HOUSE BILL No. 1191
DIGEST OF INTRODUCED BILL
Citations Affected: IC 6-1.1-19-4.9; IC 20-19-6.
Synopsis: In-class spending requirements. Provides for the reporting
of a school corporation's expenditures for current operating expenses.
Requires a school corporation to receive prior approval from the
department of local government finance before making certain
expenditures if: (1) the school corporation's total expenditures for
instruction are less than 65% of the school corporation's total current
operating expenditures; and (2) the school corporation is not operating
on an approved plan that increases the school corporation's in-class
spending percentage by at least two percentage points each year.
Effective: July 1, 2006.
January 9, 2006, read first time and referred to Committee on Education.
Second Regular Session 114th General Assembly (2006)
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between statutes enacted by the 2005 Regular Session of the General Assembly.
HOUSE BILL No. 1191
A BILL FOR AN ACT to amend the Indiana Code concerning
Be it enacted by the General Assembly of the State of Indiana:
SOURCE: IC 6-1.1-19-4.9; (06)IN1191.1.1. -->
SECTION 1. IC 6-1.1-19-4.9 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2006]: Sec. 4.9. (a) The following
definitions apply throughout
(1) "Current operating expenditures" has the meaning set
forth in IC 20-19-6-2.
(2) "In-class spending percentage" has the meaning set forth
in IC 20-19-6-6.
(3) "Instruction" has the meaning set forth in IC 20-19-6-7.
(b) Subsection (c)(1)
does not apply to a school corporation that
receives emergency financial relief under section 4.5(c) or section 4.7
of this chapter.
(b) Every (c) This section applies to a
school corporation in any
with respect to which the tax control board recommends, and
the department of local government finance authorizes,
emergency financial relief under section 4.5 of this chapter
(including relief in the form of an authorization to make an
excessive tax levy),
is, if the school corporation accepts the
authorized relief; or
(2) that immediately succeeds a year in which the department
of education reports under IC 20-19-6 that the school
corporation's in-class spending percentage for the accounting
period that is the subject of the report was less than sixty-five
percent (65%), unless:
(A) the school corporation:
(i) has a plan in place, adopted by the school
corporation's governing body and approved by the
department of local government finance, to make
instruction expenditures in each school year sufficient to
have an in-class spending percentage of at least sixty-five
percent (65%); and
(ii) is increasing expenditures for instruction in each year
by an amount that results in an in-class spending
percentage that is at least two (2) percentage points
higher than in the immediately preceding year until the
school corporation has an in-class spending percentage
of at least sixty-five percent (65%); or
(B) all the students with legal settlement in the school
corporation are enrolled in other transferee corporations
under an arrangement in which substantially all the
expenditures of the school corporation are expenditures
for the payment of transfer tuition.
(d) A school corporation is prohibited throughout any calendar
in to which or for which the school corporation receives the
emergency financial relief this section applies from taking any of the
prohibited actions described in this subsection until the action is
recommended by the tax control board to the department of local
government finance and authorized by the department. The prohibited
actions are any of the following:
(1) The acquisition of real estate for school building purposes, the
construction of new school buildings, or the remodeling or
renovation of existing school buildings.
(2) The making of a lease of real or personal property for an
annual rental or the incurring of any other contractual obligation
(except an employment contract for a new employee, which
contract is to supersede the contract of a terminating employee)
calling for an annual outlay by the school corporation in excess of
ten thousand dollars ($10,000).
(3) The purchase of personal property for a consideration in
excess of ten thousand dollars ($10,000).
(4) The adoption or advertising of a budget, tax levy, or tax rate
for any calendar year.
(5) The making of a current operating expenditure (other than
an expenditure for instruction) that exceeds five hundred
dollars ($500), if subsection (c)(2) applies and the school
corporation does not have a plan in place, adopted by the
school corporation's governing body and approved by the
department of local government finance, to increase
instruction expenditures in the year by the lesser of the
(A) Two (2) percentage points more than the amount
expended for instruction in the immediately preceding
(B) The amount needed for the school corporation to have
an in-class spending percentage in the year of at least
sixty-five percent (65%).
(c) (e) If a school corporation subject to the controls described in
subsection (b) (d) takes any of the actions described in subsection (b)
(d) without having first obtained the recommendation of the tax control
board and the department of local government finance's authorization
for the action, the department may take appropriate steps to:
(1) if subsection (c)(1) applies, reduce or terminate any
emergency financial relief that the school corporation may then
be receiving under section 4.5 of this chapter; or
(2) if subsection (c)(2) applies, reduce the certified general
fund levy for a year and the school corporation's budget by an
amount that does not exceed the amount necessary to bring
the school corporation's in-class spending percentage in the
year to at least sixty percent (60%).
(f) A school corporation is not eligible for an excess levy to fund
a plan described in subsection (c)(2) or (d)(5).
(g) The amount of a school corporation's maximum permissible
general fund levy is not reduced by the amount of a reduction
required under subsection (e)(2). For purposes of determining state
distributions to a school corporation, a school corporation shall be
treated as having levied the amount of a reduction under
SOURCE: IC 20-19-6; (06)IN1191.1.2. -->
SECTION 2. IC 20-19-6 IS ADDED TO THE INDIANA CODE AS
A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE JULY
Chapter 6. Current Operating Expenditure Report
Sec. 1. As used in this chapter, "current expenditures" refers to
expenditures classified as current expenditures for public
elementary and secondary schools under the standards applicable
to a survey.
Sec. 2. As used in this chapter, "current operating
expenditures" refers to the current expenditures described in
section 13 of this chapter.
Sec. 3. As used in this chapter, "data" refers to financial
information collected from school corporations under this chapter.
Sec. 4. As used in this chapter, "food service" refers to current
expenditures classified as food services expenditures (subfunction
code 3100 in the 3000 function code series) on a survey.
Sec. 5. As used in this chapter, "function" refers to the broadest
classification of expenditure data used in a survey.
Sec. 6. As used in this chapter, "in-class spending percentage"
refers to the percentage determined under section 17 of this
Sec. 7. As used in this chapter, "instruction" refers to current
expenditures classified as instruction expenditures (1000 function
code series) on a survey.
Sec. 8. As used in this chapter, "support services" refers to
current expenditures classified as support services expenditures
(2000 function code series) on a survey.
Sec. 9. As used in this chapter, "survey" refers to a survey
described in section 12 of this chapter.
Sec. 10. The department shall establish a program to obtain
complete and comparable cost data from each school corporation
for current operating expenditures.
Sec. 11. A school corporation shall provide the data necessary
for the department to comply with this chapter in the form and
manner and on the schedule determined by the department.
Sec. 12. The department shall compile and classify data under
this chapter in conformity with the standards applicable to the
collection of the common core of data about the nation's public
elementary and secondary schools by the United States
Department of Education and the National Center for Education
Statistics in the Local Education Agency Finance Survey (F-33)
and the National Public Education Financial Survey (NPEFS).
Sec. 13. For purposes of this chapter, "current operating
expenditures" equals the sum of the following:
(1) Instruction expenditures.
(2) Support services expenditures.
(3) Food services expenditures.
Sec. 14. (a) Subject to this section, if the standards for
submitting financial information in a survey permit a school
corporation or the department to use alternative accounting
principles, methods of accounting, or accounting periods for data,
the department shall select one (1) of the alternatives and provide
for the compilation and reporting of data under this chapter in
conformity with the selected alternative.
(b) The department must allocate current operating
expenditures for employee benefits paid by a school corporation or
the state among the current operating expenditure function codes
under the allocation formula determined by the department and
approved by the state board of accounts.
Sec. 15. The department shall provide instructions to school
corporations on how to report data in conformity with this
chapter. The instructions must be approved by the state board of
Sec. 16. Not later than ninety (90) days after the close of an
accounting period, the department shall publish on the
department's Internet web site and certify to the department of
local government finance the following information for each school
(1) The current operating expenditure data for the school
corporation for the immediately preceding accounting period.
(2) The in-class spending percentage for the school
Sec. 17. For purposes of this chapter, the in-class spending
percentage of a school corporation is equal to the result determined
under STEP FOUR of the following formula:
STEP ONE: Determine the current operating expenditures
for a school corporation for an accounting period.
STEP TWO: Determine the instruction expenditures for the
school corporation for the same accounting period.
STEP THREE: Divide the STEP TWO amount by the STEP
ONE amount, rounding to the nearest one-thousandth (0.001).
STEP FOUR: Convert the STEP THREE result to a
percentage by multiplying the STEP THREE result by one
Sec. 18. The department shall publish the data required under
section 16 of this chapter with comparative data and explanatory
information that the department determines will aid the public in
evaluating the data.
Sec. 19. The department shall establish a procedure for
reviewing and correcting erroneous data published under sections
16 and 18 of this chapter.
Sec. 20. When the state board of accounts audits a school
corporation, the state board of accounts shall conduct a review of
the internal controls of the school corporation that the school
corporation relies on to report data under this chapter. The state
board of accounts shall treat the lack of adequate internal controls
as an audit exception that must be corrected by the school
Sec. 21. Each school corporation and the department shall
submit current operator expenditure information on surveys using
the same accounting principles, methods of accounting, and
accounting periods used to compile data under this chapter.
SOURCE: ; (06)IN1191.1.3. -->
SECTION 3. [EFFECTIVE JULY 1, 2006] The initial accounting
period to which IC 20-19-6, as added by this act, applies is the
accounting period beginning January 1, 2006, and ending
December 31, 2006. The designation of the initial accounting period
under this SECTION does not prohibit the department of
education from changing the accounting period to which
IC 20-19-6, as added by this act, applies for any reporting period
that ends after December 31, 2006, even if two (2) reporting
periods partially overlap.