on specified criteria. The department will distribute the grant moneys from the BOCES centralized operating services fund, which is created in the bill and consists of moneys appropriated in the 2015-16 budget year from the state education fund. At the joint education committee hearing held in 2017, the department shall report concerning the effectiveness of the grant program in reducing eligible districts' and eligible charter schools' operating overhead costs and increasing administrators' ability to spend time supporting instruction. The department may also recommend legislative changes to continue the grant program. The grant program is repealed, effective July 1, 2018. The bill repeals an existing statute that authorizes funding for BOCES that submit plans for providing education and support services programs. Be it enacted by the General Assembly of the State of Colorado: SECTION 1. In Colorado Revised Statutes, repeal and reenact, with amendments, 22-5-118 as follows: 22-5-118. Assistance for centralized operating services - legislative declaration - definitions - rules - plans - reports - funding - repeal. (1) (a) The general assembly finds that: (I) School districts across the state are committed to and working toward the goal of preparing every student to be postsecondary and workforce ready upon graduation from high school; (II) There is wide variance among the school districts in the state in their capacity to achieve this goal, based in part on each school district's varying ability to generate property tax revenues and the percentage of its budget that each school district must use for operating expenses; (III) Small, rural school districts and rural school districts are impacted by a high percentage of operating overhead costs and restricted ability to generate property tax revenue; and (IV) Existing BOCES were created to provide a broad array of administrative and educational services. With additional resources and some reorganization, the BOCES could expand the centralized operating services they provide for small, rural school districts, rural school districts, and charter schools located within those districts, including information management and data analysis, accounting services, transportation, food services, facility operations and maintenance, security services, technical support for blended learning, and training for non-instructional staff. (b) The general assembly hereby declares that, for purposes of section 17 of article IX of the state constitution, providing funds to enable BOCES to provide centralized operating services is an important element in enabling school districts and charter schools to implement accountable education reform, including accountable programs to meet state academic standards, and the grant program created in this section may therefore receive funding from the state education fund created in section 17 (4) of article IX of the state constitution. (2) As used in this section, unless the context otherwise requires: (a) "BOCES area" means the geographical area that encompasses all of the school districts that are members of the BOCES. (b) "Centralized operating services" may include, but need not be limited to: (I) Information management and data analysis; (II) Accounting services; (III) Human resource services; (IV) Transportation services; (V) Food services; (VI) Facility operations and maintenance services; (VII) Security services; (VIII) Technical support for blended learning and on-line learning; and (IX) Training for non-instructional staff. (c) "Charter school" means a charter school authorized by a school district pursuant to part 1 of article 30.5 of this title or an institute charter school authorized by the state charter school institute pursuant to part 5 of article 30.5 of this title. (d) "Department" means the department of education created and existing pursuant to section 24-1-115, C.R.S. (e) "Eligible charter school" means a charter school that is physically located within the BOCES area of a BOCES that receives a grant pursuant to this section or within the boundaries of an eligible school district that is contiguous to the BOCES area. (f) "Eligible school district" means: (I) A rural school district, which is a school district in Colorado that the department determines is rural, based on the geographic size of the school district and the distance of the school district from the nearest large, urbanized area, and that enrolls at least one thousand students but fewer than six thousand five hundred students; or (II) A small, rural school district, which is a school district in Colorado that the department determines is rural, based on the geographic size of the school district and the distance of the school district from the nearest large, urbanized area, and that enrolls fewer than one thousand students. (g) "Grant" means a conditional three-year grant to provide centralized operating services that is awarded to a BOCES pursuant to this section. (3) (a) A board of cooperative services may apply pursuant to this section for a conditional three-year grant to enable the BOCES to provide centralized operating services to the eligible school districts that are members of the BOCES, to an eligible school district that is contiguous to the BOCES area, and to an eligible charter school. The BOCES may provide the centralized operating services only upon request by and without charge to the eligible school district or the eligible charter school. A BOCES may apply for a grant jointly with other BOCES. (b) In a grant application, a BOCES may ask to use the moneys received in the first grant year to create a plan for providing centralized operating services. Based on the information provided in the grant application, the state board may allow a BOCES to use the first-year grant moneys to develop the plan. The department must review and approve the plan for the BOCES to qualify to receive moneys in the second grant year. (c) If the state board awards a grant to a BOCES, in order to receive the grant moneys in the second and third years, the BOCES must annually demonstrate to the department, as provided in subsection (7) of this section, that the BOCES is effective in providing centralized operating services to eligible school districts and eligible charter schools. (d) Notwithstanding any provision of this subsection (3) to the contrary, a BOCES that receives a grant pursuant to this section and that provides unique centralized operating services that are not provided by another BOCES in the state may use the grant moneys to provide the unique centralized operating services to any eligible school district and to a charter school physically located within any eligible school district. (4) (a) The state board shall promulgate rules pursuant to the "State Administrative Procedure Act", article 4 of title 24, C.R.S., to establish the process and timelines by which a BOCES may apply to the department for a grant and any information in addition to the information specified in paragraph (b) of this subsection (4) that a BOCES must provide in applying for a grant. (b) To apply for a grant, a BOCES must submit a plan that, at a minimum, describes: (I) The centralized operating services the BOCES will provide, based on the needs of the eligible school districts that are members of and contiguous to the applying BOCES and the eligible charter schools that are physically located within those eligible school districts, or the unique centralized operating services the BOCES will provide; (II) The manner in which the BOCES will provide the services; and (III) The outcomes that the BOCES expects to achieve as a result of providing the services, which outcomes must include, but need not be limited to, reducing the overhead operating costs of the eligible school districts and eligible charter schools that use the services and increasing the time that employees of the eligible school districts and eligible charter schools use to improve instruction in the public schools. (c) Notwithstanding the provisions of paragraph (b) of this subsection (4), a BOCES that applies for a grant and asks to use the grant moneys to create a plan in the first grant year may submit an application to the department that provides the information required by rule of the state board. (5) (a) The state board, by rule, shall establish criteria that the department and the state board shall use in reviewing the applications and plans and selecting the grant recipients. The department shall recommend applicants to the state board, and the state board shall select the BOCES that receive grants, taking into consideration the department's recommendations. (b) The criteria must, at a minimum, give greater weight to BOCES applications or plans that: (I) Provide incentives to eligible school districts and eligible charter schools to collaborate in centralizing a broad array of operating services that will significantly reduce operating overhead costs for participating eligible school districts and eligible charter schools; (II) Provide evidence that a high percentage of the eligible school districts that are members of and contiguous to the applying BOCES: (A) Employ a single administrator and have low property values, minimal ability to raise additional local revenues under sections 22-54-108 and 22-54-108.5, and relatively high operating overhead costs; or (B) Anticipate using the centralized operating services that the BOCES expects to provide; (III) With regard to an applying BOCES that provides unique centralized operating services that are not provided by another BOCES in the state, provide evidence that a significant percentage of the eligible school districts throughout the state and charter schools physically located within eligible school districts throughout the state anticipate using the unique centralized operating services that the BOCES provides; (IV) To the extent possible, leverage moneys that the applying BOCES receives pursuant to section 22-5-122 and federal moneys with the moneys received pursuant to this section to provide centralized operating services to eligible school districts that are members of and surrounding the applying BOCES and eligible charter schools located within those eligible school districts or to provide unique centralized operating services to eligible school districts throughout the state and to charter schools physically located within eligible school districts throughout the state; and (V) Are submitted by BOCES that are applying jointly with other BOCES. (6) (a) By October 1, 2015, the state board shall award the grants. Each grant continues for up to three years, subject to annual review by the department as provided in subsection (7) of this section. The department shall distribute up to five hundred thousand dollars for each of the three grant years to each of the selected BOCES; except that, the department shall distribute grant moneys to a selected BOCES in the second and third grant years only if the BOCES demonstrates that it is effective in providing centralized operating services, as determined by the department pursuant to subsection (7) of this section. (b) Notwithstanding the provisions of paragraph (a) of this subsection (6), the state board may authorize a selected BOCES to use the grant moneys in the first year as a planning grant, and the department shall not distribute more than fifty thousand dollars to the BOCES in the first grant year. The BOCES shall submit to the department its plan for providing centralized operating services by a date specified by rule of the state board. The department shall review the BOCES's plan and shall distribute grant moneys to the BOCES for the second grant year only if the department determines that the BOCES's plan is sufficient. (7) (a) Each BOCES that receives a grant shall annually submit to the department a report, as described by rule of the state board, that provides information that the department shall use to evaluate the BOCES's effectiveness in providing centralized operating services. At a minimum, in evaluating effectiveness, the department shall consider: (I) The percentage of eligible school districts that are members of or surrounding the BOCES that use the centralized operating services that the BOCES provides, or if the BOCES provides unique centralized operating services, the percentage of eligible school districts throughout the state and charter schools physically located in eligible school districts throughout the state that use the unique centralized operating services that the BOCES provides; (II) Evidence that the eligible school districts and eligible charter schools that use the centralized operating services have reduced operating overhead costs as a result of the centralized operating services that the BOCES provides; (III) The level of satisfaction of the eligible school districts and eligible charter schools with the centralized operating services that the BOCES provides; (IV) The quality of the centralized operating services that the BOCES provides; and (V) The performance of the eligible school districts and eligible charter schools that use the centralized operating services on the performance indicators described in section 22-11-204. (b) The department shall annually review each BOCES's report, evaluate the effectiveness of the centralized operating services that each BOCES provides, and, based on the evaluation, determine whether each BOCES qualifies to receive funding pursuant to this section for the next grant year. (c) Notwithstanding any provision of paragraphs (a) and (b) of this subsection (7) to the contrary, if a BOCES is authorized to use the first year of grant moneys as a planning grant, the BOCES must submit the report described in paragraph (a) of this subsection (7) only for the second and third years of the grant, and the BOCES's receipt of grant moneys in the third year is based on the evaluation described in paragraph (b) of this subsection (7). (8) (a) There is created in the state treasury the BOCES centralized operating services fund, referred to in this subsection (8) as the "fund", consisting of moneys that the general assembly appropriates from the state education fund, created in section 17 (4) of article IX of the state constitution, to the fund. It is the intent of the general assembly to appropriate to the fund five million dollars for each of the 2015-16 and 2016-17 budget years. The moneys in the fund are continuously appropriated to the department for the direct and indirect costs associated with implementing this section. (b) The state treasurer may invest any moneys in the fund not expended for the purpose of this section as provided by law. The state treasurer shall credit all interest and income derived from the investment and deposit of moneys in the fund to the fund. Any unexpended and unencumbered moneys remaining in the fund at the end of a fiscal year must remain in the fund and shall not be credited or transferred to the general fund or another fund; except that any moneys remaining in the fund as of July 1, 2018, must revert to the state education fund. (c) Beginning in the 2015-16 budget year, the department shall annually distribute moneys from the fund as provided in this section. (9) (a) As part of the report that the department provides pursuant to section 2-7-203, C.R.S., at a hearing of the joint education committee in November or December of 2017, the department shall address the information specified in paragraph (b) of this subsection (9) and provide recommendations concerning the continuation of and any proposed legislative changes affecting the grants provided pursuant to this section. (b) The department's report must specify: (I) The BOCES that received grants, whether they received a planning grant, and whether they received the grant moneys in each of the three grant years; (II) The centralized operating services that each BOCES provided using the grant moneys; (III) The eligible school districts and eligible charter schools that used the centralized operating services that each BOCES provided; and (IV) Whether providing the centralized operating services was effective in reducing the operating overhead costs of, and increasing the amount of time available to administrators to support instruction within, the eligible school districts and eligible charter schools that used the services. (10) This section is repealed, effective July 1, 2018. SECTION 2. In Colorado Revised Statutes, 22-2-122, amend (3) (a) as follows: 22-2-122. Grants to schools and school districts. (3) (a) For each budget year, the department shall allocate to the boards of cooperative services established pursuant to article 5 of this title that provide a wide range of services described in section 22-5-118 to their member school districts, or school districts with student populations of less than four thousand students, an amount equal to one percent of the amount appropriated to all education grant programs for which a school district may apply for that fiscal year, or two hundred fifty thousand dollars, whichever is less. The amount allocated to the boards of cooperative services pursuant to this subsection (3) shall be taken from the amounts appropriated to all education grant programs for which a school district may apply. In the event the department allocates two hundred fifty thousand dollars, such amount shall be taken from each education grant program for which a school district may apply in the same proportion that the amount appropriated for that fiscal year to the education grant program bears to the total amount appropriated for that fiscal year to all education grant programs for which a school district may apply. SECTION 3. In Colorado Revised Statutes, 22-5-114, repeal (1) (b) and (2) as follows: 22-5-114. Eligibility for funds. (1) (b) Approval to receive state moneys under this subsection (1) does not constitute approval to receive state moneys pursuant to section 22-5-118. (2) Unless otherwise approved by the state board, to be eligible to receive state funds under this section, and under section 22-5-118, a board of cooperative services shall meet all the following criteria: (a) It shall serve school districts with a combined total enrollment of not less than four thousand students; and (b) It shall either serve school districts in two or more counties or serve multiple school districts located in the same county. SECTION 4. Appropriation. For the 2015-16 state fiscal year, $5,000,000 is appropriated to the BOCES centralized operating services fund created in section 22-5-118, C.R.S. This appropriation is from the state education fund created in section 17 (4) of article IX of the state constitution. The department of education is responsible for the accounting related to this appropriation. SECTION 5. Safety clause. The general assembly hereby finds, determines, and declares that this act is necessary for the immediate preservation of the public peace, health, and safety.