REFERENCE TITLE: income tax; optional additional contributions
State of Arizona
House of Representatives
Second Regular Session
Representatives Thorpe: Lawrence
Amending sections 15-977, 15-1472 and 15-1642, Arizona Revised Statutes; amending title 43, chapter 3, article 2, Arizona Revised Statutes, by adding section 43-321.01; amending section 43-1042, Arizona Revised Statutes; relating to individual income tax.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 15-977, Arizona Revised Statutes, is amended to read:
15-977. Classroom site fund; definitions
A. The classroom site fund is established consisting of monies transferred to the fund pursuant to section 37‑521, subsection B and section 42‑5029, subsection E, paragraph 10 and contributions to the fund pursuant to section 43-321.01. The department of education shall administer the fund. School districts and charter schools may not supplant existing school site funding with revenues from the fund. All monies distributed from the fund are intended for use at the school site. Each school district or charter school shall allocate forty percent of the monies for teacher compensation increases based on performance and employment related expenses, twenty percent of the monies for teacher base salary increases and employment related expenses and forty percent of the monies for maintenance and operation purposes as prescribed in subsection H of this section. Teacher compensation increases based on performance or teacher base salary increases distributed pursuant to this subsection shall supplement, and not supplant, teacher compensation monies from any other sources. The school district or charter school shall notify each school principal of the amount available to the school by April 15 of each year. The district or charter school shall request from the school's principal each school's priority for the allocation of the funds available to the school for each program listed under subsection H of this section. The amount budgeted by the school district or charter school pursuant to this section shall not be included in the allowable budget balance carryforward calculated pursuant to section 15‑943.01.
B. A school district governing board must adopt a performance based compensation system at a public hearing to allocate funding from the classroom site fund pursuant to subsection A of this section. Individual teacher performance as measured by the teacher's performance classification pursuant to section 15‑203, subsection A, paragraph 38 shall be a component of the school district's portion of the forty percent allocation for teacher compensation based on performance and employment related expenses.
C. A school district governing board shall vote on a performance based compensation system that includes the following elements:
1. School district performance and school performance.
2. Individual teacher performance as measured by the teacher's performance classification pursuant to section 15‑203, subsection A, paragraph 38. The individual teacher performance component shall account for thirty‑three percent of the forty percent allocation for teacher compensation based on performance and employment related expenses.
3. Measures of academic progress toward the academic standards adopted by the state board of education.
4. Other measures of academic progress.
5. Dropout or graduation rates.
6. Attendance rates.
7. Ratings of school quality by parents.
8. Ratings of school quality by students.
9. The input of teachers and administrators.
10. Approval of the performance based compensation system based on an affirmative vote of at least seventy percent of the teachers eligible to participate in the performance based compensation system.
11. An appeals process for teachers who have been denied performance based compensation.
12. Regular evaluation for effectiveness, which shall comply with section 15‑203, subsection A, paragraph 38.
D. A performance based compensation system shall include teacher professional development programs that are aligned with the elements of the performance based compensation system.
E. A school district governing board may modify the elements contained in subsection C of this section and consider additional elements when adopting a performance based compensation system. A school district governing board shall adopt any modifications or additional elements and specify the criteria used at a public hearing.
F. Until December 31, 2009, each school district shall develop an assessment plan for its performance based compensation system and submit the plan to the department of education by December 31 of each year. A copy of the performance based compensation system and assessment plan adopted by the school district governing board shall be included in the report submitted to the department of education.
G. Monies in the fund are continuously appropriated, are exempt from the provisions of section 35‑190 relating to lapsing of appropriations and shall be distributed as follows:
1. By March 30 of each year, the staff of the joint legislative budget committee shall determine a per pupil amount from the fund for the budget year using the estimated statewide weighted count for the current year pursuant to section 15‑943, paragraph 2, subdivision (a) and based on estimated available resources in the classroom site fund for the budget year adjusted for any prior year carryforward or shortfall.
2. The allocation to each charter school and school district for a fiscal year shall equal the per pupil amount established in paragraph 1 of this subsection for the fiscal year multiplied by the weighted student count for the school district or charter school for the fiscal year pursuant to section 15‑943, paragraph 2, subdivision (a). For the purposes of this paragraph, the weighted student count for a school district that serves as the district of attendance for nonresident pupils shall be increased to include nonresident pupils who attend school in the school district.
H. Monies distributed from the classroom site fund shall be spent for the following maintenance and operation purposes:
1. Class size reduction.
2. Teacher compensation increases.
3. Assessment intervention programs.
4. Teacher development.
5. Dropout prevention programs.
6. Teacher liability insurance premiums.
I. The district governing board or charter school shall allocate the classroom site fund monies to include, wherever possible, the priorities identified by the principals of the schools while assuring that the funds maximize classroom opportunities and conform to the authorized expenditures identified in subsection A of this section.
J. School districts and charter schools that receive monies from the classroom site fund shall submit a report by November 15 of each year to the superintendent of public instruction that provides an accounting of the expenditures of monies distributed from the fund during the previous fiscal year and a summary of the results of district and school programs funded with monies distributed from the fund. The department of education in conjunction with the auditor general shall prescribe the format of the report under this subsection.
K. School districts and charter schools that receive monies from the classroom site fund shall receive these monies monthly in an amount not to exceed one‑twelfth of the monies estimated pursuant to subsection G of this section, except that if there are insufficient monies in the fund that month to make payments, the distribution for that month shall be prorated for each school district or charter school. The department of education may make an additional payment in the current month for any prior month or months in which school districts or charter schools received a prorated payment if there are sufficient monies in the fund that month for the additional payments. The state is not required to make payments to a school district or charter school classroom site fund if the state classroom site fund revenue collections are insufficient to meet the estimated allocations to school districts and charter schools pursuant to subsection G of this section.
L. The state education system for committed youth shall receive monies from the classroom site fund in the same manner as school districts and charter schools. The Arizona state schools for the deaf and the blind shall receive monies from the classroom site fund in an amount that corresponds to the weighted student count for the current year pursuant to section 15‑943, paragraph 2, subdivision (b) for each pupil enrolled in the Arizona state schools for the deaf and the blind. Except as otherwise provided in this subsection, the Arizona state schools for the deaf and the blind and the state education system for committed youth are subject to this section in the same manner as school districts and charter schools.
M. Each school district and charter school, including school districts that unify pursuant to section 15‑448 or consolidate pursuant to section 15‑459, shall establish a local level classroom site fund to receive allocations from the state level classroom site fund. The local level classroom site fund shall be a budgetary controlled account. Interest charges for any registered warrants for the local level classroom site fund shall be a charge against the local level classroom site fund. Interest earned on monies in the local level classroom site fund shall be added to the local level classroom site fund as provided in section 15‑978. This state shall not be required to make payments to a school district or charter school local level classroom site fund that are in addition to monies transferred to the state level classroom site fund pursuant to section 37‑521, subsection B and section 42‑5029, subsection E, paragraph 10.
N. Monies distributed from the classroom site fund for class size reduction, assessment intervention and dropout prevention programs shall only be used for instructional purposes in the instruction function as defined in the uniform system of financial records, except that monies shall not be used for school‑sponsored athletics.
O. For the purposes of this section:
1. "Assessment intervention" means summer programs, after school programs, before school programs or tutoring programs that are specifically designed to ensure that pupils meet the Arizona academic standards as measured by the statewide assessment prescribed by section 15‑741.
2. "Class size reduction" means any maintenance and operations expenditure that is designed to reduce the ratio of pupils to classroom teachers, including the use of persons who serve as aides to classroom teachers.
Sec. 2. Section 15-1472, Arizona Revised Statutes, is amended to read:
15-1472. Community college district workforce development accounts; reports
A. Each community college district shall establish a separate workforce development account to receive only tax revenues authorized pursuant to section 42‑5029, subsection E, paragraph 3 and contributions to a designated account pursuant to section 43-321.01. Each community college district board shall approve the expenditure of these monies in accordance with section 15‑1461 and consistent with subsection B of this section.
B. Monies received pursuant to subsection A of this section shall be expended for workforce development and job training purposes. These expenditures may include:
1. Partnerships with businesses and educational institutions.
2. Additional faculty for improved and expanded classroom instruction and course offerings.
3. Technology, equipment and technology infrastructure for advanced teaching and learning in classrooms or laboratories.
4. Student services such as assessment, advisement and counseling for new and expanded job opportunities.
5. The purchase, lease or lease‑purchase of real property, for new construction, remodeling or repair of buildings or facilities on real property.
C. The state treasurer shall transfer monies under this section into each district's workforce development account by the fifteenth day of each month. The state treasurer shall also allocate and distribute any pooled interest earnings earned from revenues authorized in section 42‑5029, subsection E, paragraph 3 to each district in accordance with the method prescribed in subsection D, paragraph 2 of this section.
D. Revenues authorized for community college districts in section 42‑5029, subsection E, paragraph 3 shall be distributed by the state in the following manner:
1. For thirteen fiscal years beginning in fiscal year 2001‑2002 the state treasurer shall allocate one million dollars per fiscal year for the purpose of bringing this state into compliance with the matching capital requirements prescribed in section 15‑1463. The state treasurer shall distribute the monies authorized in this subsection to each district in the order in which each campus qualified for funding pursuant to section 15‑1463.
2. After the monies have been paid each year to the eligible districts pursuant to paragraph 1 of this subsection, the state treasurer shall distribute monies from the workforce development fund to each community college district in the following manner:
(a) Each district shall receive the sum of two hundred thousand dollars. This subdivision does not apply to a community college tuition financing district established pursuant to section 15‑1409.
(b) After each district has received the payments prescribed in subdivision (a) of this paragraph, the remainder of monies in the fund shall be distributed to each district according to each district's full‑time equivalent student enrollment percentage of the total statewide audited full‑time equivalent student enrollment in the preceding fiscal year prescribed in section 15‑1466.01. The percentage distribution under this subdivision shall be adjusted annually on October 1 of each year.
E. Revenues received by community college districts shall not be used by the legislature to supplant or reduce any state aid authorized in this chapter or supplant any proceeds from the sale of bonds authorized in this article and article 5 of this chapter.
F. Monies received under this section shall not be considered to be local revenues for purposes of article IX, section 21, Constitution of Arizona.
G. Each community college district or community college that is owned, operated or chartered by a qualifying Indian tribe on its own Indian reservation shall submit a report once every two years of its workforce development plan activities and the expenditures authorized in this section to the governor, president of the senate, speaker of the house of representatives, joint legislative budget committee and Arizona commerce authority by December 1 of every even‑numbered year. The report shall include the purpose and goals for which the workforce development monies were expended by each district or community college together with a general accounting of the expenditures authorized in subsection B of this section. A copy of the final report shall also be provided to the secretary of state. For the purposes of this subsection, "qualifying Indian tribe" has the same meaning prescribed in section 42‑5031.01.
Sec. 3. Section 15-1642, Arizona Revised Statutes, is amended to read:
15-1642. Financial aid trust fund; aid to students with verifiable financial need; endowment
A. The Arizona board of regents may establish a financial aid trust fund for the purposes of providing immediate aid to students with verifiable financial need, including students who are underrepresented in the population of university students or who by virtue of their special circumstances present unique needs for financial aid, and creating an endowment for future financial aid. The fund consists of monies deposited pursuant to this section and contributions to the fund pursuant to section 43‑321.01. Subject to the limitations provided in subsection B, paragraph 3 of this section, the board may assess a surcharge upon on registration fees paid by students for deposit in the fund.
B. The board shall adopt rules to govern the financial aid trust fund, including the following:
1. Twenty-five per cent percent of the monies received each year shall be placed in the trust fund as a permanent endowment. The remaining monies received shall be used for immediate aid for students with verifiable financial need. At least fifty per cent percent of the immediate aid monies shall be used for grant aid.
2. The immediate aid monies shall be distributed to the universities on a pro rata basis based on relative student contributions to the fund.
3. The surcharge on student registration shall not exceed one per cent percent of the registration fee for students taking more than six credit surcharge hours. The surcharge hours for students taking fewer than seven credit hours shall equal one‑half the surcharge assessed students taking more than six credit hours.
C. Each dollar raised pursuant to the surcharge on student registration shall be matched by two dollars appropriated by the legislature.
D. The board shall report every three years to the legislature on the status of the financial aid trust fund. The report shall include the use to which the monies have been put and the impact of such use.
E. Fund monies shall only be used in university assistance programs approved by the board and such monies shall be in addition to, and not in replacement of, existing state or institutional financial aid monies. Assistance may be provided to full‑time or part‑time students. Monies appropriated by this state shall not be used to provide assistance to students who are not residents of this state.
Sec. 4. Title 43, chapter 3, article 2, Arizona Revised Statutes, is amended by adding section 43-321.01, to read:
43-321.01. Additional contents of returns; voluntary contributions for public purposes
A. In addition to information required by section 43-321, the department shall include on the standard return form for individual taxpayers and on the short form return under section 43-323, subsection B spaces in which the taxpayer may voluntarily contribute an optional amount of monies, in addition to the taxes due, for one or more of the following purposes:
1. Salaries for schoolteachers in kindergarten programs and grades one through twelve as provided by the classroom site fund under section 15-977.
2. The department of education for the support of kindergarten programs and grades one through twelve.
3. A designated community college district workforce development account pursuant to section 15-1472.
4. A designated state university.
5. The financial aid trust fund established pursuant to section 15‑1642 for financial aid university students.
B. The taxpayer shall include the amount of the contribution as a payment submitted with the tax return form, in addition to and separate from any payment of tax included with the return. Amounts contributed pursuant to this section:
1. Are not subject to setoff pursuant to section 42-1122.
2. Are not deductible for state income tax purposes.
Sec. 5. Section 43-1042, Arizona Revised Statutes, is amended to read:
43-1042. Itemized deductions
A. Except as provided by subsections B, and D and E of this section, at the election of the taxpayer, and in lieu of the standard deduction allowed by section 43‑1041, in computing taxable income the taxpayer may take the amount of itemized deductions allowable for the taxable year pursuant to subtitle A, chapter 1, subchapter B, parts VI and VII, but subject to the limitations prescribed by sections 67, 68 and 274, of the internal revenue code.
B. In lieu of the amount of the federal itemized deduction for expenses paid for medical care allowed under section 213 of the internal revenue code, the taxpayer may deduct the full amount of such expenses.
C. Notwithstanding subsection B of this section, expenses for long‑term health care that are paid or reimbursed from the taxpayer's long‑term health care savings account pursuant to section 43‑1032 shall not be deducted pursuant to this section.
D. A taxpayer shall not claim both a deduction provided by this section and a credit allowed by this title with respect to the same charitable contributions.
E. A taxpayer shall not claim a deduction under this section for any amount contributed pursuant to section 43-321.01 and included in a federal itemized deduction.
E. F. The taxpayer may add any interest expense paid by the taxpayer for the taxable year that is equal to the amount of federal credit for interest on certain home mortgages allowed by section 25 of the internal revenue code.
Sec. 6. Effective date
This act is effective from and after December 31, 2018.