Session of 1998
                   
HOUSE BILL No. 2953
         
By Representative Franklin
         
2-13
            9             AN ACT concerning school district finance; authorizing the adoption of
10             local participation budgets and the levy of taxes to fund such budgets;
11             affecting the definition of local effort; amending K.S.A. 1997 Supp.
12             72-6410 and repealing the existing section.
13            
14       Be it enacted by the Legislature of the State of Kansas:
15           New Section 1. (a) The legislature acknowledges that activities in
16       music and the other arts disciplines and in athletics are and should be an
17       integral part of the curriculum of Kansas school districts. Research has
18       shown that a comprehensive activities program makes school a more in-
19       teresting and challenging environment, improves overall pupil achieve-
20       ment, lowers dropout rates, expands the ability of pupils to think, aids in
21       the development of self-control and self-esteem, cultivates a strong work
22       ethic, improves discipline, provides experiences that teach pupils to ac-
23       cept success and failure and to gain poise and confidence. The legislature
24       further acknowledges that many school districts lack the financial re-
25       sources necessary to maintain a strong activities program and hereby de-
26       clares that it is the intention of sections 1 through 5 of this act to provide
27       an opportunity for parents of pupils and for other community members
28       to increase their involvement in and support for school activities programs
29       through the funding of a local participation budget which may be adopted
30       in each school year by the board of education of any school district. The
31       adoption of a local participation budget shall require a determination by
32       a board of education that adoption of such a budget is necessary to sup-
33       plement amounts budgeted in the general fund for maintenance of a
34       comprehensive activities program and shall require a majority vote of the
35       members of the board. The adoption of a local participation budget shall
36       require no other procedure, authorization or approval. A local participa-
37       tion budget shall be limited to an amount equal to the product obtained
38       by multiplying $35 by the adjusted enrollment of the district in the school
39       year.
40           (b) There is hereby established in every district that adopts a local
41       participation budget a fund which shall be called the local participation
42       fund. The fund shall consist of all amounts deposited therein or credited
43       thereto according to law. Amounts in the local participation fund shall be

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  1       expended to develop comprehensive education reform aimed at assisting
  2       pupils attain higher academic and occupational skills standards by ensur-
  3       ing the infusion of activities in music and the other arts disciplines and
  4       in athletics throughout the school district curriculum. Any unexpended
  5       and unencumbered cash balance remaining in the local participation fund
  6       of a district at the conclusion of any school year may be maintained in
  7       such fund until budgeted and expended in a succeeding school year or
  8       may be transferred to the general fund or any program weighted fund or
  9       categorical fund of the district.
10           New Sec. 2. (a) In each school year, the board of every district that
11       has adopted a local participation budget may levy an ad valorem tax on
12       the taxable tangible property of the district for the purpose of financing
13       such budget and for the purpose of paying a portion of the principal and
14       interest on bonds issued by cities under authority of K.S.A. 12-1774, and
15       amendments thereto, for the financing of redevelopment projects upon
16       property located within the district.
17           (b) The proceeds from the tax levied by a district under authority of
18       this section, except the proceeds of such tax levied for the purpose of
19       paying a portion of the principal and interest on bonds issued by cities
20       under authority of K.S.A. 12-1774, and amendments thereto, for the fi-
21       nancing of redevelopment projects upon property located within the dis-
22       trict, shall be deposited in the local participation fund of the district.
23           (c) No district shall proceed under K.S.A. 79-1964, 79-1964a or 79-
24       1964b, and amendments to such sections.
25           (d) The provisions of this section are subject to the provisions of sec-
26       tions 3, 4 and 5, and amendments thereto.
27           New Sec. 3. (a) (1) For the purpose of financing all or a portion of
28       a district's local participation budget in order to reduce reliance of the
29       district upon revenue received from property taxation, the board of any
30       district that has adopted a local participation budget may submit the ques-
31       tion of imposing a school district retailers' sales tax to the electors of such
32       district at an election called and held thereon.
33           (2) The board of any district proposing to adopt a retailers' sales tax
34       shall give notice of its intention to submit such proposition for approval
35       by the electors in the manner required by K.S.A. 10-120, and amend-
36       ments thereto. The notices shall state the time of the election and the
37       rate and effective date of the proposed tax. If a majority of the electors
38       voting thereon at such election fail to approve the proposition, such prop-
39       osition may be resubmitted under the conditions and in the manner pro-
40       vided in this section for submission of the proposition. If a majority of
41       the electors voting thereon at such election shall approve the levying of
42       such tax, the board of such district shall provide by resolution for the levy
43       of the tax. Any repeal of such tax or any reduction or increase in the rate

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  1       thereof, within the limits prescribed by subsection (b) shall be accom-
  2       plished in the manner provided herein for the adoption and approval of
  3       such tax except that the repeal of any such retailers' sales tax may be
  4       accomplished by the adoption of a resolution so providing.
  5           (b) (1) The rate of any school district retailers' sales tax shall be fixed
  6       in the amount of .25%, .5%, .75% or 1% which amount shall be deter-
  7       mined by the board of the district.
  8           (2) The board of a district levying a retailers' sales tax is hereby pro-
  9       hibited from administering or collecting such tax locally, but shall utilize
10       the services of the state department of revenue to administer , enforce
11       and collect such tax. Such tax shall be identical in its application, and
12       exemptions therefrom, to the Kansas retailers' sales tax act and all laws
13       and administrative rules and regulations of the state department of rev-
14       enue relating to the Kansas retailers' sales tax shall apply to such school
15       district sales tax insofar as such laws and rules and regulations may be
16       made applicable. The state director of taxation is hereby authorized to
17       administer, enforce and collect such school district sales taxes and to
18       adopt such rules and regulations as may be necessary for the efficient and
19       effective administration and enforcement thereof.
20           (3) Upon receipt of a certified copy of a resolution authorizing the
21       levy of a school district retailers' sales tax, the state director of taxation
22       shall cause such taxes to be collected within or outside the boundaries of
23       such district at the same time and in the same manner provided for the
24       collection of the state retailers' sales tax. All moneys collected by the
25       director of taxation under the provisions of this section shall be credited
26       to a school district retailers' sales tax fund which fund is hereby estab-
27       lished in the state treasury. Any refund due on any school district retailers'
28       sales tax collected pursuant to this section shall be paid out of the sales
29       tax refund fund and reimbursed by the director of taxation from collec-
30       tions of school district retailers' sales tax revenue. All school district re-
31       tailers' sales tax revenue collected within any school district pursuant to
32       this section shall be apportioned and remitted at least quarterly by the
33       state treasurer, on instruction from the director of taxation, to the trea-
34       surer of such school district.
35           (4) The director of taxation shall provide, upon request by the board
36       of a district levying a school district retailers' sales tax, a monthly report
37       identifying each retailer having a place of business in the district and
38       setting forth the amount of such tax remitted by each retailer during the
39       preceding month. Such report shall be made available to the board within
40       a reasonable time after it has been requested from the director of taxation.
41       The director of taxation shall be allowed to assess a reasonable fee for the
42       issuance of such report. Information received by any such board pursuant
43       to this provision shall be confidential, and it shall be unlawful for any

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  1       member or employee of such board to divulge any such information in
  2       any manner. Any violation of this provision by any such member or em-
  3       ployee is a class B misdemeanor, and such member or employee shall be
  4       dismissed from office.
  5           (c) For the purpose of levying taxes pursuant to this section, there is
  6       hereby specifically conferred upon the board of any district the power
  7       and authority to impose taxes upon services rendered outside the bound-
  8       aries of the district by retailers having a place of business located within
  9       such district.
10           (d) All retail transactions consummated within a district having a re-
11       tailers' sales tax, which transactions are subject to the Kansas retailers'
12       sales tax, shall also be subject to a school district retailers' sales tax. Except
13       as hereinafter provided, all retail sales, for the purpose of this section,
14       shall be considered to have been consummated at the place of business
15       of the retailer. In the event the place of business of a retailer is doubtful
16       the place or places at which the retail sales are consummated for the
17       purposes of this section shall be determined under rules and regulations
18       adopted by the secretary of revenue which rules and regulations shall be
19       considered with state and federal law insofar as applicable. Retail sales
20       involving the use, consumption, or furnishing of gas, water, electricity and
21       heat, for the purposes of this section, shall be considered to have been
22       consummated at the situs of the user or recipient thereof, and retail sales
23       involving the use or furnishing of telephone service or services taxed un-
24       der subsection (k) of K.S.A. 79-3603, and amendments thereto, shall be
25       considered to have been consummated at the situs of the subscriber billed
26       therefor. Retail sales involving the leasing of telecommunication or data
27       processing equipment commonly used in connection with telephone serv-
28       ices shall be considered to have been consummated at the situs of the
29       lessee. Retail sales involving the furnishing of services taxable under sub-
30       sections (p), (q) and (r) of K.S.A. 79-3603, and amendments thereto,
31       pursuant to a contract under which the sale of such services and the
32       furnishing of tangible personal property exceeds $10,000 per contract per
33       contractor shall be considered to have been consummated at the situs
34       where such services are performed. The director of taxation is hereby
35       authorized to request and receive from any retailer or from any board
36       levying the tax such information as may be reasonably necessary to de-
37       termine the liability of retailers for any school district sales tax. The col-
38       lection of any school district sales tax authorized at a primary or general
39       election shall commence on the first day of the calendar quarter next
40       following the 30th day after the date of the election authorizing the levy
41       of such tax. The collection of any sales tax of a school district approved
42       at any other election shall commence on the first day of the calendar
43       quarter next following the 60th day after the date of the election author-

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  1       izing the levy of such tax.
  2           (e) For the purpose of determining the situs of installation, mainte-
  3       nance, servicing and repair services taxable under the provisions of this
  4       section, the place of business of the retailer of such services shall be the
  5       office or other location from which such retailer does business. Such
  6       location may be established by determining the location where sales or
  7       service personnel report or at which mail is received, orders are taken,
  8       telephone service is listed or the consideration of any other relevant fac-
  9       tors established by rules and regulations of the secretary of revenue. If
10       the place of business of a retailer of services is located within the bound-
11       aries of a district imposing a retailers' sales tax, services performed by
12       such retailer are subject to the tax regardless of whether the service is
13       performed within or outside the boundaries of the district. If there is no
14       fixed or determinable place of business for any retailer, other than a re-
15       tailer having its only place or places of business in another state, the place
16       of business of such retailer shall be deemed to be the place where the
17       services are performed.
18           (f) All revenue received from a school district retailers' sales tax im-
19       posed pursuant to this section shall be credited to the local participation
20       fund of the district and shall be expended only for the purposes of such
21       fund. Any tax levy imposed by the board of a school district pursuant to
22       section 2, and amendments thereto, upon taxable tangible property lo-
23       cated within the district shall be reduced by an amount equivalent to the
24       amount of revenue distributed for use by the board pursuant to this sec-
25       tion.
26           (g) The provisions of this section are subject to the provisions of sec-
27       tion 5, and amendments thereto.
28           New Sec. 4. (a) For the purpose of financing all or a portion of a
29       district's local participation budget in order to reduce reliance of the
30       district upon revenue received from property taxation, the board of any
31       district that has adopted a local participation budget may submit the ques-
32       tion of imposing a school district income tax upon every resident individ-
33       ual of the school district. Any such election shall be noticed, called and
34       held in the manner provided by K.S.A. 10-120, and amendments thereto,
35       for the noticing, calling and holding of elections upon the question of
36       issuing bonds under the general bond law. The notice of such election
37       shall state the time of election, and the notice and the ballot shall state
38       the rate and effective date of the proposed tax. If a majority of the electors
39       voting at such election fail to approve the proposition, such proposition
40       may be resubmitted under the same conditions and in the same manner
41       provided hereunder for initial submission of the proposition. If a majority
42       of the electors voting at such election approve the levying of such tax, the
43       board of the district, by resolution, shall authorize and provide for the

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  1       levy of such tax. Thereupon, the clerk of the board shall transmit a cer-
  2       tified copy of such resolution to the secretary of revenue.
  3           (b) Any school district income tax imposed under the provisions of
  4       this section shall be levied against a resident individual's Kansas income
  5       tax liability after reduction for any credits thereon as reported on the
  6       resident individual's Kansas income tax return. The rate of such tax shall
  7       be the rate as set out on the notice of election and ballot. Such rate shall
  8       be fixed at 5% or any other percentage which is the product of 5% mul-
  9       tiplied by any whole digit. All taxes imposed under this section shall be
10       applicable to all taxable years commencing after December 31 of the year
11       in which the levy of such tax is authorized under subsection (a) and shall
12       be due at the time the resident individual's state income tax is due.
13           (c) The board of any district which has imposed a school district in-
14       come tax under the provisions of this section may submit, in any subse-
15       quent year, the question of increasing or decreasing the rate of such tax
16       or of repealing any such tax imposed, and such board shall be required
17       to submit any of such questions upon submission of a petition signed by
18       not less than 5% of the qualified electors of the district. Any change in
19       rate or repeal of such tax shall be approved by the electors and adopted
20       by the board in the manner prescribed for imposing such tax under sub-
21       section (a). Any change in rate or repeal of such tax shall become effective
22       on January 1 of the year next following the year in which such change in
23       rate or repeal is adopted.
24           (d) Any district levying an income tax under the provisions of this
25       section is hereby prohibited from administering or collecting any such tax
26       locally, but shall utilize the services of the state department of revenue
27       to administer, enforce and collect such tax. The provisions of the Kansas
28       income tax act, article 32 of chapter 79 of the Kansas Statutes Annotated,
29       except the Kansas withholding and declaration of estimated tax act, shall
30       apply to school district income taxes levied under the provisions of this
31       section to the extent that the same can be made applicable thereto. The
32       secretary of revenue is hereby authorized to adopt such rules and regu-
33       lations as may be necessary for the administration, collection and enforce-
34       ment of school district income taxes levied under the provisions of this
35       section. The state income tax return shall be adapted to provide for the
36       reporting of any resident individual's liability for the school district in-
37       come tax levied under this section. The director of taxation shall keep a
38       record of all moneys attributed to each school district levying an income
39       tax, including any penalties and interest attributable to such school district
40       income tax.
41           (e) The director of taxation shall pay all tax moneys collected under
42       tax levies authorized or imposed under the provisions of this section into
43       the state treasury on or before the first day of each month, and the state

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  1       treasurer shall credit the same less amounts withheld under subsection
  2       (f) to the school district income tax fund which is hereby created.
  3           (f) A revolving fund, designated as the school district income tax re-
  4       fund fund, in an amount not to exceed $50,000, shall be set apart and
  5       maintained by the director of taxation from taxes collected under this
  6       section for payment of refunds. The revolving fund shall be in such
  7       amount, within the limit set by this subsection, as the director shall de-
  8       termine is necessary to meet current refunding requirements.
  9           (g) The state treasurer shall make distributions from the school dis-
10       trict income tax fund to districts levying a school district income tax under
11       the provisions of this section on the following dates: On May 1 and August
12       1 of each year, moneys deposited in such fund during the preceding
13       calendar quarter; on December 1 of each year, moneys deposited in such
14       fund since August 1; and on February 1 of each year, moneys deposited
15       in such fund since December 1 of the preceding calendar year. The state
16       treasurer shall apportion and pay moneys deposited in the school district
17       income tax fund to districts levying a school district income tax under the
18       provisions of this section as follows: An amount equal to the total proceeds
19       received from taxpayers in each district levying such school district in-
20       come tax, as indicated by the returns filed and attributed to each such
21       district, with any adjustments or corrections made by the director of rev-
22       enue, shall be apportioned and paid to the district levying the tax.
23           (h) The director of accounts and reports shall draw warrants on the
24       state treasurer payable to school district treasurers of the several districts
25       entitled to payment from the school district income tax fund upon vouch-
26       ers approved by the director of taxation. Upon receipt of such warrant
27       each district treasurer shall credit the amount thereof to the local fund
28       of the district. All revenue received from a school district income tax
29       levied pursuant to this section shall be expended only for the purposes of
30       such fund. Any tax levy imposed by the board of a school district pursuant
31       to section 2, and amendments thereto, upon taxable tangible property
32       located within the district shall be reduced by an amount equivalent to
33       the amount of revenue distributed for use by the board pursuant to this
34       section.
35           (i) The provisions of this section are subject to the provisions of sec-
36       tion 5, and amendments thereto.
37           New Sec. 5. Revenues received by a school district from any one or
38       all of the tax levies authorized by sections 2 through 4 of this act shall be
39       limited so that the total amount of such revenues are not in excess of the
40       amount necessary to fund the local participation budget of the district.
41           Sec. 6. K.S.A. 1997 Supp. 72-6410 is hereby amended to read as
42       follows: 72-6410. (a) ``State financial aid'' means an amount equal to the
43       product obtained by multiplying base state aid per pupil by the adjusted

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  1       enrollment of a district.
  2           (b) ``Base state aid per pupil'' means an amount of state financial aid
  3       per pupil. Subject to the other provisions of this subsection, the amount
  4       of base state aid per pupil is $3,670. The amount of base state aid per
  5       pupil is subject to reduction commensurate with any reduction under
  6       K.S.A. 75-6704, and amendments thereto, in the amount of the appro-
  7       priation from the state general fund for general state aid. If the amount
  8       of appropriations for general state aid is insufficient to pay in full the
  9       amount each district is entitled to receive for any school year, the amount
10       of base state aid per pupil for such school year is subject to reduction
11       commensurate with the amount of the insufficiency.
12           (c) ``Local effort'' means the sum of an amount equal to the proceeds
13       from the tax levied under authority of K.S.A. 72-6431, and amendments
14       thereto, and an amount equal to any unexpended and unencumbered
15       balance remaining in the general fund of the district, except amounts
16       received by the district and authorized to be expended for the purposes
17       specified in K.S.A. 72-6430, and amendments thereto, and an amount
18       equal to any unexpended and unencumbered balances remaining in the
19       program weighted funds of the district, except any amount in the voca-
20       tional education fund of the district if the district is operating an area
21       vocational school, and an amount equal to any remaining proceeds from
22       taxes levied under authority of K.S.A. 72-7056 and 72-7072, and amend-
23       ments thereto, prior to the repeal of such statutory sections, and an
24       amount equal to the amount deposited in the general fund in the current
25       school year from amounts received in such year by the district under the
26       provisions of subsection (a) of K.S.A. 72-1046a, and amendments thereto,
27       and an amount equal to the amount deposited in the general fund in the
28       current school year from amounts received in such year by the district
29       pursuant to contracts made and entered into under authority of K.S.A.
30       72-6757, and amendments thereto, and an amount equal to the amount
31       credited to the general fund in the current school year from amounts
32       distributed in such year to the district under the provisions of articles 17
33       and 34 of chapter 12 of Kansas Statutes Annotated and under the pro-
34       visions of articles 42 and 51 of chapter 79 of Kansas Statutes Annotated  ,
35       and (1) for districts other than the district created by K.S.A. 72-5333a,
36       and amendments thereto, an amount equal to 75% of the federal impact
37       aid of a district and (2) for the district created by K.S.A. 72-5333a, and
38       amendments thereto, an amount equal to the federal impact aid of the
39       district.
40             (d) ``Federal impact aid'' means an amount equal to the federally
41       qualified percentage of the amount of moneys a district receives in the
42       current school year under the provisions of title I of public law 874 and
43       congressional appropriations therefor, excluding amounts received for as-

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  1       sistance in cases of major disaster and amounts received under the low-
  2       rent housing program. The amount of federal impact aid defined herein
  3       as an amount equal to the federally qualified percentage of the amount
  4       of moneys provided for the district under title I of public law 874 shall
  5       be determined by the state board in accordance with terms and conditions
  6       imposed under the provisions of the public law and rules and regulations
  7       thereunder.
  8           Sec. 7. K.S.A. 1997 Supp. 72-6410 is hereby repealed.
  9           Sec. 8. This act shall take effect and be in force from and after its
10       publication in the statute book.
11      
12