DAR File No. 42117

Education, Administration

Rule R277-420

Aiding Financially Distressed School Districts

Notice of Proposed Rule

(Amendment)

DAR File No.: 42117
Filed: 09/15/2017 08:49:06 AM

RULE ANALYSIS

Purpose of the rule or reason for the change:

Following a five-year review, the Utah State Board of Education determined that Rule R277-420 continued to be necessary so it was continued. The rule is amended to provide necessary technical and conforming changes to bring the rule into compliance with the Rulewriting Manual for Utah.

Summary of the rule or change:

The amendments to this rule provide technical and conforming changes that include changes to numbering, references, and terminology.

Statutory or constitutional authorization for this rule:

• Art X Sec 3
• Subsection 53A-19-105(5)
• Section 53A-1-401

Anticipated cost or savings to:

the state budget:

The amendments to Rule R277-420 provide technical and conforming changes which will likely not result in a cost or savings to the state budget.

local governments:

The amendments to Rule R277-420 provide technical and conforming changes which will likely not result in a cost or savings to local governments.

small businesses:

The amendments to Rule R277-420 provide technical and conforming changes which will likely not result in a cost or savings to small businesses.

persons other than small businesses, businesses, or local governmental entities:

The amendments to Rule R277-420 provide technical and conforming changes which will likely not result in a cost or savings to persons other than small businesses, businesses, or local government entities.

Compliance costs for affected persons:

The amendments to Rule R277-420 provide technical and conforming changes which will likely not result in any compliance costs for affected persons.

Comments by the department head on the fiscal impact the rule may have on businesses:

After conducting a thorough analysis, it was determined that the amendments to this rule will not result in a fiscal impact to businesses.

Sydnee Dickson, State Superintendent

The full text of this rule may be inspected, during regular business hours, at the Office of Administrative Rules, or at:

Education
Administration
250 E 500 S
SALT LAKE CITY, UT 84111-3272

Direct questions regarding this rule to:

• Angela Stallings at the above address, by phone at 801-538-7656, by FAX at 801-538-7768, or by Internet E-mail at [email protected]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

10/31/2017

This rule may become effective on:

11/07/2017

Authorized by:

Angela Stallings, Deputy Superintendent, Policy and Communication

R277. Education, Administration.

R277-420. Aiding Financially Distressed School Districts.

R277-420-[2]1. Authority and Purpose.

[A.](1) This rule is authorized by:

(a) Utah Constitution Article X, Section 3, which vests general control and supervision over public education in the Board;

(b) Section 53A-1-401, which allows the Board to make rules to execute the Board's duties and responsibilities under the Utah Constitution and state law; and

(c) Subsection 53A-19-105(5) , which requires the Board to develop standards for defining and aiding financially distressed school districts[, and Section 53A-1-401(3) which permits the Board to adopt rules in accordance with its responsibilities].

[B.](2) The purpose of this rule is to specify [the] eligibility requirements [for] and [the] procedures for nonrecurring or nonroutine interfund transfers for financially distressed school districts.

 

R277-420-[1]2. Definitions.

[A. "Board" means the Utah State Board of Education.

B.](1)(a) "Interfund transfer" means a transaction which withdraws money from one fund and places it in another without recourse.

(b) An [I]interfund transfer[s are] is regulated by statute and Board rules.

(c) "Interfund transfers " do not include interfund loans in which money is temporarily withdrawn from a fund with full obligation for repayment during the fiscal year.

[C. "School district," for purposes of this rule, means school district under the direction of the local board of education.

D. "State Superintendent" means the State Superintendent of Public Instruction. For purposes of this rule, the Board's designee is the State Superintendent.

E. "USOE" means the Utah State Office of Education.

F.](2) "Without recourse" means there is no obligation to return withdrawn money to the fund from which it was transferred.

 

R277-420-3. Eligibility.

[To qualify as a financially distressed school district, a school district shall meet all of the following requirements:

] (1) A school district may qualify as financially distressed if the district:

[A. Have ](a) has a deficit of three percent or more in its year end unappropriated maintenance and operation fund balance following a reduction for any amount in an undistributed reserve[.];

[B. Be](b) is unable to meet its financial obligations in a timely manner[.];

[C. Be](c) is unable to reduce the maintenance and operation deficit by [twenty-five] 25 percent in its budget for the next year[.];

[D. Have](d) can demonstrate that it has made reasonable, local efforts to eliminate the deficit[.];

[E. Be](e) is financially incapable of meeting statewide educational standards adopted by the Board[.]; and

[F. Have] (f) has a deficit resulting from circumstances not subject to administrative decisions.

(2) The Superintendent shall evaluate the criteria outlined in Subsection (1) and make a determination on whether a district is financially distressed[This judgment shall be made] following an on-site visit and consultation with the school district and local school board[by USOE staff].

 

R277-420-4. Procedures for Making Interfund Transfers.

[A.](1) A local school board [applying to qualify] may apply for an interfund transfer under this rule [shall request that the USOE visit the school district, conduct an audit, and assist the local school board and district staff in developing a plan to eliminate the deficit.]by filing a request with the Superintendent, which shall include:

(a) evidence that the district meets the criteria set forth in Section R277-420-3; and

(b) a plan to eliminate the district's budget deficit.

(2) As part of a district application under Subsection (1)(a), the Superintendent shall:

(a) visit the school district; and

(b) conduct a financial analysis.

[B. The school district shall meet the eligibility requirements of R277-420-3 and be approved as a financially distressed school district by the Board or its designee.](3) The Superintendent may only approve an interfund transfer under this rule if the Superintendent determines that:

(a) the district meets the eligibility requirements of Section R277-420-3; and

(b) the district's request does not conflict with Subsection 53A-19-105(6)(d).

(4) The Superintendent shall advise the Board of any transfers approved under this rule at the next regularly scheduled Board meeting.

[C.](5) A school district designated as financially distressed may make nonrecurring or nonroutine interfund transfers to the district's maintenance and operation fund upon the approval of the [Board or its designee]Superintendent and in accordance with the plan submitted by the district under Subsection (1)(b).

[D.](6) [The]An interfund transfer shall be established by [the]a school district under the direction of the local school board in an undistributed reserve account consistent with Section 53A-19-103.

 

KEY: education finance

Date of Enactment or Last Substantive Amendment: [November 8, 2012]2017

Notice of Continuation: September 13, 2017

Authorizing, and Implemented or Interpreted Law: 53A-19-105; 53A-1-401[(3)]; 53A-19-103